The Hindu Business Line : Underpowered

If the first six months of this financial year are anything to go by, the Power Ministry should be really worried. Against a target of adding over 10,000 MW of electricity generating capacity during the first half of the year, only 2,645 MW has gone on stream. And even this capacity had been slated for commissioning the previous year. India’s track record in adding capacity continues to be abysmal. Its target is to add about 78,000 MW in the Eleventh Plan (2007-12) and industry representatives point out, with a mixed feeling of awe and despair, that China added more than this figure in a single year. The reasons for capacity addition targets not being met in the previous Plan periods — limited equipment manufacturing capacity, delays in obtaining various approvals, including environment and techno-economic clearance — still remain, despite the greater degree of preparedness the Ministry now exhibits.

Capacity constraints in equipment manufacturing are the main reason for the delays in capacity addition. The public sector BHEL still remains the country’s largest equipment supplier. The Power Ministry and the Heavy Industries Ministry, the parent ministry for BHEL, have been at loggerheads over the equipment manufacturing capacity, the former keen on creating another BHEL-type entity that will substantially increase the manufacturing capability, and the Heavy Industries Ministry, as expected, opposed to this move, contending that the resources could be better spent improving BHEL’s capacity. Meanwhile, a number of foreign players, notably from Korea and China, have bagged a few orders to supply power plant equipment, and Larsen & Toubro has tied up with Mitsubishi to manufacture both super-critical boilers and turbines starting albeit in 2008-09. Foreign manufacturers even cite restrictive tender conditions as a factor hampering capacity addition.

Identifying the problems and continuously monitoring the progress achieved, as the Power Ministry is trying to do, is just one part of tackling the serious problem confronting the power sector. The country’s largest generator, NTPC, and the largest equipment manufacturer, BHEL, apparently do not see eye to eye on a range of issues, though both are quite happy to work with each other (the two have even formed a joint venture). The urgent need is to sort out the problems in equipment manufacturing capacity if things are to improve on the generation front. Otherwise, the performance in the Eleventh Plan will be no better than that in the past.

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