India Hits 181,000-Megawatt Capacity, but Problems Still Hinder Targeted Additions

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--India will miss the 62,000-megawatt (MW) target for additional power generation capacity installed during the 11th Plan period, which covers 2007-12, by a significant margin. However, the sector almost doubled the amount of capacity that was added during the 10th Plan period, which covered 2002-07.

Sushilkumar Shinde, the Minister of Power, told the parliamentary consultative committee that installed capacity increased from 132,000 MW in March 2007 to more than 181,000 MW in July 2011, a 37% growth. The private sector is estimated to have contributed nearly 36% of the additional capacity, and is forecast to contribute 50% to the 12th Five-Year Plan, which covers 2012-17. When the current plan period ends, the private sector will have added almost 19,000 MW to the system.

The minister noted that domestic capacity for power plants and manufacturing equipment was increasing and was complementary to the capacity addition targets.

BHEL, a major state-controlled power manufacturing company, was raising its annual power equipment manufacturing capacity from 10,000 MW in December 2007 to 20,000 MW in 2012. A number of new joint venture companies had been formed to manufacture supercritical boilers and turbine generator sets for thermal power plants, the minister said.

The minister and his government colleagues are well aware of the problems that continue to cause slippage and missed targets for installed power addition. The missed 62,000-MW target for the 11th Plan already had been revised down from the original 79,000 MW when it appeared to be unattainable. The target set for the coming 12th Plan period is an additional 100,000 MW in the five-year period.

The funding of power projects is becoming an increasingly difficult area to manage. One problem is the uncertainty surrounding the progress of projects from planning to construction, and even during construction. Investors demand a degree of certainty in a construction schedule and wish to see returns starting from power output when a plant is commissioned on time.

Coal linkages and allocations by federal and state governments are another zone of uncertainty and are coupled with coal transportation problems. Coal supply shortages and breakdowns result in a number of power stations running under capacity at any given time and cause delays in commitment to new projects. India generates 80% of its power from thermal, coal-fed power stations.

Tussles between the power and environment ministries, including problems concerning forest clearance and the social impact of power projects on local populations, have held up progress on some major power projects. Some of these disputes have been defused, but others are still hindering development and confusing the outlook.

Having looked at some of the problems facing the sector, it can be said that the power industry is vigorous and the supply of quality engineers from the education system is impressive. The targeted addition of 20,000 MW a year for the next five years sounds possible, but has to be qualified by the experience of major slippage on targets during the last two plans.

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