‘Encourage private sector investment in power projects’

NEW DELHI: The industry body Assocham on Friday asked the government to stimulate private investment in the power sector with a view to add 135 gigawatts (GW) of generation capacity during the 12th plan. In this regard, the Associated Chambers of Commerce and Industry (Assocham) noted that initial projections indicate that only 60-65 gigawatts (one gigawatt is equal to 1,000 megawatts) of capacity addition is likely to be fulfilled through public funding.

In the 11th plan, a target of 78.7 gigawatts of capacity addition was fixed, but Planning Commission estimates indicate that actual realisation may not exceed 50 GW (or 63.53 per cent of the target) due to slippages in public sector projects, according to an Assocham statement.

The shortfall is primarily due to poor project implementation, inadequate domestic equipment manufacturing capacity and a go-slow approach adopted due to a shortage of fuel, primarily coal, it said. Another key issue that may aggravate the power crisis could be heavy dependence on thermal projects, Assocham said in its latest ‘Eco Pulse’ study.

Over 65 per cent of the installed capacity in the country is accounted for by thermal projects, while the remaining is made up by hydro, renewable and nuclear energy. The study said creating 100 GW (1 GW = 1,000 MW) of power generation capacity would require Rs 5 lakh crore, going by the present industry norms. As such, it asserted that state governments must reduce power distribution losses and explore other possible sources like nuclear energy and hydro power, while pushing the Centre for speedy environmental and land clearances for new projects.

“If states do not rectify such key infrastructural issues, they are bound to lose out on large scale investments,” Assocham Secretary General D S Rawat said. More than one-fourth of the power produced in the country is lost in transmission and distribution.

“This has got an important bearing on the cost and quality of power. If properly addressed, this could become an augmenting factor for the Indian industry and add to its competitiveness,” Rawat said.

“The government should give incentives not only to encourage investments from the private sector, but also for improving operational efficiencies and exploring alternative energy sources,” he said. Therefore, planning needs to be done so that provisioning for adequate investments, raw materials, clearances and efficiency improvements can be taken care of, the Assocham study said.DP