Growing power sector needs funds worth $230 billion in 12th Plan: Power minister

Power minister Sushilkumar Shinde said while the present installed generation capacity in is more than 1,81,000MW, over 80,000MW of new power capacity is under construction. He added that during the forthcoming 12th Five Year Plan, the funding requirement of the Indian power sector has been estimated at $230 billion

Chicago: India's power minister Sushilkumar Shinde made a strong pitch for US investment in the growing power sector in India on Tuesday, asserting that lucrative opportunities were available to investors, reports PTI.

He was speaking at the US-India Economic Opportunities and Synergies Summit in Chicago organised by FICCI in association with The Executive Club of Chicago at the Fairmont Hotel here.

Mr Shinde said the average plant load factor (PLF) of Indian generation units improved to 77.5% during 2009-10 from 73.6% in 2006.

The contribution of the private sector to India's electricity output has grown from 11.6% in 2006 and further to 30% as of date and is likely to go up by about 60% in the 12th Plan (2012-2017), he said.

Mr Shinde told reporters at a press conference that during 2010-11, 15,795MW of power got synchronized and 12,161MW commissioned, which was the highest-ever capacity addition achieved in a single year since Independence.

"80,000MW is under construction as of now-such a huge amount," Mr Shinde said.

"Per capita consumption of electricity has grown from 600 kwh to 785 kwh in a span of five years," FICCI senior vice-president RV Kanoria told reporters.

However, while "infrastructure has not grown, India has grown," Mr Kanoria added.

Mr Shinde said while the present installed generation capacity in India is more than 1,81,000MW, over 80,000MW of new power capacity is under construction.

He added that during the forthcoming 12th Five Year Plan (2012-2017), the funding requirement of the Indian power sector has been estimated at $230 billion.

Stating that the 12th Plan aims at capacity addition of nearly 100,000MW, Mr Shinde emphasised that such a gigantic task can be successful only with strong support from the private sector.

Highlighting the reforms in the power sector in India, Mr Shinde said the Electricity Act, 2003, allows the sector to align itself with market dynamics and clears roadblocks in the way of greater participation by the private sector.

He said an independent regulatory framework in India now provides business confidence to power companies and a fairly lucrative rate of return on equity of 15.5% per annum.

Underlining that the share of the private sector in capacity expansion has gone up substantially in the 11th Plan, with 33% of total incremental capacity expected to come from the private sector, the minister said that in the 12th Plan, this share is expected to further increase to about 50%.

He said 100% foreign direct investment (FDI) is permitted to facilitate private investment under the automatic route for power generation, transmission and distribution projects.

Giving an outline of the power projects in India that are to be implemented under a public-private partnership model, Mr Shinde said 16 ultra-mega power projects (UMPPs) and 14 inter-state transmission schemes have been identified for development by the private sector on the basis of competitive bidding.

He said while the bidding for four ultra-mega power projects and six transmission projects has  been completed, more than five UMPPs are in the pipeline and offer unique opportunities for investment.

Each UMPP is of 4,000MW capacity and requires an estimated $4.5 billion investment.

Regarding hydro power, Mr Shinde said the estimated potential in the hydro sector in India is 1,50,000MW, out of which only 30,000MW has been harnessed.

The remaining capacity needs to be developed, which offers investors a lucrative opportunity.

He said that international majors like Mitsubishi, Toshiba, Hitachi, Alstom and Ansaldo have already started the process of partnering with Indian manufacturers to set up super critical manufacturing facilities.

On the renewable energy front, Mr Shinde said that India has launched the Jawaharlal Nehru National Solar Mission and is committed to adding 20,000MW of solar power by 2022.

He said State Electricity Regulatory Commissions (SERCs) are mandating minimum Renewable Purchase Obligations (RPOs) for Discoms and a mechanism for trading renewable energy certificates (RECs) through power exchanges has been operationalised in India.

Addressing the concerns of investors on the financial health of distribution companies, the minister said an "Accelerated Power Distribution and Reforms Programme (APDRP)" has been launched in urban areas, the main objective of which is to bring down the aggregate technical and commercial (AT&C) losses by around 15%.

He said the budget for the R-APDRP programme during 2007-2012 is about $11 billion.

With regard to energy efficiency, Mr Shinde said the Indian government has given due emphasis on this issue.

Stating that 37 energy service companies (ESCOs) have been accredited by the Bureau of Energy Efficiency (BEE), he said tremendous opportunities exist for foreign ESCOs operating either independently or in JVs for taking up energy efficiency projects.

He said it is estimated that an investment of $15 billion is required on energy efficiency initiatives in India.

Mr Shinde said that in order to improve confidence among the financial institutions, a robust energy audit system has been created.

He added that a Partial Risk Guarantee Fund and Venture Capital Fund are being created for boosting investments in the area of energy efficiency and a National Mission on Enhanced Energy Efficiency has been approved.

Mr Shinde is on a five-day visit to the US, which aims at enhancing cooperation between the two countries in the power sector.

He will also go to New York, where besides addressing the press conference organised by the counsel general of India, he will meet chief executive officers of various organisations, organised by the United States-India Business Council (USIBC).

He will also deliver the keynote closing address at the 8th Annual India Investment Forum.


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