Home > Capital Goods, Infrastructure, Power > Power capacity addition: Targets set, revised and re-revised

Power capacity addition: Targets set, revised and re-revised

Power capacity addition has been a laggard and earlier also targets have been set and revised downwards. This is what I was hinting at in my last post on Ports in India when I said that “Although pace of infrastructure development in India has been slow, the pace of infrastructure target announcement has not restrained.”

But, the government seemed very bullish on its Power Sector expansion for the 11th plan period (2007-12). In line with earlier trend, the Planning Commission plans to revise its target downwards from 78,577 mw planned initially to 62,000 mw. The government may further revise this target lower to 55,000 mw (PTI, 25 Jan, 2011). It cites the following reasons for the revision:

  • law and order problems in Jammu and Kashmir, West Bengal and northeastern states
  • Uri (in J&K) and Teesta (in West Bengal) hydro-electric projects are way behind schedule
  • technical problems related to the equipment in certain thermal power projects in Uttar Pradesh

When I read these reasons, all that comes to my mind is what is new about these issues to have affected us in this plan period?

Law & order problem in a few certain has been there for long. There has also been a very tardy progress in developing hydro projects in our country. So what’s different??

Really speaking, nothing. Nothing is different. We continue to face structural issues (sorry for sounding repetitive) like land acquisition and regulations and delay in supply of power equipment.

Now that the un-achievement figure will look high, the government plans to allow NTPC and other government-owned power utilities to invite bids for equipment from manufacturers other than BHEL. Until now, there was a hue & cry about China dumping its equipments here. Not that I am saying that the Government should or shouldn’t allow imports from China (that’s a debatable topic), but we cannot be reactive after nearly half the plan period is over.

One positive that I see in downward revision of targets is that the achievement rate looks better!!

Besides threat from Chinese manufacturers, there are other competitors in the market including L&T-Mitsubishi, Bharat Forge-Alstom, among others to apply for tenders raised by NTPC. In spite of the threat from these companies, financial performance of BHEL is unlikely to get affected in the near-medium term. This is because, BHEL is sitting on an order book position of `1.5 lakh crore as at the end of December 2010 which will take close 3-4 years to execute. However, its order inflow may get slightly affected given the presence of more intense competition.

Click here to see the Likely Capacity Addition during 11th plan period which stands at a mere 62,647mw.

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