Power production to grow by 5-6% during FY2019-20: Care Ratings

India’s energy demand will rise as the economy expands and more people have access to power, cooking gas and transport. Currently, India is the third largest energy consumer after China and the US. Its energy demand is expected to grow three-fold by 2040.

May 28, 2019 Uma Gupta

The newly connected households under the government's Saubhagya Scheme will drive the demand for electricity.

Image: Extempore/Flickr

Total power production in India will grow by 5-6% during FY2019-20, with the benefits of improved demand from newly connected households under Saubhagya Scheme kicking in—according to Care Ratings.

Among power sources, coal production will remain steady with a 6-7% growth on account of miners focusing on surface mining of coal instead of underground mining. Still, the ratings agency expects coal imports (includes both steam and coking coal) to grow by 8-10% on account of sustained demand from power sector as well as power-intensive industries like cement and metals.

Natural gas production will pick up by 3.1% to reach the level of 33.9 BCM, while crude oil production will further fall by 2.5% to 244.5 million barrels from 251 million barrels during FY2018-19. Processing of crude oil will rise by 3.7% to 1956 million barrels, which will lead to crude oil imports increasing by 3% to 1711 million barrels during FY2019-20.

The government aims to reduce oil and gas imports by 10% by 2022, which can only be attained by either increasing domestic crude oil production or by curtailing consumption.

There has been a continuous decline in crude oil production since the past five years and even though the government wants to elevate the domestic production, it will not be immediately reflected.

FY2018-19

Care Ratings reported that total power production in FY2018-19 grew by 5.1% to 1375 billion units with maximum growth coming from renewable sources. Power produced by renewable sources grew by 25% against 21% growth in FY2017-18.

Terming 100% electrification of households across India as a key achievement in FY2018-19, the report highlighted that it has addressed the supply-side constraint for generation and distribution companies. The Saubhagya Scheme, which targeted electrification of over 24.8 million households, was successfully completed in early-January 2019 by providing metered electricity connections to wiling households across rural and urban areas.

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