According to Fitch Ratings, strong industrial activity would likely fuel a 7% annual increase in domestic power demand in 2023–2024. The rating agency stated in a report that it anticipates a further shortening of the receivable days (or payment cycle) in the near future.
Based on strong industrial activity, Fitch Ratings projects that India’s electricity demand would climb by roughly 7% in FY24 after rising by 7.1% in 1HFY24. In contrast, FY23 had an increase of 9.5%. The research stated that “the average thermal power plant load factor (PLF) should remain above 60% due to the strong power demand.”
It also stated that the overall amount owed by distribution companies (discoms) to power generation companies (gencos) has decreased to approximately Rs 70,000 crore from Rs 1.3 lakh crore in June 2022, when the central government implemented the late payment surcharge (LPS) regulations. In the foreseeable future, Fitch anticipates that the receivable days for gencos with a Fitch rating will continue to decrease, albeit more slowly than they did in FY23. However, structural adjustments to improve the operational and financial characteristics of discoms are necessary for the long-term sustainability of gencos’ stronger position with respect to receivables. This involves increased operational effectiveness, public subsidies, and prompt and appropriate tariff adjustments.
According to the report, the thermal coal stockpile at the end of September 2023 was around 8.4 days, compared to the usual of approximately 18 days. This was the case even though over the previous six months, the government encouraged greater imports of coal and enhanced local production in an effort to maintain an appropriate stock of coal.