Home diesel delivery startup Humsafar is having a great year. For this fiscal year alone, it plans to grow its home diesel delivery business from 100 to more than 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 liter steel jerry cans of diesel. In 2022-23, he hopes to capture around 30% market share in this growing business.
He may have some tough competition on his hand. According to industry estimates, there are around 1,000 (no less!) start-ups already operating in this space, not to mention the large number of unlicensed and unorganized players who bridge the gap between consumers and India, strictly regulated and slow growing. organized fuel retail trade.
All of the public sector oil majors have launched their own version of door-to-door delivery or partnered with startups to do so. Humsafar has an agreement with Indian Oil. Refiner MRPL has partnered with PEP Fuels, a start-up promoted by major exploration and production group ONGC, for home delivery. BPCL had more than 1,500 mobile “Fuelkarts” last year and plans to significantly increase capacity. Reliance BP Mobility Solutions, a joint venture between India’s largest refiner Reliance Industries and global energy giant BP, has also entered the business.
The government, whose FuelEnt policy aimed to allow companies to deliver diesel to homes, says the explosive growth is proof of the success of its policy and the way it is tackling structural gaps in the fuel distribution market. fuel thanks to innovative solutions.
Maybe so, but what the growth of diesel home delivery shows is the huge gap between demand and availability of reliable power supply in India.
The keyword here is reliable. At first glance, despite the persistent shortage of coal in thermal power plants, India is not doing too badly overall. According to the Central Electricity Authority, in April 2022, the gap between demand and supply was about 2.6 billion units, or 1.9% of overall demand that month, the North region being the worst off, its gap being 3.7%. In fact, for 2021-22, the gap between supply and demand had narrowed to just 0.4%.
But then the aggregates tend to hide more than they reveal. The main issue for consumers – in particular industries and businesses – is the degree of assurance that electricity will be available on demand, as well as a high degree of reliability in terms of quality, in terms of voltage and frequency. constant amperage.
This is where the distribution side of India’s power sector fails miserably. And, as a result, the private generator business is booming in India. According to PSI research, the Indian diesel generator set market is expected to grow from around USD 143.6 million in 2021 at a CAGR of 10.6% between 2021 and 2030. “Market growth is expected to be driven by strong demand for medium and high horsepower diesel generator sets from the commercial sector and by notable growth in the construction and manufacturing sectors,” the report noted.
Ask the Indian telecommunications industry. It has become India’s second largest consumer of diesel after Indian Railways, relying almost entirely on diesel generators to keep telecommunications towers running.
Estimates of the actual installed capacity of private generators are difficult to obtain. The 2016-17 economic study estimated the total installed capacity of diesel generators at 70 gigawatts. An internal assessment by private power producer Tata Power put the capacity at 90 gigawatts in 2018, with growth of more than 5,000 MW per year.
Add to that the smaller capacity generators that run mostly on diesel – the type you find a roadside vendor or small shop using – and it adds a lot of generating capacity in private hands. This is the market for home diesel delivery supplies, as apart from their static units they must operate within the cap of 200 liters per customer per sale, eliminating people wanting refuel their SUV but too lazy to drive down to the nearest gas station.
With diesel almost ₹100 a liter in most parts of the country, the fact that these diesel-to-home delivery startups can’t feed their customers in factories, malls, hospitals and housing corporations fast enough – or grow fast enough quickly, as in the case of Humsafar – offers a telling picture of the real failure behind this apparent boom – the inability of discoms to provide adequate or reliable power. As long as generator manufacturers and home diesel suppliers prosper, any talk of India becoming an electricity surplus nation is a statistical mirage.