1. Government eyes Rs 3-trn investment, reforms to light up power sector

Government eyes Rs 3-trn investment, reforms to light up power sector

With an ambitious target to give 24X7 electricity to all, the government is eyeing Rs 3 lakh crore worth investments...

By: | New Delhi | Published: December 28, 2014 3:20 PM
Grid manager has red-flagged at least half-a-dozen hotspots in the nation’s grid infrastructure that continue to be vulnerable to high voltage tower collapses. (Reuters)

Government has already laid out an ambitious target to provide 24X7 power supply to all households in the country by March 2019 . (Reuters)

With an ambitious target to give 24X7 electricity to all, the government is eyeing Rs 3 lakh crore worth investments in power transmission and distribution business, as it gears up to free the sector from a gridlock of fuel scarcity, regulatory clogs and other issues.

Leading from the front, Power Minister Piyush Goyal is confident that the results would start showing in the new year and a right foundation has been laid to ‘power up’ the power sector since a new government took over in May this year.

The ray of hope for 2015 follows a year mostly marked with the drying up of investments, fuel supply bottlenecks and the gnawing transmission problems.

“We are planning investments of Rs 3 lakh crore in the T&D sector and have already started the Deen Dayal Grameen Jyoti Yojana and Integrated Power Development Scheme, with all this I think we will be able to reach the length and breadth of the country and enhance the T&D network and make sure everybody gets adequate power,” Goyal told PTI.

The investment banker-turned-politician has already laid out an ambitious target of the new government to provide 24X7 power supply to all households in the country by March 2019 — a deadline that is little over four years away now.

“We believe our steps to increase coal production are on the right track, our targets are quite doable, whether it is renewable energy, coal production or 24×7 power, we are very confident of our targets,” Goyal said.

The mass cancellation of coal mines was a big ‘shock’ for power sector in 2014, but the sector is hopeful that this thorny issue of fuel supply has been put to rest with the launch of a transparent auction process for coal mines.

“2014 was a turbulent year for the power sector players with Supreme Court cancelling captive coal blocks, inadequate fuel supply to power plants, no long term power procurement bids on offer, plummeting short term power rates and inadequate tariff hikes because of elections,” Debasish Mishra, Senior Director, Consulting, Deloitte India said.

However, Goyal differed with this observation and said that the electricity generation has grown in double-digits and coal production has also shown an upswing since he assumed office about six months ago.

“We hope to close the year on a double digit on the coal production side also,” Goyal said adding, the government has been been able to bring about confidence in the sector and we are seeing investment coming back to the sector.

Earlier, the minister had said that the government expects around USD 250 billion (Rs 15 lakh crore) investments for the entire power sector in the next 4-5 years, out of which USD 100 billion could be in the renewable energy.

The anticipated investments totalling Rs three lakh crore (about USD 50 billion) would be part of this overall target.

The once-neglected power transmission segment now enjoys a special position under new government’s scheme of things.

The thrust is on modernising transmission and distribution infrastructure as doing this will go a long way in achieving the target of supplying round-the-clock power to every household in the country.

Distribution, which is often described as the ‘Achilles heel’ of the power sector, has received a new lease of life with the government announcing that it would make necessary amendments in the existing Electricity Act.

The proposed amendments include stricter penalties for power defaulters and the giving the end consumer a choice to choose its power distribution company, thereby encouraging competition in the sector.

Critics argue that some of the proposed initiatives of the new government amounts to ‘repackaging’ of Goyal’s predecessor Jyotiraditya Scindia’s emphasis on power distribution and Electricity (Amendment) Act in his little more than one-year long tenure at the end of UPA government. However, Goyal has a clear advantage of time by his side.

The industry experts believe that the year 2015 can be a ‘make-or-break’ period for the sector, especially in the view of landmark reforms announced for the coal sector.

Mishra said that the industry was “hoping that in 2015 there will be a turn around on all these issues, else there will be another crisis staring at the sector.

With coal-based thermal power generation being the epicentre of the sector, the non-conventional electricity production has not yet got its rightful place.

Prime Minister Narendra Modi-led BJP government has pledged to change that as it taken a giant leap in the clean energy space by announcing a whopping 1,00,000 MW of solar power production in the next five years.

Currently, solar energy contributes a measly 2,800 MW to the overall 2,55,000 MW installed power generation capacity.

With the government preparing the Renewable Energy Bill to facilitate speedy growth of clean power generation in the country, the renewable energy industry including wind power has received a renewed thrust under the current regime.

The Centre has also agreed to leave no stone unturned in giving required support to wind energy industry to achieve the target of 10,000 MW of wind power installations per year.

As the government pumps in new lease of life into the solar and wind energy sectors, another clean source of power generation — gas remains in limbo.

While the targets remain ambitious, a lot would depend on investments that Goyal — the former BJP treasurer and now Minister for Power, Coal and Renewable Energy — manages to attract and the reforms that he is able to steer through.

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