Hit by fuel shortage,power projects running at partial capacity only
The continuing shortage of fuel is clearly the biggest impediment
On paper,a cumulative thermal power generation capacity of 30,419 mega watts is reported to have been added during the last two years,an impressive increase of 27 per cent. But when it comes to actual electricity generation on the ground,the corresponding rise is just 15 per cent. The reason: most of the power generation projects commissioned since March 2009 are either idling or forced to operate at partial load.
The continuing shortage of fuel is clearly the biggest impediment,with domestic coal stocks alarmingly low and gas production having hit rock bottom. Added to this are some structural issues,including the fact that Coal India Ltd CIL has stopped signing fresh fuel supply agreements FSAs with power generation projects. Even in cases where FSAs have been signed,CIL is not willing to release coal to projects that do not have firm power purchase agreements or PPAs with distribution utilities in the states.
The numbers bear this out. A total of 143 FSAs are to be signed by Coal India Ltd by 2014-15 with identified power projects totaling a capacity of 60,000 MW that were assured coal supply following a high-level intervention by the Prime Ministers Office in January last year. Of these,92 are to be signed by the end of 2012-13. Till February-end 2013,with just a month left for the financial year to draw to a close,only 46 FSAs had been signed,according to the latest Coal ministry estimates.
Complicating the matter further,the signing of fresh PPAs can take place only if the states call for bids from project developers to buy electricity,under the provisions of the Power ministrys tariff policy that makes it binding on states to procure power only through the bidding route. The bidding process itself,though,is hanging fire as basic prerequisites such as the standard bidding documents are still not ready.
At a time when the need of the hour is ensure that distribution utilities,including State Electricity Boards,call for tariff bids from project developers under the Case 1 bidding route where location,technology or fuel is not specified by the procurer,the Power ministry is busy preparing bidding documents for Case 2 or site-specific projects to be built in future,such as the ultra mega power projects, a senior official with the Central Electricity Regulatory Commission,the apex regulatory body in the power sector,said.
According to Power ministry officials,the documents for Case 2 bidding are in the final stages of vetting and work on Case 1 documents will start as soon as this process is wrapped up.
As a result,about half the generation capacity that has come on stream during the last couple of years the 10,210.50 MW of new capacity declared commissioned during the first ten months of the current fiscal of which 9,500.50 is thermal capacity,coming on the back of a record capacity addition of 20,501 MW added last fiscal is reported to be running at partial load. This is reflected in the plant load factor PLF of Indias thermal capacity tapering off sharply see chart.
With new projects faltering,enthusiasm among developers too is waning. Project developers such as GMR and Lanco are among those selling assets to counter losses,with large-scale retrenchments being reported across most private firms. Investor interest in the power generation sector is already petering out,with lenders applying the brakes on funding new private generation projects.
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