Fuel Cost for Power Generation Down 18% but Consumers Pay All-Time High Tariff

While consumers are paying an all-time high power tariff per unit on their electricity bills, the cost of fuel for power generation has decreased by 18 percent year-on-year (YoY) to an average of Rs. 8.3/unit in August 2023.

Power generation in the country went down by 9 percent YoY to 30,800 gigawatts per hour (GWh) in 2MFY24, while it was up 14 percent YoY in August compared to the same period last year.

Hydel generation was recorded at an all-time high in August, while the fuel cost for coal decreased by 46 percent YoY compared to SPLY, according to data by Topline Securities.

Major contributors during August 2023 were Hydel (37.6 percent), RLNG (17.2 percent), Coal (14.8 percent), and Nuclear (12.8 percent).

Hydel power generation is up by 12 percent YoY from 5,354 GWh in August 2022 to 6,006 GWh in August 2023. On a month-on-month (MoM) basis, hydel generation is up 9 percent. For the period July-August FY24, it is up 12 percent YoY.

RLNG-based power generation increased by 56 percent YoY to 2,741 GWh in August 2023 from 1,756 GWh last year but is down by 6 percent MoM compared to 2,918 GWh in July 2023.

Coal-based power generation increased by 9 percent YoY to 2,357 GWh in August 2023 from 2,163 GWh last year. On an MoM basis, coal-based power output shows an increase of 8 percent in August from 2,180 GWh in July.

Nuclear power generation increased by 9 percent YoY to 2,040 GWh in August, up from 1,874 GWh last year, while monthly nuclear power generation shows a decrease of 3 percent from 2,107 GWh observed the previous month.

As of August, solar-based generation is up 14 percent YoY from 73 GWh last year to 84 GWh in August 2023. During 2MFY24, it surged by 10 percent YoY to 159 GWh from 144 GWh in 2MFY23.

Fuel Cost

During August 2023, fuel cost for power generation decreased by 18 percent YoY and 1 percent MoM, to an average of Rs. 8.3/unit, compared to an average cost of Rs. 10.1 in August 2022 and Rs. 8.3/unit in July 2023, respectively. For 2MFY24, fuel costs are down 20 percent YoY with an average cost of Rs. 8.3/unit, compared to Rs. 10.4/unit in 2MFY23.

Furnace Oil was the priciest fuel with a fuel cost of Rs. 33.3 per unit during the period in review.

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