As electricity demand surged due to scorching summer heat, India witnessed a substantial rise in imports of liquefied natural gas (LNG) during the first four months of the ongoing fiscal year as thermal power plants increased generation by making greater use of the cleaner burning fuel.
According to latest figures from the oil ministry, LNG imports between April and July jumped by over 13% from a year ago while overall natural gas consumption was more than 8% higher. Domestic gas output also increased, albeit at a slower 4.6% pace, resulting in India's reliance on imported fuel rising to near 49% from less than 47% previously.
Power utilities led the growth in demand as electricity generation from existing gas-based capacities, which account for 5.6% of total installed capacity, more than doubled during the peak summer quarter ended June compared to last year. Higher output was sustained through July as well to meet excessive cooling needs amid scorching weather across large parts of the country.
The jump in LNG imports, primarily through spot purchases taking advantage of relatively low international prices, allowed domestic supplies to be diverted towards more priority sectors of city gas and fertilizers while still fulfilling the expanding requirement of the electricity sector. This helped raise the plant load factor or capacity utilization of gas thermal plants to over 25% in the June quarter from just about 15% a year back.
With monsoon rains arriving and temperatures subsiding in most regions by mid-July, power demand is believed to have moderated from extraordinary levels witnessed during the intense summer months. However, gas consumption is still expected to remain firm through the ongoing fiscal supported by the government's various initiatives to boost the role of the cleaner fuel in India's overall energy mix.
