Virendra Patil

Associate Manager - Sales & Mktg, BD of SC Boilers, Power Plants at TBWES Edit post

FY 2015: Another DARK year for India's Power Sector

Apr 3, 2015 74Views

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Only six Super Critical Power Projects awarded in FY 2015, totalling to Just 6880 MW (7 GW), total manufacturing capacity in India is more than 25000 MW.

It was mostly another gloomy year for the power sector in FY 2015, but it is looking forward to brighter days ahead under as Power, Coal and New & Renewable Energy were brought under one Minister. Piyush Goyal has his plate full of woes, but his initial days hold out promise for the jittery sector

Key issues – Fuel Security issues: Coal base power plants capacity addition with CAGR % while Coal production CAGR is not even half of that. Coal supplies by CIL is restricted to around 65% of actual coal requirement by coal based thermal plants, leading to increased dependence on imported coal with the cascading result of high power generation costs. Fluctuation of Imported coal prices is another area of concern. Funding Issues: The total outstanding credit to the power sector from various banks amounted to Rs ~6 lakh crore at the end of FY 2015. Because of uncertainty in policy, lending comfort is lost. A big concern today is a lack of financing available for new projects. Over the last 4-5 years, the leading rates have increased significantly from the time of project appraisal resulting in project cost overrun and hence higher end tariffs. Financial condition of State Discoms: Increasing Transmission and distribution losses and operational inefficiencies have adversely affected the financial health of State Discoms which are currently plagued with enormous out-standing debts. Increasing power generation costs due to limited fuel availability, poor financial health of State Discoms, high AT&C losses have contributed in suppressed demand projections by State Discoms.

Policy Paralysis: The micro level policies governing the fuel cost pass-through, mega power policy, competitive bidding guidelines are not in consonance with the macro framework like The Electricity Act 2003 and the National Electricity Policy. UMPP revised SBD is not yet published, No new UMPP project awarded in last 2-3 years. No participation by IPP’s: Private Player’s participation is almost zero, not a single 660 MW unit awarded (advance release) by IPP’s in last 2-3 years. No progress reported in PPP projects (Public Private Partnership). Despite the encouraging growth trajectory in the energy space over the last few years, the Indian Power sector has still not been able to induce and sustain the required capacity addition matching the ever growing power demand of the country.