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