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Home / Industry / Energy /  Plans for doorstep diesel delivery signal the severity of India's power crisis

Doorstep diesel delivery startup Humsafar is having a great year. This fiscal alone, it plans to ramp up its doorstep diesel delivery business from 100 to over 200 cities. The startup operates a fleet of mobile fuel pumps mounted on light trucks, as well as a number of static diesel storage units. It retails 20-litre steel jerrycans of diesel. In 2022-23, it hopes to capture around 30% market share in this rapidly growing business.

It may have tough competition on its hand. According to industry estimates, there are approximately 1,000 (no less!) start-ups already operating in this space, quite apart from the large number of unlicensed and unorganized players that plug the gap between consumers and India’s rigidly rule-bound and slow-growing organized fuel retail business.

All the public sector oil majors have either started their own version of doorstep delivery or have tied up with startups to do so. Humsafar has a deal with Indian Oil. Refiner MRPL has tied up with PEP Fuels, a startup promoted by exploration and production major ONGC, for doorstep delivery. BPCL had over 1,500 mobile ‘Fuelkarts’ as of last year, and is planning to ramp up capacity in a big way. Reliance BP Mobility Solutions, a joint venture between India’s largest refiner Reliance Industries and global energy giant BP, has also entered this business.

The government, whose FuelEnt policy aimed at enabling enterprises in doorstep delivery of diesel, is claiming this explosive growth is proof of the success of its policy and proof of how it is addressing structural deficiencies in the fuel distribution market through innovative solutions.

Maybe so, but what the growth of the doorstep delivery of diesel services actually shows is the humongous gap between demand and availability of reliable power supply in India.

The keyword here is reliable. On the face of it, despite the ongoing coal shortage at thermal plants, India isn’t doing too badly at the aggregate level. According to the Central Electricity Authority, in April 2022, the demand-supply gap was about 2.6 billion units, or 1.9% of overall demand that month, with the Northern region faring the worst, its gap at 3.7%. In fact, for 2021-22, the demand-supply gap had been brought down to just 0.4%.

But then aggregates tend to hide more than they reveal. The key issue for consumers – particularly industries and businesses – is the degree of assurance that power will be available on demand, as well as a high degree of dependability when it comes to quality, in terms of steady voltage and amperage.

This is where the Indian power sector’s distribution side is failing miserably. And, as a consequence, the private generator set business is booming in India. According to PSI research, India’s diesel genset market is set to grow from an estimated $143.6 million in 2021 at a CAGR of 10.6% during 2021–2030. “The market growth is expected to be driven by the high-volume demand for medium- and high-power diesel gensets from the commercial sector and notable growth in the construction and manufacturing industries," the report notes.

Ask the Indian telecom industry. It has become India’s second largest consumer of diesel after the Indian Railways, depending almost entirely on diesel gensets to keep telecom towers up and running.

Estimates of the actual installed capacity of private gensets are hard to come by. The 2016-17 Economic Survey estimated the total installed capacity of diesel gensets at 70 Gigawatts. An internal assessment by private power producer Tata Power put the capacity at 90 Gigawatts in 2018, growing at over 5,000 MW per year.

Add to that the smaller capacity gensets which run predominantly on diesel – the kind you find a roadside vendor or a small shop using – and that adds up to a lot of generating capacity in private hands. It is this market that the doorstep diesel delivery supplies are catering to, since, other than at their static units, they have to operate within the 200 litre per customer per sale cap, which eliminates people wanting to top up their SUVs but too lazy to drive down to the nearest petrol pump.

With diesel almost 100 per litre in most parts of the country, the fact that these doorstep diesel delivery startups can’t feed their customers in factories, malls, hospitals and housing societies fast enough – or expand fast enough, as in the case of Humsafar – offers a telling picture of the real failure behind this apparent boom – the discoms’ inability to supply either adequate or reliable power. As long as genset makers and doorstep diesel suppliers are thriving, all talk of India becoming a power surplus nation is a mere statistical mirage.

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