Slump in demand and lower capacity utilisation behind the dip, say experts Tamil Nadu, which houses the maximum number of factories in the country with 37,378 units, is witnessing a churn in its power consumption basket. According to data from Power Finance Corporation (PFC), the share of power consumption by industries in Tamil Nadu had come down to 24.82 per cent in 2013-14 from 37.33 per cent in 2011-12. An economic appraisal of Tamil Nadu carried out by the Department of Evaluation and Applied Research covering the period between 2010 and 2014 corroborates this trend: According to the study, the share of industrial sector in power consumption came down to 31.4 per cent in 2012-13 from 38 per cent in 2010-11. Experts say that the slowdown in growth and use of captive power by industries are the key the reasons behind this decline. Sabyasachi Majumdar, senior vice president of ICRA Ltd, said that overall industrial (HT and LT) consumption in all India energy demand has steadily come down to 29 per cent in FY2014 from 32 per cent in FY 2012 with volumes remaining stagnant or growing marginally. “This is partly because of a slowdown in industrial demand and subdued operating metrics/modest capacity utilisation in several key industries; muted industrial capex also played a role,” he said. Majumdar also pointed out that many industries have moved towards captive power consumption using DG sets, small thermal power plants (captive as well as group captive) or renewable energy sources (both captive and group captive). This shift by HT consumers could have played a major role especially in states where industrial tariffs are high and grid outages are a frequent phenomena, he added. Rise in tariff Tamil Nadu had increased its industrial power tariff by 30 per cent and had also imposed restrictions on power use by industries in 2014. “The State raised its industry tariff. So obviously, industry’s demand would have declined to some extent,” K.R. Shanmugam, a former director of the Madras School of Economics who is currently with the Institute of Financial Management and Research said. He also said that the Gross State Domestic Product (real) growth of industries in Tamil Nadu had been relatively low compared with the services sector after financial year 2011. Mr. Shanmugam also said some of the services earlier offered by industries, like packaging, had been brought under services sector. “This means some of industrial outputs are now accounted under services. So the share of services increases and its growth is also significantly higher than industry’s; some small and medium enterprises are also classified as services SMEs.” A senior official at the Tamil Nadu Generation and Distribution Company (TANGEDCO) pointed out that there were unofficial power cuts of almost 40 per cent during the day which continued till 2012. Then there was a 90 per cent power cut. But the situation started stabilising from there on. “Post June 2015, on an average, the general consumption level has been 280-300 MW per day,” he said. The official said from 2011-16, there were 899 new HT industrial connections which consumed 7,89,360 KVA (kilovolt ampere).

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