Private players ramp up power generation capacity

The challenge for developers, though, is how to run these newly commissioned projects, as nearly all of them are facing fuel shortages.

Written by Anil Sasi | New Delhi | Published:December 11, 2014 1:31 am

Fuel woes notwithstanding, a record 9,618 MW of new generation capacity has been commissioned in the first seven months of this fiscal. This was largely on account of a spirited performance by the private sector players, who accounted for over 55 per cent of the total capacity addition during the period, even as capacity addition by the Central sector utilities faltered.

The challenge for developers, though, is how to run these newly commissioned projects, as nearly all of them are facing fuel shortages.

The surge in project commissioning during the current fiscal, especially by private sector players, is explained by the fact that most of these projects were conceived back in 2006-07, when short-term power tariffs were ruling at well above Rs 10 per unit (kWh) and the outlook on fuel availability was still positive.

Coal India Ltd’s output was broadly on track with estimates, global coal prices were much lower and the Krishna-Godavari Basin gas output projections looked optimistic then.

Now, even with the dire fuel situation, developers in advanced stages of commissioning have no option but to go ahead with rolling out their units. A majority of the projects commissioned so far this year (9,351 MW of the 9,618 MW) are thermal units.

The resolution by the government of the coal sector imbroglio and the possibility of auction early next year, though, is a positive for the fuel-starved power generation sector. Key private sector generation units commissioned during the course of the current fiscal include two 660 MW units of Reliance Power’s Sasan UMPP in Madhya Pradesh, a 660 MW unit of Sesa Sterlite’s Talwandi Sabo thermal project in Punjab, a 600 MW unit of KSK Energy’s Akaltara (Naiyara) thermal project in Chhattisgarh and a 660 MW unit of Adani Power’s Tirora thermal project in Maharashtra.

The strong private sector performance is in line with the progressively improving trend of private developers to capacity addition during five years of the previous Plan period.

To put things in perspective, the cumulative capacity added during just the seven months of the current fiscal is nearly half the capacity addition of 20,950 MW achieved in the entire five years of the Tenth Plan (2002-07). During the Ninth Plan, 19,119 MW was added and 16,423 MW in the Eighth Plan.

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