States and private companies beat CPSUs on power generation by a wide margin in the 11th Five Year Plan so far

The central sector, conventionally the leader in India’s power generation drive, has been outdone by the states and the private sector by a wide margin in the 11th Five Year Plan so far, an analysis by FE shows.While central utilities like NTPC, Damodar Valley Corporation and NHPC have performed badly on capacity addition in the current five year plan, state and private sector have not only commissioned a large number of projects but have also announced a series of new projects aimed at rapidly adding capacity to make the most of present deficit situation in the Indian power market.

As of November 15, the central sector had added just 7,905 MW capacity or 26% of its initial target of 36,874 MW.

During the same period, state utilities commissioned 12,511 MW capacity (46%) against the plan target of 26,783 MW set for them Planning Commission. The private sector added 8,945 MW (59%) capacity against its plan target of 15,043 MW.

In the 10th Plan, the central sector had added 13,005 MW capacity against the target of 22,832 MW (57%). In comparison, state utilities commissioned 6,244 MW against the 11,157 MW target while private players added 1,930 MW only against the plan target of 7,121 MW.

“ Going forward, the private sector will become a dominant player in the Indian power sector,” said Kuljit Singh, partner in global consulting firm Ernst & Young.

The largest central power generator NTPC, which was once known for its excellent project management skills, has been forced to revise its plan target from 22,000 MW to 9,920 MW. The PSU capacity addition programme went haywire because of different factors.

For example, the central sector generGandhar in Gujarat because of non-availability of natural gas, while 1,980 MW North Karanpura and 600 MW Loahrinag Pala projects were scrapped.

Commercial dispute with a Russian contractor led to slippage in commissioning of the 1,980 MW Barh-1 project in Bihar, which in turn impacted commissioning schedule of the 1,320 MW Barh-II.

NTPC had to change contractors initially hired for projects like 750 MW Bongaigaon in Assam and 520 MW Tapovan Vishnugod in Uttarakhand after they failed to deliver. That has led to delay in commissioning of these projects.

Similarly, DVC is also lagging behind on its 11th Plan capacity addition target. The public sector generator even failed to commission projects meant to meet additional power requirements during the recent Commonwealth Games in New Delhi.

NHPC is also struggling to expedite implementation work at its key projects like the 2,000 MW Lower Subansiri in Arunachal Pradesh.

It has also lostator could not start implementation work at 2,600 MW capacity expansion projects at Kawas and out to private sector on some projects where the company conducted feasibility studies. Private sector projects offered better terms to the state governments by way of additional free power and upfront premium.

The delay in executing projects by contractors who bag the project as the lowest bidder has also resulted in delays.

“ Time has come to evaluate whether the contractor has the ability to deliver as per schedule,” says Anil Razdan, former power secretary who has been engaged as an advisor by the ministry.

“The contractor’s ability to deliver should be judged by how much capacity it has commissioned in the previous year rather than by its installed manufacturing capacity. This should also be given weightage in the bid evaluation,” Razdan elaborated.