Power sector issues a hurdle to double-digit growth: CII

New Delhi: Fuel supply shortages, the mounting losses of distribution companies and paucity of funds are the hurdles faced by the power sector that need to be urgently addressed to achieve double-digit gross domestic product (GDP) growth. A study by Confederation of Indian Industry (CII) says that ‘critical obstacles, including fuel supply bottlenecks, distribution losses and a lack of funding, need to be urgently addressed to achieve double-digit GDP growth.’ CII Director General Chandrajit Banerjee said fuel availability has emerged as the biggest risk faced by thermal power projects in India. The coal production has not kept pace with power capacity addition in the current plan and developers have been forced to import coal at a time when international coal prices have shot up. The study said a lack of clarity on financing this extra cost as well as added transport costs for plants in the interior of the country have led to uncertainty and reduced investment in the power sector.

“With coal-based capacity addition expected to account for over 50 per cent of total capacity addition in the upcoming 12th plan, the issue of acute shortage of domestic coal in the country and its impact on project economics due to higher prices of imported coal needs to be urgently addressed,” said the study. “In addition, there would also be financial stress on assets already built or committed by many private sector players,” CII National Committee on Power and Tata Power Company Chairman and Managing Director Anil Sardana said. “There is an urgent need for comprehensive coal sector reforms, including opening the sector up to competition to increase investment in the power sector. Reforms would benefit the coal sector,” he added. DP