Fuel supply constraints hit power generation during 2013

A sharp drop in gas production from RIL's eastern offshore KG-D6 fields saw a dozen power plants shutting operations

Power plants from Andhra Pradesh to Maharashtra idled as gas supplies dried up and coal linkages impeded quick ramp up of electricity generation even as undeterred corporate bigwigs from Ambanis to Tatas showed willingness to commit big money into the sector during the year.

A sharp drop in gas production from Reliance Industries' eastern offshore KG-D6 fields saw a dozen power plants with nearly 3,000 MW of generation capacity shutting operations and a similar number not being able to be commissioned.

There were also problems in getting coal, which fires nearly three-fourth of India's power plant, due to dispute over terms of a new supply agreement with Coal India Ltd.

But these issues did not deter Anil Ambani Group, Tatas, Adanis and Jindals to fiercely fight for a pie of the Ultra Mega Power Projects (UMPPs) in the year 2013.

The year began with six power plants of GMR, Lanco and GVK in Andhra Pradesh shutting down due to stoppage of KG-D6 supplies and was followed by a showdown between electricity generation firms and Coal India Ltd over signing of fuel supply agreements.

While state-owned NTPC was embroiled in a spat with the coal major over the quality of dry fuel, other companies showed unhappiness over the quantity of fuel supplied to them.

It took an intervention of the Prime Minister's Office (PMO) and the Cabinet Committee on Investments (CCI) to break the logjam over the contentious issue. The result was visible in December with as many as 157 FSAs having been signed out of 173.

Then came the proposals from Ambanis, Adanis, Tatas and Jindals for setting up the UMPPs in 2013.

UMPP or ultra mega power project are Power Ministry's ambitious projects entailing Rs 25,000 crore investment each. As many as nine companies showed interest in executing the 4,000 MW UMPP at Odisha and eight firms for setting one such project in Tamil Nadu.

"After a gap of few years the government has launched two UMPPs. For the first time these bids will be carried out with new bidding guidelines and surprisingly there is fairly good amount of interest among both public and private utilities to participate in these bids," Debasish Mishra, Senior Director at Deloitte said.

Some relief on dwindling gas supplies came in the form of assurance from the Empowered Group of Ministers', headed by Defence Minister A K Anthony, in August. The panel suggested that any additional gas extracted from RIL's KG basin, in the next three years, will be made available to the power sector.

While, it was welcomed by the gas-starved power plants the results will be seen only in the next fiscal.