India expects its power
sector to attract INR13 trillion (about $255 billion) of investments in the
next five years, nearly a third more than in the past half a decade, driven by
demand for electricity from its expanding economy.
The South Asian nation of 1.2 billion people
still has millions living without power, especially in villages, and its urban
areas often face blackouts. To meet demand and to support economic growth,
India has made the power sector a priority investment area.
India's economic growth in the current fiscal
year to March 31 is estimated at 6.9%. New Delhi expects the expansion to pick
up pace next year with the economy growing 7.6%, and accelerate further to
about 9.0% in a few years.
"The Indian economy will grow at a fast
pace and so will the power sector," said Arvinder Singh Bakshi, chairman
of the Central Electricity Authority, a power sector monitoring body.
India plans to add 75.78 gigawatt of generation
capacity during 2012-2017 to its current capacity of 193 gigawatt.
Shortage of coal, the fuel used to generate more
than half the electricity in India, has been hurting the expansion plans of
utilities. The shortfall this fiscal year to March 31 is estimated at 114
million metric tons.
State-run NTPC Ltd., the largest utility, has
cut its aim to add generation capacity for the next five years by 34% to 66
gigawatt on natural gas and coal shortages to fire its stations. Uncertainties
over fuel supplies are also discouraging lenders to put their money on new coal-based
projects.
Bakshi, while talking to reporters on the
sidelines of a news conference, said the government is trying to tackle the
problem.
"Involvement of the top echelons of the
government, right from the Prime Minister's Office, for improving local coal
availability is the reason of our optimism," he added.
The government has recently asked state-run Coal
India Ltd. to sign long-term supply contracts with operational and upcoming
power projects. Coal India is facing a slowdown in output growth, mainly due to
delays in environment clearances for its mining projects, and may have to
import part of the dry fuel.
Power Minister Sushilkumar Shinde said the
company has to abide by the directive to sign long-term agreements.
Coal India hasn't entered into such agreements
since 2009. It has been asked by the government to sign the first of the pacts
under the directive by Saturday.
"If the coal supply situation improves, the
power sector situation will naturally improve," Shinde said.
Source: http://www.foxbusiness.com
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