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Encourage private investments in power generation

ASSOCHAM urged the government to encourage private sector investments and aim at adding 135 gigawatt of power capacity during the 12th Five Year Plan (2012-17) as initial projections show that capacity addition through public funding could be in the range of 60 to 65 GW.

In the 11th Plan, a target of 78.7 GW was fixed but the Planning Commission estimates indicate that actual realisation may not exceed 50 GW - or 63.53% due to slippages in public sector projects. The shortfall is primarily due to poor project implementation, inadequate domestic equipment manufacturing capacity and slowdown due to lack of fuel primarily coal.

Another key issue that may aggravate the power crisis could be heavy dependence on thermal projects, said The Associated Chambers of Commerce and Industry of India in its latest Eco Pulse Study. Over 65 per cent of installed capacities are in thermal mode followed by hydro, renewable and nuclear energy.

The study said that creating 100 GW of power generation capacity will require INR 500,000 crore going by the present industry norms. So state governments must reduce power distribution losses and explore other possible sources like nuclear energy and hydro power, it said while urging the Centre to speed up environmental and land clearances for new projects.

Mr DS Rawat secretary general of Assocham said that “If states do not rectify such key infrastructural issues, they are bound to lose out on large scale investments. More than one-fourth of power produced in the country is lost in transmission and distribution.

This has got an important bearing on cost and quality of power. If properly addressed, this could become an augmenting factor for the Indian industry and add to its competitiveness.”

He said that “The government should give incentives not only to encourage investments from private sector but also for improving operational efficiencies and exploring alternative energy sources. A realistic roadmap for capacity creation in power generation, transmission and distribution is required immediately.”

Annual losses in power sector total up to INR 70,000 crore due to faulty distribution utilities.

Mr Rawat said that availability of regular power supply has become a key determining factor for investment flows into various states. Some re-thinking needs to be done on the tariff front as well so that private and government-owned utilities can at least recover their running costs. Power companies should also be encourage to improve their operational efficiencies through innovative means.

The ASSOCHAM study said the recent shortfall in coal supplies to power stations has severely crippled industrial activity in the country. Almost half of 89 power stations have supplies of less than seven days and one-third of them have supplies of less than four days.

India faces a coal shortage of 142 million tonnes with the demand rising from 554 million tonnes to about 696 million tonnes in the current financial year. The gap has to be met by imports.

On the other hand, electricity demand is projected to increase at a compound annual growth rate of 7.5 per cent during the 12th Plan. A long-term estimation for future energy requirement is critical for a nation as capacities cannot be created overnight.

The study said that therefore, planning needs to be done so that provisioning of adequate investments, efficiency improvements, raw materials and clearances can be taken care of.

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