More foreign investments likely in power sector, says Shinde

With first major foreign direct investment (FDI) into the power sector coming through from Sembcorp Utilities into Gayatri Projects and investment of Rs 1,100 crore, the Union Power Minister, Mr Sushil Kumar Shinde, today said that the country is poised for more overseas investments into the sector in future.

Even though the Centre had decided as early as 2003 to allow 100 per cent FDI into the power sector, the investment flow has not come through. “There are enough signals to show more investment flow is likely into the power sector. Global investing community is convinced about the huge demand-supply mismatch and the potential in the sector,” Mr Shinde said.

“Most of the foreign investors come in, enquire and then stay away from making any new investments. But the situation has changed. This is reflected from increasing interest from lenders to fund power projects. We have deployed three teams to constantly monitor proposals and sort out any irritants. This includes my personal supervision,” he said

“The per capita consumption of 700-800 kwh is quite low compared to developed economies. As per indications, this is poised to grow to about 1,000 kwh per person by 2010. With huge demand and supply gap, investors sense an opportunity to plug into this. The approvals for four ultra mega power projects of 4,000 MW each with investment of up to $4 billion (about Rs.18,000 crore) each reflects that interest,” the Minister said.

Referring to Enron and its fallout on the investments into the power sector, Mr. Shinde said that the Government had decided to revive the project at any cost. About Rs 10,000 crore was paid to two firms GE and Bechtel. The project has been revived and now generating 1,900 MW. The Plan projects have fallen short due to delays in orders and also lack of capacity of suppliers. With at least five equipment companies, including that of L&T, Bharat Forge, Alstom, Toshiba, now in the fray along with BHEL, we see this paving way for faster implementation of projects, he said.