India missed power capacity addition yet again!

By RAKESH SHARMA

NEW DELHI -- India missed its power generation capacity addition target for the third consecutive year of its current five-year plan, leading to concerns that electricity supply will remain tight.

India added 9.56 gigawatts of power generation capacity during the financial year ended March 31, meeting only two thirds of its target of 14.51 GW, Central Electricity Authority data showed Tuesday.

The country slipped its revised capacity addition target by 23% during the year ended March 2008 and 54% during the year ended March 2009 of the current five-year plan, which ends March 2012.

The world's second-fastest growing major economy after China has set a target of adding 78.7 GW of capacity during the latest plan period and another 100 GW thereafter to fight frequent blackouts in cities and to electrify millions of rural households.

The targets have remained unmet due to a shortage of capital equipment and skilled workers, delays in getting fuel, lengthy land acquisitions and water allocation processes and environmental clearances.

The federal government's flagship power equipment maker, Bharat Heavy Electricals Ltd., which has an annual capacity to make equipment that can produce 15 GW of power, hasn't been able to keep pace with growing demand. Meanwhile, equipment purchased from China has met strong resistance from local suppliers on safety grounds.

Power Minister Sushilkumar Shinde said April 7 that only 61,000 MW of capacity may come up during the latest plan period, as the target was "very ambitious," adding that he was confident the 100 GW target for the next plan period will be met.

HSBC Global Research, in a note in January, said it expects India to add 49 GW of capacity and that slippage will continue in the coming years.

India's peak hour power supply in March fell short of demand of 118.47 GW by 13.3%, CEA data showed. The deficit averaged 12% in the year earlier period.

Analysts expect that, despite India's plans to accelerate capacity addition during the plan periods, the country will continue to have a power deficit even beyond 2017 due to the huge gap between demand and supply.

The power deficit during the current peak summer season is likely to result in spikes in tariffs and the sector is expected to receive strong investor interest on capex requirements for capacity building.

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Gopinath S
Chief Executive
nRG Consulting Services, Bangalore
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