" This blog is a integrated approach towards tracking the Indian power sector
which is evolving, having a great potential with prosperous future."

ALL INDIA INSTALLED CAPACITY

ALL INDIA INSTALLED CAPACITY

Friday, August 6, 2010

Chinese power cos set to account for half of India's 12th Plan target

While the government pushes policies aimed at weeding out Chinese manufacturers from major power projects, Chinese companies backed by the government of China have already surpassed their 11th plan order book in the 12th plan. With more than 90 per cent of those projects coming from the private sector, totalling 16,470 mega watts (MW) so far, experts say that Chinese companies could account for almost half of the one lakh mega watt target set for the five-year plan beginning in 2012. 


Chinese power equipment manufacturers have procured almost 18 per cent of the 12th plan capacity addition target, thanks in large part to Reliance Power’s two equipment orders for its ultra mega power projects totaling 9,260 MW. Although government initiatives coming from the ministry of power, NTPC, Planning Commission, BHEL and Larsen and Toubro have relegated Chinese investors to sub-critical and below, there are enough projects abound to allow Chinese companies to leave a hefty footprint on the Indian power sector. “It is a concern for the larger eco-system of India; and India has visited Chinese power plants to investigate concerns about their shelf-life and there don’t seem to be any quality concerns long-term,” said Shuahranshu Patnaik, Pricewaterhouse Coopers executive director. “The private sector is not dumb, they know what's cheaper.”  The good news for consumers: the more power plants erected by Chinese companies, the lower the cost of power. Power plants built by Chinese manufactures, including DongFang Electric Corporation, Shanghai Electric, Harbin Power Equipment Company and SEPCO, cost about 25 per cent less than plants equipped with BHEL or L&T equipment. If all fuels and technologies are the same then the cost of power, which ranges from rs 1 to rs 1.30 per unit, will cost .25 paise per unit less when coming from a Chinese plant as compared to a BHEL or L&T plant. “When considering just the planned capital costs, then this is what it comes down to for private players,” Patnaik said.
And private players will carry more and more of the responsibility as India tries to fill its 12 per cent peak power deficit. Between the 8 th plan and 11 th plan, capacity addition from private players has grown from 1,430 MW to 19,797 MW. With that number expected to more than triple in the next five-year-plan, China’s place in India’s power sector growth becomes clearer, unless domestic manufacturing grows well beyond BHEL and L&T. “ The production of capital goods required to support growth of Indian industry has become deficient in the country in the last 15 to 20 years,” Planning Member Arun Maira told. Maira’s committee recommendation to impose a 10 per cent import duty on all UMPP equipment was agreed upon by the ministries of power and heavy industry in July. A Maira committee is also reviewing the prospects of imposing a sector-wide ban on the import of foreign manufactured goods, requiring all power equipment to come from companies with domestic manufacturing tie-ups. “ This has happened in many sectors, including power, telecom and textiles manufacturing. We don't need to do this piece-meal; what we need is a strategy set in place so that by the time we get to the 13 th and 14 th plan, India has a strong industrial base and is capable of being carrying the country.”

The mid-term appraisal of the 11 th five-year plan had this to say about continuing to lean on Chinese power equipment: “Import of huge quantity of Chinese equipment without developing local component vendors would mean continuing import of components and spare parts from China. This will not only be a costly affair but also weakens the opportunity for developing domestic manufacturing capability. There is need to develop domestic manufacturing capacity and vendors for spare parts of Chinese equipment.”

No comments:

Post a Comment