Indian power sector seeing low capacity utilisation: Assocham

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New Delhi, Aug 29: The Indian power sector suffers from low capacity utilisation and the plant load factor (PLF) for power plants is estimated to remain low at around 62 per cent until 2018-19, industry chamber Assocham said on Tuesday, citing its report.

“India’s energy sector is facing low capacity utilisation in power generation as plant load factor (PLF) is estimated to remain low at around 62 per cent until 2018-19,” Assocham said citing its joint study with ratings agency Crisil titled “Insolvency and Bankruptcy Code: Protecting stakeholders, improving ease of doing business”.

“However, operational performance of discoms remains a concern, besides intensive rural electrification in Uttar Pradesh, Bihar and north-eastern states also remained low.”

The study noted that while a number of reforms have been announced by the Centre, the execution of most remains a work-in-progress.

Assocham said that while reforms under health, education and technological readiness are in the initial stage of implementation, those concerning macro-economic environment, infrastructure and financial market development are in the middle stage. Reforms under goods market efficiency and institutions are in the advanced stage.

On the macroeconomic front, the study said weak investments challenge sustainable growth and private investments are unlikely to pick up before 2019 owing to low capacity utilisation and weak balance sheets.

It noted that concrete reform measures are still pending in the labour market.

“Little progress has been seen in easing labour laws and absence of a uniform simplified labour law continues to deter investments in labour-intensive industries,” the study said.

It also said that large-scale employment generation is difficult in an environment of slow growth.