Economy

Power cos laying foundation for big capacity hikes

PTI New Delhi | Updated on November 09, 2017 Published on December 30, 2010

A view of NTPC Simhadri Super Thermal Power Plant (file photo). -- C.V. Subrahmanyam   -  The Hindu

From disinvestment to cementing nuclear energy pacts, 2010 saw the country’s power sector strengthen its foundations for the massive capacity expansion required to meet the growing needs of the energy-starved nation.

The year also saw a shift in the process for awarding power projects to a tariff-based bidding system.

These developments augur well for the sector, as India — which is eyeing a GDP growth rate in excess of 9 per cent — aims to add 1,00,000 MW of electricity during the XII Five-Year Plan (2012-17), with the major contribution expected to come from private power producers.

However, the Government had to scale down the generation target for the ongoing XI Plan (2007-12) from 78,577 MW to 62,374 MW.

In particular, the mood during the year gone by was exemplified by big-ticket disinvestment in four PSUs, which generated about Rs 20,000 crore for the Government.

A number of public offers by private power players are also in the pipeline for the coming months, which are targeted at raising the funds required for their investment and expansion plans.

India and France signed a $9.3 billion dollar framework agreement for the sale of two nuclear reactors to India for a proposed new plant at Jaitapur, in Maharashtra, during the visit of the French President, Mr Nicolas Sarkozy, to New Delhi in early December. France’s state-run nuclear firm, Areva, will supply the reactors.

With regard to new projects identified by the government, they will henceforth be granted on the basis of tariff-based bidding, as against the current cost-plus tariff policy. This is likely to facilitate smaller private sector players with lower tariffs becoming more competitive and garnering lucrative contracts that might have otherwise gone to large public sector power producers.

Disinvestment in state-run power gencos kicked off early in the year, with the country’s largest power producer, NTPC, launching a follow-on public offer (FPO) in February.

NTPC raised over Rs 8,800 crore through its FPO, the proceeds from which went to the investment fund that finances social sector schemes. The Government’s stake in the public sector company came down to 84.5 per cent from 89.5 per cent following the allotment of shares under the offer.

NTPC currently generates over 32,000 MW of electricity and plans to hike this capacity to 40,000 MW by March, 2012, and further to 75,000 MW by 2017.

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Published on December 30, 2010
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