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Odisha second in drawing new power sector investments

According to the study titled 'state-wise analysis of power sector: Consumption, demand & investment,' by Assocham, the state has attracted new investments worth Rs 4 lakh cr

BS Reporter  |  Bhubaneswar 

With 12 per cent share of the total new investments in power sector, has emerged as the second most favoured state for investors after Gujarat, says a study by apex industry body Associated Chambers of Commerce and Industry of India (Asscoham).

According to the study titled 'state-wise analysis of power sector: Consumption, demand & investment,' by Assocham, the state has attracted new investments worth Rs 4 lakh crore. This is out of the total new investments worth over Rs 31 lakh crore attracted in the from various public and private sources between 2004-05 and 2012-13.

Share of the private sector stood at 67 per cent of the new investment worth over Rs 3,318 crore flowed into in 2012-13 while the public sector accounted for 33 per cent.

"Flow of private investments is determined by attractiveness of investment opportunities as they are mostly driven by profitability considerations," said D S Rawat, national secretary general of Assocham. Bureaucratic efficiency, infrastructure facilities and ease of land acquisition influence the flow of private investments, said Rawat, adding that tax concessions, product market conditions and exit policies are effective tools of private investment attraction. The study further pointed out that with investments worth over Rs 16 lakh crore, has the third highest share of about 33 per cent in total outstanding investments. The total outstanding investment from the is worth Rs 49.5 lakh crore by the end of 2012-13, clocking compounded annual growth rate (CAGR) of about 26.5 per cent.

"Odisha has taken a great leap forward in this behalf as the total outstanding investments in attracted by the state have increased from over Rs 1.6 lakh crore (as of 2004-05) to Rs 4 lakh crore by the end of 2012-13, thereby logging of over 33 per cent. Besides, the state share has improved drastically from just about six per cent to about 33 per cent," noted the Assocham study. About 47 per cent of investment projects in the power sector attracted by Odisha were under implementation (as on 2012-13). The state has registered improvement in implementation of power projects as over half of projects were under implementation.

However, despite attracting massive investments in the power sector, the condition of power supply in the state has worsened over the years as power deficit had increased by about 2.5 per cent during 2004-05 to 2012-13.

The deficit is mainly due to high growth in power demand compared to that of power availability. Though Odisha occupies the second slot in pulling power sector investments, only 43 per cent of households in the state have access to electricity. The state is also lagging in agriculture infrastructure development, ranking 19th in terms of power consumption growth in agriculture sector. In order to garner additional funds in the power sector, the state government should lure private sector investment through a tax incentive scheme and facilitate quicker implementation of pending projects, the study suggested. Private sector players should also be encouraged to invest in untapped regions having large potential for setting up power plants. Assocham has suggested promotion of power generation by tapping new and renewable energy sources like wind, hydro, bio-mass and solar.

First Published: Mon, September 08 2014. 20:17 IST