High cost deters buyers, affects 10% of NTPC's output
New Delhi: NTPC, the country's largest power generator, is finding few takers for as much as 10 percent of its output because higher fuel costs have increased the price of electricity.
"Around 10 percent of the total generation of the company has taken a hit due to increased cost of raw material and the buyers' unwillingness to buy costlier power," a Power Ministry official said.
NTPC currently has an installed capacity of 41,184 MW, mostly fired by coal and gas, which have seen an increase in costs. With many state electricity boards not ready to buy expensive power, NTPC is also being forced to run some of its stations at a lower plant load factor.
Right now, the gas we are getting is expensive, the official said.
Last month, the government approved the doubling of natural gas prices to USD 8.4 per million British thermal units from April 1 next year, a move that will make power, urea and CNG costlier.
Also last month, the government allowed power companies to pass on the cost of imported coal to consumers.
"Of late, coal prices - both domestic and imported (because of rupee depreciation) has been rising much faster than inflation. As a result, utilities are forced to increase consumer tariffs across the board," said Debasish Mishra, Senior Director at Deloitte.
He added, "Since agriculture remains highly subsidised in most of the states and industrial and commercial tariffs have reached a level of tolerance - the brunt is being felt by residential customers. There are many states where the residential tariffs have crossed Rs 6/unit."
Suppressed demand and excessive supply resulted in a decline in electricity prices, according to the Indian Energy Exchange's trading figures for June.
Average electricity prices fell to as low as Rs 1.93/kWh in the Eastern region while in the South, the average rates dropped to as much as Rs 4.42 per unit.
A kilowatt hour, or kWh, is a unit used to measure electricity delivered to consumers by utilities.