Private players to power 12th Plan capacity addition - Will account for 62 percent of 75,000 MW slated to come up

Amid an impending transition to a new competitive bidding regime for future generation projects, private sector developers are slated to corner a bulk of the power projects on the anvil.

A strategy plan submitted by the Power Ministry to the Cabinet Secretariat forecasts that the private sector will account for 62 per cent of the 75,000 MW capacity slated to come up during the coming Five- Year Plan period (2012-17), a big jump from the 20 per cent factored in for the current Plan period ending March 2012.

The total capacity addition requirement for the Twelfth Five-Year Plan is pegged at 88,000 MW, which includes 13,000 MW from renewable energy sources. Of the 75,000 MW slated to come up through conventional energy sources (coal, gas and large hydro projects) in the coming Plan period, the private sector is expected to be the biggest contributor with 46,500 MW.

“The increase in private sector participation from the current planned level of approximately 19 per cent to 62 per cent is a highlight of the next Plan (Twelfth Plan) in terms of generation,” the Power Ministry's strategy document states.Utilities in the State and Central sector are expected to account for 20 per cent (15,000 MW) and 18 per cent (13,500 MW) of the capacity addition envisaged during the Twelfth Plan period.

Advantage pvt players

According to experts, the transition to a new regime for the award of power projects from January next year makes the private sector players clear favourites to bag the new projects that are slated to be announced by various distribution utilities.

Besides, a large number of private projects are already in the pipeline, where construction activity is in various stages. Most of these are likely to come up as merchant projects, with plans to offload electricity in the spot market (either on the two operational power exchanges or sales through power traders).

Government firms, both in the State-sector as well as Central Sector utilities such as NTPC Ltd and Neyveli Lignite Corporation, have been finding it difficult to compete against aggressive private players to bag projects under the competitive bidding route, where the developer promising to offer the lowest tariff from a proposed project gets to set it up.The Government has set January 5 as the cut-off date for power projects to shift to a tariff-based competitive bidding regime, effectively disallowing future generation and transmission projects to enter into power purchase agreements based on the current regulator-determined tariffs.

The private sector has shown a progressively improving trend in the commissioning of new projects during the first three years of the current Plan period.According to Government data, of the 9,263-MW commissioned in 2007-08, the private sector accounted for only about eight per cent.This improved to 25 per cent in 2008-09 (883 MW out of the 3,454 MW commissioned that year) and to 45 per cent during 2009-10 (4,313 MW out of the 9,585 MW commissioned).