Lucknow: The Uttar Pradesh (UP) government has taken massive strides towards fulfilling its promise of becoming a power surplus state by 2017, signing memorandum of understandings (MOUs) with several major companies this year for establishing new plants with a cumulative generation capacity of 9,750 megawatts (MW), reports PTI.
Faced with a power crisis year-after-year in the peak summer season, the state government this year secured promises from companies like Reliance Power, JP Power, Bajaj Hindustan, Lanco, Creative Thermolite, Unitech Machines, Parekh Aluminics, Torrent Power, Dalmia Group, Ashok Leyland, GVK, GMR Welspun and the Aditya Birla Group to set up new projects in the state.
"A plan has been worked out by the state to enhance power generation capacity by ensuring rigorous implementation of power sector reforms and bringing in efficiencies of the private sector to meet full demand by 2014," state power secretary Navneet Sehgal said.
"MoUs have been signed this year with Bajaj Hindustan for setting up power plants in Lalitpur and Chitrakoot for projects generating 1,980MW of power each," he said, adding that another MOU for a 450MW power plant was signed with sugar mills owned by the group.
The government has also signed a MoU with Lanco-Infotech for two 1320MW plants at Bhognipur, in Kanpur Dehat district, and with Parekh Aluminics for a project in Fatehgarh with a capacity of 250MW, he said.
Mr Sehgal further said that Unitech Machines will set up a plant with a capacity of 250MW in Auraiya, while Neyveli Lignite will establish a 2,000MW power plant in Ghatampur.
The power scenario has already started looking up, with two plants of 600MW capacity each commencing operations at Roza and Shahjahanpur, official sources said.
However, the collapse of a 115-metre high chimney at the Parichcha power plant on 20th May has delayed 500MW of power capacity coming onstream, sources said.
According to sources, the installed generation capacity of the state as of today is 4,082MW, excluding around 526MW of hydel power.
However, the state is only able to produce 3,000MW of power on a daily basis. It also gets around 4,000MW from the central pool, sources said. However, given that daily demand in the state amounts to 10,000MW, this translates into an average daily shortfall of 3000MW.
The scarcity of power is a major political and election issue in Uttar Pradesh, as no new power plant has been set up in the past 20 years, even though demand has increased manifold during the period.
Government delays decision to allow more cotton exports as cotton traders wait eagerly to take advantage of higher global prices
The uncertainty over increasing cotton exports and the delay in issuing licences for export may result in excess domestic supply of cotton that could pull down the current high prices, according to traders. But textiles manufacturers are concerned that unseasonal rain could curtail production and an increase in exports would only compound the problem.
Cotton has been in short supply since April, but prices started moving up in the middle of the year on hopes of increased exports to exploit the higher prices internationally. A candy of cotton (356 kg) sold for as high as Rs47,000 in October compared with Rs23,000 in the corresponding period a year ago.
In response, the government capped cotton exports at 55 lakh bales and that for cotton yarn at 720 million kg. However, this has not reduced prices much, as traders believe that the export limit could be raised any time.
“If the government does not increase the limit of cotton export from the current ceiling of 55 lakh bales, it may lead to an increased supply in the domestic market and impact cotton prices,” says Dhiren N Sheth, president of the Cotton Association of India (CAI).
V Ravichandran, vice president of South India Cotton Association told Moneylife, “If cotton supply increases in the domestic market, prices could come down by as much as Rs1, 500 to Rs2, 000 per candy.” Cotton prices are currently at around Rs40,000, still high on expectation of an increase in the cap on exports. Also, recent reports have suggested that the record cotton production of 325 lakh bales expected earlier may not materialise due to unseasonal rain that has destroyed crops in major cotton-growing states.
While the government permitted export of 55 lakh bales from 1st November to 15th December, only about 25 lakh bales have been shipped out of the country, and this is being seen as a possible reason for the delay in increasing the export limit.
But, Prabhakar Kelkar, general secretary, Bhartiya Kisan Sangh, attributed the lower export to the late decision by the government on the quota. “The government should have issued the permission for export of cotton in August. Due to the delay in the government’s decision on the export limit, exporters could not meet the target of 55 lakh bales by 15th December. Now this is affecting the decision on the next slot of exports,” Mr Prabhakar told Moneylife.
Last year, India exported 85 lakh bales, when cotton production was 295 lakh bales.
Commerce Secretary Dr Rahul Khullar, was quoted as saying that the decision on exports would be taken mid-December, but nothing has happened yet. Messages to the Ministry of Commerce and the Ministry of Textiles on the exports issue were not answered.
The textiles industry is opposed to any increase in cotton exports as it could push cotton prices in the domestic market up further. The Confederation of Indian Textiles Industry (CITI) has said there is no justification to setting an export target on anticipation of production, when the output of a commodity like cotton is entirely dependent on weather conditions.
“We estimate that production would not be more than 300 lakh bales, after unseasonal rain has slowed down production of cotton. Now, after exporting 55 lakh bales, we would have 245 lakh bales and domestic requirement is more than 260 lakh bales, so our stock position in the country would be very tight,” IJ Dhuria, head of raw materials, Vardhman Textiles Limited told Moneylife.
A senior official of Cotton Corporation of India thought that the recent rain would have only a little impact, reducing cotton production by 5-7 lakh bales. The Cotton Association is still hopeful of a production of 347 lakh bales in 2010-11.
CITI argues that the government should allow an increase in exports only after the domestic requirement is fulfilled. “Cotton arrivals are already late. There is a season of cotton production and arrivals, but export can be done anytime. Cotton should be exported after February, by which time we would have a better idea about the availability of cotton and how much surplus can be exported,” says DK Nair, secretary-general of CITI.