‘A Third of Power Projects An­nounced in 2005-11 Stalled’

The Economic Times - - Economy & Companies - Our Bureau

Kolkata: Al­most one-third of the power projects an­nounced in In­dia be­tween 2005 and 2011have not fruc­ti­fied, with a ma­jor­ity of them — in terms of both ca­pac­ity and num­ber — from the pri­vate sec­tor, ac­cord­ing to a re­search firm.

Lack of as­sured fuel sup­plies, can­cel­la­tion of coal mine al­lo­ca­tions and de­layed ap­provals were among the fac­tors that led to the stalling of th­ese projects.

About 257 projects an­nounced in the seven-year pe­riod, ac­count­ing for 79 gi­gawatts and an es­ti­mated in­vest­ment of .₹ 5.91 lakh crore ($88 bil­lion) have not been com­pleted, ac­cord­ing to fig­ures com­piled by Feed­back Con­sult­ing. Some 158 GW of gen­er­a­tion ca­pac­ity was added dur­ing this time.

Projects an­nounced af­ter 2011 were not con­sid­ered in the study, be­cause it typ­i­cally takes five to seven years for plants to be­come op­er­a­tional, ac­cord­ing to Feed­back Con­sult­ing.

“With the open­ing up of the sec­tor in the 2003 Elec­tric­ity Act, a host of pri­vate sec­tor play­ers en­tered the power gen­er­a­tion sec­tor. This led to a huge in­crease in power gen­er­a­tion ca­pac­ity ad­di­tion in the country from about 100 GW to about 275 GW now,” said AM Deven­dranath, as­so­ciate vice-pres­i­dent of the en­ergy ver­ti­cal at Feed­back Con­sult­ing. The share of the pri­vate sec­tor in over­all power gen­er­a­tion ca­pac­ity in­stalled in the country in­creased to more than 37% now from less than 5%, he said.

Among the stalled projects, 79% in terms of num­ber and 64% by ca­pac­ity be­longed to pri­vate com­pa­nies. About 26% of the ca­pac­ity and 10% of the num­ber of projects were from the cen­tral sec­tor and the rest were from the states.

Coal-fired plants were the worst hit, ac­count­ing for about 51.3 GW of ca­pac­ity, or 64% of the to­tal. This was fol­lowed by gas-based plants, with15% of the to­tal ca­pac­ity.

“Dur­ing the heady growth pe­riod of 2007-2009, most of th­ese projects were an­nounced with­out proper end-cus­tomer, util­ity-backed power pur­chase agree­ments or fuel link­ages, which led to th­ese projects be­com­ing un­fea­si­ble and in many cases the pro­mot­ers lost in­ter­est and gave up on some projects,” said Deven­dranath. “A slew of projects were dis­con­tin­ued due to poor coal and gas link­ages and the re­vo­ca­tion of coal mines al­lot­ted to th­ese projects. Lack of en­vi­ron­men­tal clear­ances and land ac­qui­si­tion prob­lems led to aban­don­ing of projects.”

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