Whether or not it is an aberration, time will tell, but October 2023 power generation numbers are surely a dampener. As most high-frequency data points started to turn positive on sequential and year-on-year basis, the 10 percent year-on-year drop in October power generation is a setback of sorts – and it maybe too premature to call the worst behind already.

Although the cumulative 4MFY24 power generation at 52 billion units is still 3 percent higher year-on-year, October’s generation is the lowest for the month since 2016. In the run-up to the double-digit decline for most of the last fiscal year, the lows reported did not go as back as 2016 – which makes the October drop a unique one. This begs the question if the power generation as reported by the Central Power Purchasing Agency – reflects the drop in demand by as much or is an outcome of forced reduced generation, owing to limited availability of foreign exchange or fuel – or both. The exact answer would never be known, but this could well be the case.

Not that any of it comes as a surprise – given the sharp upward adjustment in consumer end tariff. With the industries only just beginning to find their feet again, and with domestic consumers facing record-high bills – organic negative demand growth is very much on the cards. Worryingly, the fuel cost component has shot up to Rs11.43/unit – the highest in 16 months – and Rs3.53/unit clear of the reference fuel cost for the period. The required monthly FPA is also the highest since July 2022 – despite both currency and global energy commodity prices – stabilizing, after the base tariff adjustment in July.

The biggest deviation from the reference fuel cost comes from the previous adjustment of a massive Rs25 billion in That Coal Block-1 Power Generation Company. The adjustment is three times the Energy Purchase Price (EPP) of the plant for the period – which is an anomaly. The previous adjustment alone accounts for Rs3/unit – accounting for the bulk of the monthly FPA. The details of the said adjustment will be made more visible once the hearing takes place – and it remains to be seen whether the regulator allows for such a sharp adjustment.

As winter approaches, generation from both imported and domestic gas sources starts to taper off. Monthly gas supply for captive power generation should throw more light on the state of affairs – especially in light of industrial demand. Sadly, like many key numbers, this piece of information remains out of public reach on a regular basis.