* India FY23 power output seen 15.2% up, coal-fired power
over 17%
Coal trains to utilities from April 1-6 at 379/day vs 453 needed
Coal India FY23 supply target to power sector 565 mln T
* Total FY23 local coal requirement at 760 mln T
By Sudarshan Varadhan
CHENNAI, April 12 (Reuters) - India is likely to face more
power cuts this year as utilities' coal inventories are at the
lowest pre-summer levels in at least nine years and electricity
demand is expected to rise at the fastest pace in at least 38
years, officials and analysts say.
Power cuts could stifle industrial activity in Asia's third
largest economy, just when economic activity was starting to
recover after months of COVID-related lockdowns.
The shortage of electricity as a percentage of demand has
shot up to 1.4% over the last week, a Reuters analysis of
government data showed, higher than the 1% deficit in October,
when India last faced a serious coal shortage, and the 0.5%
shortfall in March.
The southern state of Andhra Pradesh, home to plants
operated by automakers such as Kia Motors and drug
manufacturers including Pfizer (PFE), is facing an electricity
deficit of 8.7%, the data showed, pushing it to resort to
widespread power cuts.
Coal inventories at power plants had an average stock of
nine days at the beginning of this financial year starting April
1, the lowest since at least 2014. Federal guidelines recommend
power plants to have at least 24 days of stock on average.
"The problem is, even after Coal India and the coal ministry
kept asking power plants to stock up, the utilities kept
reducing their inventories," said Rajiv Agarwal, secretary
general of the Indian Captive Power Producers Association.
Facor Alloys Ltd, a producer of ferrochrome which
is used in manufacturing stainless steel, said on Monday it was
reducing output by 50% due to the power cuts in Andhra Pradesh.
Industrial states such as Gujarat and Maharashtra have
resorted to load shedding, officials said, with government data
showing eastern states such as Jharkhand and Bihar, and Haryana
and Uttarakhand in the north reporting power shortages of over
3% each.
"A commensurate increase in electricity generation to meet
the increased demand is unlikely, limited by the availability of
coal," Fitch Ratings said in a note on Thursday.
Coal accounts for nearly 75% of India's power output.
A shortage of trains to deliver coal to power plants is also
exacerbating the supply crisis. The number of trains committed
by the Indian Railways per day is 415, 8.4% lower than the 453
required by the utilities.
The actual number of trains available from April 1-6 was 379
per day, 16% lower than required, the minutes of a meeting held
between the power and coal ministries last week reviewed by
Reuters showed.
SOARING POWER DEMAND
India's power demand is expected to soar in summer, with
weather officials forecasting maximum temperatures above normal
in April in many northern and central regions.
"An unprecedented change in weather has resulted in peak
demand shooting up after midnight due to soaring
air-conditioning use," said Harry Dhaul, director general of the
Independent Power Producers Association of India.
Total power output is seen surging 15.2% during the year
ended March 2023, a federal power ministry note reviewed by
Reuters showed, with demand set to rise at the fastest pace in
at least 38 years.
That will likely push coal-fired power generation up by
17.6%, according to the note.
Higher power demand this year has already forced India to
cut coal supplies to the non-power sector, despite record
production and supply by Coal India Ltd, which produces over 80%
of India's coal.
Coal India is targeting a 4.6% increase in supply to
utilities to 565 million tonnes this financial year to avert a
shortage, another power ministry note showed.
But the power demand growth forecast has pushed the power
ministry to ask utilities to increase coal imports for blending
to 36 million tonnes, the highest in at least six years.
The move could add to the financial woes of debt-laden power
distributors, as global coal prices are trading at steep
premiums to average levels in 2021 due to the Russia-Ukraine
crisis.
"High international coal prices would limit any significant
increase in coal imports," Fitch Ratings said, adding that
domestic supplies could be hit during the annual monsoon season.
(Reporting by Sudarshan Varadhan; Additional reporting by
Rajendra Jadhav in MUMBAI and Nallur Sethuraman in BENGALURU;
Editing by David Evans)
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