Private sector beats govt to add record power capacity

In the first three years of the 12th plan, private sector contributed 63% to the record total thermal power capacity addition

In the first three years of the 12th Plan period (2012-17), the country’s private sector contributed 63 per cent to the record total thermal power capacity addition of 57,719 megawatt (Mw).

This addition of 36,257 Mw by the private sector is the highest it has delivered till date in a comparable period. The contribution of central sector is 16 per cent of the achievement; states did the other 21 per cent of the total. This is a major leap over the 11th Plan capacity addition, wherein the private sector contributed 21,719 Mw. The target for the private sector to meet in the coming two financial years is 43,540 Mw.

“The growth of the power sector in India during recent years shows the value and speed private players have brought to the sector. Hence, it is imperative for the government to push the PPP (public-private partnership) model and create an environment for private players to continue with their efforts to meet the country’s target,” said Ratul Puri, chairman, Hindustan Power Projects.

The thermal capacity addition of 20,830 Mw in 2014-15 was the highest ever in the history of the Indian power sector. It was in 2011-12 that the addition achieved first outran the target for the year. A record 52 projects, most of these allocated during 2007-09, were commissioned by the private sector. The trend was repeated in FY13, when of the targeted 15,154 Mw, the total capacity set up was 20,121 Mw. The same year saw emergence of ultra mega power projects (UMPP) of 4,000 Mw by Tata Power and Reliance Power. Other major names such as Adani Power, Lanco and Jaypee also set up large projects.

“This record capacity addition is due to exuberance of the private sector in 2008-11. However, by this year’s end, a downward trend would begin. There is no new capacity coming and much of the current capacity do not have any power purchase agreements (PPAs). Even for future projects, there is no healthy pipeline of PPAs,” said A K Khurana, director general, Association of Power Producers, representative body of private generatoring companies.

The coal mine auctions and new gas supply mechanism are estimated to rescue stranded capacity of 25,000 Mw. There are still concerns over evacuation of the power, given the dearth of PPAs as state utilities are short of cash.

“The current government has struck the right chords. However, success can be felt only when the financial challenges of the sector, along with the health of distribution companies, are addressed appropriately,” said Puri.