Sucheta Dalal :Ministry of power cuts expansion projection on equipment constrains
Sucheta Dalal

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Ministry of power cuts expansion projection on equipment constrains  

November 4, 2009


The sluggish progress in establishing new power projects has forced the Union ministry of power to rethink its target to generate 78,000MW power during the 11th five-year plan, from 2007 to 2012.The ministry is blaming the scenario on late placement of orders for the main plant and other equipment that has delayed the final commissioning of projects.
During the first year of the 11th plan, the ministry was able to commission power projects of 9,263MW as against its target of 16,335MW. The same performance continued next year as well. During 2008-09, the ministry could commission power projects of 3,453MW, much below its target of 11,061MW. Even during the first half of the current fiscal year, projects of 4,433MW were commissioned as against the targeted 6,462MW.
This means during the first half of the 11th Plan, the ministry was able to commission only 17,149MW of projects as against its set target of 33,858MW, which is less than 50% achievement. This has forced the ministry to sit up and re-think its target to generate additional 78,000MW electricity during the 11th five-year plan.
Power projects have major requirement of turbines, hydro-power plants, steam generators and steam turbines, valves, pumps, compressors and boilers for critical applications. There are very few manufacturers in India who meet the precise requirement of power equipment. The ministry is blaming late placement of orders for the main plant and other equipment which it feels has delayed final commissioning of power projects and caused it to miss the target.  
State-run Bharat Heavy Electricals Ltd (BHEL) is the largest manufacturer of power equipment and accounts for more than two-thirds of the power equipment supplies in India. With an annual turnover of Rs28,000 crore BHEL has an outstanding order book of Rs1,25,800 crore. The company recently increased its capacity to 10,000MW per annum from 6,000MW per annum and is planning to increase it further to 15,000MW. That means it will take BHEL many more years to complete the current orders.
The situation is so grave that new power projects have had to wait for a few years. The huge waiting period is causing some power companies to check the feasibility of procuring boilers from Chinese manufacturers.   
Earlier, the power industry could not grow due to tight regulations and high debts of state electricity boards (SEBs). Poor rate of return coupled with sick financial status of SEBs forced many companies to abandon their ambitions to enter power generation. During that time the average power project commissioned was just 3,000MW to 4,000MW per annum. SEBs were finally abolished following the passage of the Electricity Bill 2003.
The government also provided many incentives to private players resulting in a sudden hike in capacity. It was expected to add around 15,000MW capacity per year. However, with the equipment shortage, this seems a far away target. The ministry has no other way out but to cut down projection, in line with the availability of equipment.
- Dhruv Rathi   [email protected]

-- Sucheta Dalal