India planned to add 78,700 mw capacity under the Eleventh Plan. Against that, only 22,000 mw was added in the first three years of the Plan. Meanwhile, the Planning Commission has reduced the capacity addition target for the plan to 62,000 mw. But there are indications that the government might fail to achieve even the revised target. This underlines the government?s poor planning for the power sector. Huge shortfalls in power capacity addition targets have become a regular feature in India because of poor planning by the government. For example, the shortfall in targeted capacity addition for the Tenth Plan was as high as 50%. The story is going to be more or less the same this time, too.
Since capacity addition is unable to keep up with growth in electricity demand, the power shortfall is worsening every year. At the same time, the Indian economy remains on its high growth trajectory. The demand growth for electricity is also projected to grow at a commensurate pace in the coming years. If capacity addition continues at the current pace, the economy might lose growth momentum. The basic problem has been lack of advance planning on the part of the government. The power sector was neglected until 2001-02.
Bhel was the only domestic supplier of power equipment. It had a manufacturing capacity of 6,000 mw a year at that time. It did not feel the need for additional capacity. In fact, the company had to lay off staff during 1999-2001 to deal with slow growth in business. But as the Indian economy shifted to a high growth
trajectory, demand for power started growing at a much faster pace than projected by policymakers. The government was caught unaware. It tried to expedite capacity addition. But Bhel was not prepared to meet the sudden explosion in demand for power equipment.
India has been meeting the bulk of its power requirement from coal. In a bid to reduce dependence on coal-fired generation, the power ministry decided to increase the share of gas-based capacity addition in the Eleventh Plan. But most of these projects could not take off due to gas supply shortage, derailing the ministry?s capacity addition target. The government had envisaged the introduction of supercritical technology in power equipment during the Eleventh Plan. It also planned placing equipment supply orders through bulk tendering. However, so much time was taken in working out the modalities that benefits will not be reaped during the current plan.
Lack of coordination among concerned ministries and agencies is another obstacle hampering the pace of capacity addition. While bottlenecks in power equipment supply have eased to some extent because of capacity expansion by Bhel, securing environmental clearance and acquiring land for power projects is getting more difficult by the day. It is not only private developers facing such problems. Even the central government is unable to resolve issues to ensure the timely allocation of ultra mega power projects (UMPPs). The central government is supposed to secure all statutory and regulatory clearances and tie up physical inputs like land and water supply before handing over UMPPs to developers.
The power ministry could not bid out even one UMPP during the past fiscal, even though it had targeted the allocation of at least three projects. Power Finance Corporation, the nodal agency for the allocation of UMPPs, has issued expressions of interest for two UMPPs, one in Chhattisgarh and another in Orissa. But captive coal mines allocated for these UMPPs have failed to secure environmental clearance. The result is that tendering is stalled. The government had planned to initiate process for allocation of the Tamil Nadu UMPP along with these two projects. But it could not do so pending environment clearance for the associated port envisaged for the project.
While the Planning Commission estimates the requirement of additional power generation capacity, it is the power ministry that is responsible for meeting this target. Coal production comes under the coal ministry but it needs clearances from the ministry of environment & forests and the support of state government for land acquisition to undertake mining.
The power ministry has envisaged 1 lakh mw capacity addition during the Twelfth Plan. To meet that target, the government would need to address bottlenecks in critical areas. While domestic power equipment supply is projected to further ease, with private players like Bharat Forge and Larsen and Toubro setting up manufacturing facilities for supercritical equipment, the government needs to address regulatory and statutory bottlenecks. The government also needs to find a credible solution to the growing resistance to acquisition of land for power projects. Otherwise, the Twelfth Plan capacity target might also prove unrealistic.
noor.mohd@expressindia.com