Coal Feed Improves for India's Power Generators, but 4.5% Deficit Persists

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--Fuel-supply concerns continue to be a drag on India's power generation capacity, which is forecast to grow 5% to 6.5% in the coming financial year, which begins in April. This growth rate is in line with the country's growth forecast for its overall gross domestic product (GDP).

The higher availability of domestic coal and the increased acceptance of imported coal will support increased growth, in line with the GDP. The outlook is stable to negative, according to India Ratings and Research (Ind-Ra).

Coal production also will increase due to faster progress on project clearances, which is attributed to coordination between the coal and environment ministries and the closer monitoring of captive coal blocks.

The upcoming general elections could see many states hold off on tariff increases, or reduce tariffs by increasing subsidies. But tariff hikes could resurface in the second half of the year.

Although power generation could improve as liquidity eases, cautious bank lending to state power producers and moderate demand from the manufacturing sector could lead to the energy deficit remaining at 4.5% in the 2015 financial year. The deficit declined to 4.5% in the April-to-November 2013 period, from 8.7% in 2012.

For related information, see November 7, 2013, article - India's Largest Power Projects Seek Relief from Environmental Roadblocks.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and nine international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.