Peak deficit keeps power sector in dark; US nuke deal brings some hope

Written by Sanjay Jog | Mumbai | Updated: Dec 29 2008, 05:56am hrs
Rising mismatch between the demand and supply, closure or below capacity functioning of coal-based power plants in particular due to coal shortage, constraints in the procurement of gas, failure of the revival of 2,150 mw Dabhol power project by December, delays in the start of construction work due land acquisition issues and above all dismal performance in the renewable sector marked the Indian power sectors performance in 2008.

However, the clearance of the India-US civil nuclear deal was a major relief for the country to promote nuclear capacity addition and increase it to 20,000 mw by 2020 from the present 4,153 mw. Besides, the commissioning of two power exchanges Indian Energy Exchange (June 28) and Power Exchange India (October 22) created additional forum for power starved states to procure power in the day ahead trading.

The Central Electricity Regulatory Commission (CERC) gave some landmark judgements including the postponement of its move to introduce price cap of Rs 5 per unit and Rs 6 per unit (during 6pm and 10 pm) for inter state short term trade in order to curb profiteering. Further, CERC slapped penalty for failure of northern states to maintain grid discipline.

The poor capacity addition coupled with drying water reservoirs resulted in increase in peak power deficit to 14.3% in November, compared with 12.9% in the same month a year ago. This rise in the deficit has come despite a fall of around 470 mw in demand for electricity during the month compared with November 2007. Besides, the energy deficit also surged to 8%. The Central Electricity Authority (CEA) data further reveal that the total power generated from hydro resources in the country in November stood at 7,788 mw, which fell by around 511 mw against its target due to low reservoir levels. In the same period last year, the countrys hydro power plants generated 950 mw more than their target of 7,647 mw for the month. Hydro power generation this time has been low as the monsoon has been weak. The reservoirs are empty because of low rainfall

Between January and November this year projects aggregating to 4611.8 mw are commissioned. This comprises of 2869.8 mw of thermal capacity, 1967 mw of hydro capacity. Ongoing inadequate coal supply has been a major worry of coal based projects as 46 of the 77 such projects monitored by CEA have coal stock of less than seven days and around 36 stations having less than four days of coal stock. There is a gap of 36.31 million tonne between requirement and indigenous availability as has been envisaged at the planning stage for the current fiscal.

Moreover, the gas supply is grossly inadequate and spot purchase supply are very expensive. The power ministry and CEA have admitted that additional gas-based capacity of 12,980 mw can be taken up if gas is available and thus they have made a strong case for ensuring gas supply on first priority to entire existing and under construction capacity. Against this backdrop, the ongoing Dabhol power project saga continues as the Ratnagiri Gas & Power Pvt Ltd has missed its deadline of the completion of total revival of the project in December and it has been rescheduled to April next year due to delays in the restoration of damaged turbines, dispute among stakeholders over the sharing of increased cost.

On the implementation of much debated ultra mega power projects is concerned (UMPP), the Power Finance Corporation has deferred the dates of submission of request for proposal for the Jharkhand while the projects identified in Maharashtra, Karnataka, Tamil Nadu and Orissa have yet to taken to the bidding stage.

Similarly, the comisioning of the transmission lines through a joint venture has been a non-starter due to the non-settlement of regulatory and legal issues. Besides, the governments move to launch in all 14 ultra mega transmission projects is being pursued on a snails pace.