Private investment in power sector slumps 44% last fiscal: Jyotiraditya M Scindia

Private sector investment in power sector decreased by a whopping 44% last financial year to Rs 54,953 crore from 98,283 crore a year ago, power minister Jyotiraditya M Scindia said on Tuesday. Industry experts said the private investment has further declined in the current financial year.

Association of Power Producers director general Ashok Khurana said the declining trend in investments was due to uncertainties on fuel supply, regulatory affairs and policy framework.

“The private developers have slowed down or postponed their investments because of the issues,” he said.

PwC executive director (infrastructure) Kameswara Rao said the investment was low as there was no demand for electricity from state distribution companies and also as no new projects are being bid by the government.

The country’s power generation capacity increased by 20.6 gigawatts in 2012-13 — the largest in any year.

“Whatever investments we have seen so far are on projects that were planned earlier. Companies with existing plants are suffering losses due to fuel scarcity so the ability to invest is low,” he said.

He said there have been no major power procurement tenders from state distribution companies besides Uttar Pradesh, Tamil Nadu and Rajasthan. “There is a need to create demand by signing of power purchase agreements and announcing new projects like the ultra mega power projects,” Rao said.

The government is yet to finalise new guidelines for bidding power plants that was stopped in 2011. An empowered group of ministers in expected to meet on the issue on Thursday.

On an average, 27% of the country’s available 1,46,000-mw power generation capacity is under outage.

Thermal power plants are stranded or underutilised due to shortage of gas and coal shortage. Data available with the Central Electricity Authority shows that coal-based plants operated at 63% of their capacity in June, while gas power plants at 29%.

Coal-based power plants can be run partially on imported coal but that raises costs leading to non-purchase by state distribution companies. Power regulator Central Electricity Regulatory Commission (CERC) has allowed companies like Tata Power and Adani Power that operate imported coal-based plants to recover additional costs from state distribution companies.

The government has also recently allowed power-generating companies to bill the distribution utilities for additional cost incurred on imported coal. But poor financial health of distribution companies does not allow them to purchase power generated from imported gas or coal.

Last September, the government offered a debt-restructuring scheme to the state distribution companies that have aggregated Rs 1.9 lakh crore losses.

Khurana said pick up in investment in power sector will depend upon the regulatory outcome of coal cost pass through and CERC judgment on Adani Power and Tata Power cases on imported coal.


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