Electricity generation grows, but expectations remain subdued

Electricity generation grew for the second consecutive month clocking 10.5% in February, shows data from Central Electricity Authority. Growth was aided by an extra day in the month in 2020, and a low base last year, when generation fell 0.6%.

Adjusted for the extra day, growth in February will be 6.7%, which is decent compared to the 2% rise in January and 2-13% fall in September-December 2019.

The improvement coincides with the recovery in business activity after year-end holidays. Container traffic grew after four months of declines in January, shows data compiled by Antique Stock Broking Ltd.

The composite Purchasing Managers’ Index output index collated by IHS Markit for the last two months also suggests industrial activity is picking up.

With the favourable base continuing (generation in March 2019 was up just 1.2%), electricity production should remain decent in March too.

However, with the coronavirus pandemic disrupting the global economy, sustainability of the recovery remains questionable.

Specifically, the slow progress in distribution sector reforms is clouding the outlook for power generators

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