Minister Maintains that India Will Achieve Power Capacity Addition Targets by 2012

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Researched by Industrial Info Resources (Sugar Land, Texas)--India's Minister of Power, Sushil Kumar Shinde, is optimistic that, by the end of the 11th Five-Year Plan (2007-2012), the country will achieve its revised power capacity addition target of 62,000 megawatts (MW). The targeted addition will be accomplished despite the cancellation of coal blocks and delays in power project clearances. The minister made the statement on the sidelines of the World Innovation Summit and Expo on Power.

Shinde's comment comes after ministry officials indicated that despite the scale-down, India would not achieve its power targets. This has been attributed to power equipment supply delays, land and coal block acquisition problems, and hurdles in securing environmental and other approvals. As of October 27, 2010, nearly 29,000 MW of new electricity generating capacity has been linked to the national grid. This includes about 9,586 MW that was commissioned in 2009. The remaining capacity is expected to begin operations by 2012. During the 10th Five-Year Plan (2002-2007), India's power capacity addition target was 41,110 MW, of which only 20,950 MW was commissioned.

Earlier, the Planning Commission revised the power capacity addition target for the 11th Five-Year Plan from 78,700 MW to 62,000 MW. However, the tough stand taken by the Ministry of Environment and Forests (MoEF) has become a stumbling block in achieving even this scaled-down target. Nearly 42 coal blocks have been cancelled by the ministry, which has led to delays in the commissioning of new power projects. The delay is also likely to adversely impact the Indian government's ambitious "Power for All - 2012" target. This project, which aims to provide electricity to all rural areas in the country, was dependent on a power addition target of 78,700 MW. Presently, almost 50% of India's rural population has no access to electricity.

The ministries of Coal and Power are at loggerheads with the MoEF. The ministries claim that about 43 coal-block allocations, which were earlier assigned to power developers, have been revoked by the MoEF. The locations of these mines were allegedly in "no-go areas" and threatened wildlife, flora and fauna in the region. The Power Ministry claims that several project developers had gone ahead and made infrastructural, equipment and financial investment on such projects.

Earlier, the ministry had scrapped several projects, including the 600-MW Loharinagpala project to be developed by NTPC Limited (BSE:532555) (New Delhi). Adani Power Limited (BSE:533096) (Ahmedabad, Gujarat) was denied permission to build its proposed power project, as it was located near the Tadoba-Andheri Tiger reserve in Maharashtra. Projects proposed by the Essar Group (Mumbai) and Hindustan Zinc Limited (BSE:500188) (Udaipur, Rajasthan) are also in a limbo. The ministry has also extended the study period for the coastal ultra-mega power projects (UMPP) from three months to one year. The delay in receiving permits and approvals has delayed 53 new power plants that proposed to install a combined capacity of 45,000 MW.

However, there is relief for the Power Ministry, as some units of the four 4,000-MW UMPPs under construction will begin operations by 2012. Four units of the Mundra UMPP being developed by Tata Power Limited (BSE:500400) (Mumbai), and five units of the Sasan UMPP being developed by Reliance Power Limited (BSE :532939) (Mumbai), will begin operations in November 2012. The remainder will be commissioned after 2012. In 2013-17, other UMPPs, including Krishnapatnam and Tilaiya, are scheduled to begin full operations.

In a related development, former power secretary R.V. Shahi said that speedier environmental clearances will help India to achieve its power generation targets. However, the country needs to address the causes for its huge power transmission and distribution losses. In 2009-10, India's transmission and distribution losses were about 29% of total power generation. The government has been unsuccessful in bringing down these losses to 15% over the last five years. Jharkhand, Bihar and Madhya Pradesh have recorded the highest thefts, pilferaging and transmission losses of 51%, 40% and 49%, respectively.

A recent report published by the Central Electricity Authority (New Delhi) has revealed that by 2012, India proposes to reduce its peak power demand deficit from 13.8% to 6.5%. However, delays in the development of power projects and issues raised by the MoEF regarding the allocation of coal mines may pose a stumbling block. By 2012, India's coal imports are likely to increase by 85% to 85 million tons. Experts have observed that India may not be able to achieve its infrastructure and economic development targets because of delays in power capacity addition. In 2007-17, India plans to invest $1.5 trillion to overhaul its infrastructure.

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