India Ratings and Research (Ind-Ra) has published the May edition of its credit news digest on India’s power sector. The report highlights that in April 2018, Coal India Limited’s monthly coal production declined to 45 million tonnes after increasing continuously since August 2017; although, 11.7% higher yoy compared to April 2017. With the lower mom coal generation, coal inventory also declined to 15.9 million tonnes in April 2018. Compared to April 2017, the decline is 56% yoy, indicating coal supply shortages.
Similar to March 2018, the number of plants with critical and supercritical levels stood at 28 in April 2018, due to non-uniform distribution of coal across plants across the country. Due to muted generation from nuclear and hydro power, dependence on thermal power remained high. However, overall thermal plant load factor (PLF) improved only marginally yoy to 64.9% in April 2018 (April 2017: 64.7%), despite PLF for both central and state sectors improving to 76.5% (74.5%) and 64.7% (58.9%), respectively. This was driven by lower private sector PLF at 56.3% in April 2018, led by coal supply shortages faced by private sector players due to lack of long-term fuel supply agreements.
In April 2018, despite coal shortages in the thermal sector, power deficit declined to 0.5% from 0.6% in April 2017, even though the all India electricity generation (excluding from the renewable sources) remained stable yoy at 103billion units (BUs). The increasing power supply is supplemented by higher renewable generation which Ind-Ra expects to have been at around 9BUs in April 2018 (April 2017: 5.9BUs; March 2018: 8.7BUs). Driven by increasing demand and inadequate availability of coal with the thermal generators along with a decline in hydro power, short-term power prices on the exchange remained high at INR3.98/kWh in April 2018 (April 2017: INR2.77/kWh).