| Topic : Project Refromation |
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Source : http://www.rediff.com
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last activity : 01 23 2012 14:52:29 +0000
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IN RECENT times, Maharashtra has been experiencing a severe power crisis. For many decades, it had a reputation for reliable supply and recorded good progress both in industry and agriculture. But because of little or no addition to generation capacity for almost a decade, many parts of Maharashtra are now subject to power cuts for six-ten hours a day.
During the 1990s, there was a flurry of seminars and symposia by the Independent Power Producers Association (IPPA) to educate government functionaries about how the structure of the power supply industry should be changed to make it IPP-friendly. Notwithstanding the time and energy invested by civil servants and politicians, the growth in private sector generation over the past decade-and-a-half has been very modest and indeed dismal. The star of the private sector, Enron project, which has occupied media space extensively over the past decade, has been a real disaster for the country. Many power professionals warned the country of the glaring infirmities in the project. Yet politicians and civil servants with little or no professional expertise sold the project to the country. Hopefully the asset already created will be put to use, but the Indian financial institutions, publicly held, and hence the public will have to take a big beating in the process. India's power sector today ails not just from inadequate addition to generation capacity. An equally disturbing development is the ad hoc manner in which the Union power ministry has been planning to tackle this problem. Against a scaled down target of adding 34,000 MW of power generation capacity during the Tenth Plan (that will come to an end in less than nine months from now), the actual net addition to the existing capacity will be around 15,000 MW.
So, what is the power ministry doing about this? Well, you could look forward to a few innovative attempts within the ministry to dress up the numbers to present a better picture than what the woefully low addition of new capacity in the last five years would otherwise suggest. The idea doing the rounds is to add all the new power generation capacity created in the renewable energy sector to the capacity created through conventional sources of power generation like thermal, hydel and nuclear. So far, the government's Plan programme has no provision for targeting capacity addition in the renewable energy sector. Thus, the targets are to be achieved from thermal, hydroelectrical and nuclear power sectors. So, if the contribution of the renewable energy sector is included in the overall performance in the Tenth Plan, the final figure would look a little less embarrassing. But the hard reality and its consequences for economic growth cannot be escaped.
Not that the power ministry did not plan anything at all to make good the shortfall that it feared from the third year of the current Plan period. It focussed on setting up mega thermal power projects. With a fully functional national grid yet to be commissioned and no viable payment mechanism in place, potential investors in the ultra mega power projects are now a little wary.
True, several foreign investors, including those from the US and China, have shown interest in setting up these projects either on their own or in partnership with Indian companies. But unless the question of guaranteed offtake and a credible payment mechanism is settled, the target for adding fresh capacity in the Eleventh Plan through these ultra mega power projects may also turn elusive.
The elasticity of power consumption with respect to GDP is 1.2; rapid growth necessitates greater power consumption. To maintain political largesse in power distribution, India is foregoing $12.5 billion in economic output annually.
Isn't this loss painful enough to build a national consensus on this issue? If not, the power problem will get worse before we are forced to turn to the straightforward solution, the only solution to rid us of our energy impasse -- the elimination of power theft and dacoity!
During the 1990s, there was a flurry of seminars and symposia by the Independent Power Producers Association (IPPA) to educate government functionaries about how the structure of the power supply industry should be changed to make it IPP-friendly. Notwithstanding the time and energy invested by civil servants and politicians, the growth in private sector generation over the past decade-and-a-half has been very modest and indeed dismal. The star of the private sector, Enron project, which has occupied media space extensively over the past decade, has been a real disaster for the country. Many power professionals warned the country of the glaring infirmities in the project. Yet politicians and civil servants with little or no professional expertise sold the project to the country. Hopefully the asset already created will be put to use, but the Indian financial institutions, publicly held, and hence the public will have to take a big beating in the process. India's power sector today ails not just from inadequate addition to generation capacity. An equally disturbing development is the ad hoc manner in which the Union power ministry has been planning to tackle this problem. Against a scaled down target of adding 34,000 MW of power generation capacity during the Tenth Plan (that will come to an end in less than nine months from now), the actual net addition to the existing capacity will be around 15,000 MW.
So, what is the power ministry doing about this? Well, you could look forward to a few innovative attempts within the ministry to dress up the numbers to present a better picture than what the woefully low addition of new capacity in the last five years would otherwise suggest. The idea doing the rounds is to add all the new power generation capacity created in the renewable energy sector to the capacity created through conventional sources of power generation like thermal, hydel and nuclear. So far, the government's Plan programme has no provision for targeting capacity addition in the renewable energy sector. Thus, the targets are to be achieved from thermal, hydroelectrical and nuclear power sectors. So, if the contribution of the renewable energy sector is included in the overall performance in the Tenth Plan, the final figure would look a little less embarrassing. But the hard reality and its consequences for economic growth cannot be escaped.
Not that the power ministry did not plan anything at all to make good the shortfall that it feared from the third year of the current Plan period. It focussed on setting up mega thermal power projects. With a fully functional national grid yet to be commissioned and no viable payment mechanism in place, potential investors in the ultra mega power projects are now a little wary.
True, several foreign investors, including those from the US and China, have shown interest in setting up these projects either on their own or in partnership with Indian companies. But unless the question of guaranteed offtake and a credible payment mechanism is settled, the target for adding fresh capacity in the Eleventh Plan through these ultra mega power projects may also turn elusive.
The elasticity of power consumption with respect to GDP is 1.2; rapid growth necessitates greater power consumption. To maintain political largesse in power distribution, India is foregoing $12.5 billion in economic output annually.
Isn't this loss painful enough to build a national consensus on this issue? If not, the power problem will get worse before we are forced to turn to the straightforward solution, the only solution to rid us of our energy impasse -- the elimination of power theft and dacoity!
This problem is not unique to Maharastra alone. It is same in almost all Indian States. The common people, Industry and in total the country economy are suffering because of power shortage. The solution is not one dimensional i.e. not addition of new generation capacity alone, to me the most important is free the electricity board from all burden and free them make them responsible and answerable. But is it only dream!!!
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Ravindra Sharma, Managing Consultant, CHEF-India
| 01 23 2012 14:52:29 +0000
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| 03 24 2009 08:27:55 +0000
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