Changing India's power equations

The Ministry of Power is encouraging private sector participation in all possible ways in generation, transmission as well as distribution, says Shri Sushil Kumar Shinde, Honourable Union Minister of Power in this exclusive interaction with Niranjan Mudholkar

The Government’s ambitious mission of ‘Power for All by 2012’ would require enhancing installed generation capacity to at least 2,00,000 MW by 2012. What is the update on this?

During the 11th Plan, we will be adding about 62,374 MW (excluding renewable) which is more than three times the capacity added during the 10th Plan. Out of this, a capacity of 24,367 MW has already been commissioned till June 30, 2010. During the year 2009-10 we have added a capacity of 9585 MW which is highest in a year during the last six decades. A capacity of 40,072 MW is likely to be added during the balance two years of 11th Plan. Hence, the installed capacity at the end of 11th Plan is likely to be 1,99,471 MW.

In addition, projects totalling to 12,590 MW are being attempted for commissioning on best efforts basis during 11th Plan. Further, capacity aggregating to about 60,600 MW is under execution at present for likely benefits during 12th Plan. About 1,00,000 MW capacity addition is being planned during 12th Plan. With this capacity addition, the country will be self sufficient to meet the rising demand for power in a few years.

Can you provide an update on the nine Ultra Mega Power Projects (UMPP)? Is the Government likely to announce more UMPPs in the near future considering the enormous targets?

So far four UMPPs, namely Mundra in Gujarat, Sasan in Madhya Pradesh, Krishnapatnam in Andhra Pradesh and Tilaiya in Jharkhand have been awarded to the successful developers and are in different stages of implementation. As indicated by CEA, two units of Mundra UMPP and one unit of Sasan UMPP are expected to come in this Plan period and rest of the units in 12th Plan.

Chhattisgarh UMPP and Orissa UMPP are already at RfQ stage. The RfQ for Chhattisgarh and Orissa UMPPs have been issued on March 15, 2010 and June 11, 2010 respectively. For Tamil Nadu UMPP, a site at Cheyyur in Kancheepuram district, and for second UMPP in Andhra Pradesh site at Nayunipalli village in Prakasham district have been identified and pre-RfQ activities are being carried out. Efforts are being made to bring these two projects also at RfQ stage during the current financial year.

The site for Karnataka UMPP has not yet been finalised and State Govt has been requested to suggest sites. The site for Maharashtra UMPP at Munge in Sindhudurg district is also waiting to be finalised for settlement of some local issues.
In addition to the above, proposals have also been received for additional UMPPs from the States of Orissa (2nd), Gujarat (2nd), Jharkhand (2nd) and Andhra Pradesh (3rd) and the same are being examined.

Currently, what is the break-up of India’s various power plants (thermal, hydro, nuclear etc.) in terms of generation capacity? Do you see this equation changing in the next five years?

The total installed generating capacity in the country as on June 30, 2010 was 1,62,367 MW, comprising 64% from fossil fuel, 23% from Hydro, 3% from nuclear and balance 10% from renewable energy sources. This scenario is not going to change much in the next five year on the fossil fuel front as coal would continue to be the main source of power generation in the country.

We have taken 50,000 MW initiative for expeditious development of hydro projects. Similarly, renewable capacity is going to be increased considerably in view of government efforts towards development of renewable energy sources, particularly due to harnessing of the solar/wind potential in the country.

How has the shortage of coal affected thermal power plants?

During 2008-09, Plant Load Factor of thermal power stations could not show desired improvement because of shortage of coal and gas. There was delay in synchronizations and commercial operation of units due to lack of completion of balance of plant works by contractors. The overall Plant Load Factor of thermal power units in the country improved significantly from 73.6% during 2005-06 to 77.2% during 2008-09.

India is one of the largest energy consumers in the world despite having very low per-capita consumption for most energy related products. How do you analyse this situation?

The per capita consumption of electrical energy is approximately 734 KWh. We have kept a target of 1000 KWh by 2012. This is expected to increase in the coming years in view of the ongoing massive generating capacity addition programme and emphasis on rural electrification under Rajiv Gandhi Grameen Vidyutikaran Yojana.

India’s cost per unit of electricity is amongst the highest in the world. Besides supply shortfalls & T&D losses, the massive rate inflation is caused due to unscheduled interchanges by states. What is being done to resolve this issue?

The most important factor responsible for this is the high Aggregate Technical & Commercial (AT&C) losses. Lack of consumer education and inefficient use of electricity is aggravating the problem.

In order to reduce AT&C losses, Government of India had initiated Accelerated Power Development and Reforms Programme (APDRP) in the 10th Plan. This has been restructured in the 11th Plan as Restructured APDRP, which aims at bringing down the AT&C losses to 15%.

The Unscheduled Interchange charges are basically aimed at bringing grid discipline with disincentive to over-draw and incentive to under-draw during low frequency. The unscheduled interchange would reduce with higher growth in availability of electricity as compared to its demand.

Massive capacity addition of over 80,000 MW (under implementation) is expected to ease out the overall situation.

India’s annual T&D losses are estimated to be more than 30% of the supply. Most of this is resulting out of theft. How is the government tackling this problem?

As mentioned in the previous reply, the biggest challenge here is the high AT&C losses. A combination of technical and non-technical factors is contributing to T&D losses. For the reduction of AT&C losses, Government has approved the R-APDRP with an expected programme size of Rs51,577 crore.

Further, as per the provisions of Section 153 of the Electricity Act, 2003 special courts dealing with power theft have been set up in Assam, Andhra Pradesh, Chhattisgarh, Gujarat, Haryana, Himachal Pradesh, J&K, Karnataka, Madhya Pradesh, Maharashtra, Meghalaya, Manipur, Nagaland, Orissa, Punjab, Rajasthan, Sikkim, Tamil Nadu, Tripura, UP, Uttarakhand, West Bengal and Delhi.

Following measures are being taken by power utilities for reduction of T&D losses:

• Replacement of all consumer meters with static meters & improving metering, billing & collection efficiency
• Metering of all 11 KV feeders & Dist transformers for energy auditing
• Augmentation of overloaded distribution system
• Implementation of HVDS
• Use of Aerial Bunched Cable (ABC) in theft prone areas
• IT initiative like SCADA, GIS, AMR etc.
• Segregation of rural & agriculture feeders.

Considering the huge targets of generation as well as transmission & distribution of power in India, the private sector has an increasingly important role to play. How is your Ministry encouraging private players?

The Ministry of Power is encouraging private sector participation in all possible ways in generation, transmission and distribution. After opening up of power sector, contribution from private sector has increased considerably. At present, the private sector share is approximately 19% which will be increasing up to 28% by the end of 11th Plan.

The contribution from private sector during 12th Plan would be more as many power plants in private sector have been planned for benefits during 12th Plan. Private sector is likely to add about 60% of the total capacity addition during 12th Plan. Recently, Transmission sector too has been opened to private developers.

In which segments of the power sector can the private sector participate to greater extents?

Private sector can play a very important role in all three sectors viz. generation, transmission and distribution and we are playing a role of facilitator to private developers in power sector. Development of power sector requires large investment that cannot be met solely by public finance. Electricity Act 2003 has provided a legal frame-work to attract private sector participation in the power sector. While Private sector participation in generation and transmission is visible, in distribution its participation needs to be encouraged. Private sector can play vital role in distribution sector.

For the progressive growth of the distribution sector it is essential that the sector should become revenue sustainable. Secondly the magnitude of finances involved in the development and subsequent operation and maintenance of distribution infrastructure is quite substantial. The State Government should provide necessary environment for participation of private sector in Distribution.

The key issues faced by the industry include land acquisition, unavailability of sufficient skilled workers, challenges related to coal & water linkages, rising equipment cost and getting various clearances including environmental clearances. What are the steps taken by to address each of these issues?

There are several issues which cause delay in development of power projects. We are coordinating with State Governments and other Ministries like Environment and Forests and Coal to resolve these issues and provide expeditious necessary clearances. To resolve the issue of skilled manpower, we launched the ‘Adopt an ITI’ initiative and have made it mandatory to establish a technical institute along with a power project.

This will also provide employment opportunity to the local population. The steps taken by our Ministry to increase plant manufacturing are also showing results. Four joint venture companies, viz. Bharat Forge with Alstom, L&T with MHI Japan, JSW with Toshiba and GB Engineering with Ansaldo will start manufacturing soon. Doosan from South Korea has also shown interest in putting 100% FDI plant equipment manufacturing facility in India.

About two years back, the cabinet had approved a new hydro policy. What is the progress?

Under this new hydro policy, private entrepreneurs can take up projects on the basis of MoUs till January 2011 and they will be allowed merchant sale of up to 40% of the saleable power. This policy also envisages exemption from tariff based bidding till January 2011, merchant sale of 40% of saleable power is allowed. One per cent free power above the 12% earmarked for local area development is also included in the policy.

This policy which was introduced in 2008 goes one step ahead of the National Rehabilitation and Resettlement Policy (NRRP) of 2007 so far as relief and rehabilitation provisions for hydro power projects are concerned. These provisions shall be applicable even if one family is affected by the development of a hydro power project.

Some key achievements of Power Sector*

Installed generation capacity increased from about 1,23,901 MW as on 31.1.2006 to about 1,61,352 MW with a growth of 30%.

In the 8th, 9th and 10th plan together capacity addition was 56,618 MW, whereas in 11th plan target capacity addition is 78,700 MW (not including captive and renewable).

Projects of over 50,000 MW capacity are presently under construction by private developers.

Private sector likely to add about 60% of the total capacity addition in the 12th Plan.

Incremental flow of bank credit to power sector has increased by nearly 300% from Rs13000 core in April-Nov, 2008 to Rs38,000 crore in April-Nov 2009.

Of the total incremental bank credit, power sector now accounts for over 50% in 2009.

Energy Conservation Building Code (ECBC) launched for five climatic zones (hot & dry, warm & humid, composite, temperate and cold)

A decision was taken that CPSUs implementing a project will adopt the ITI in the area, train local youth and provide them employment. So far 52 ITIs have been adopted (including 8 new ITIs under construction).

To boost power equipment manufacturing capacity, four new joint venture companies are setting their base in India. Capacity of BHEL is also being increased to 15,000 MW by the end of 2009.

Transmission sector opened up for the private sector. Bidding for first three projects costing Rs5800 crore has been completed and LOI for two projects have been issued by REC and PFC has issued LOI for one project. RfQs for three more projects costing Rs4300 crore are being issued.