Power sector clocks 25% higher investments

Thanks to a private sector surge, the power sector has seen nearly 25 per cent higher investment flows than envisaged.

In the first two years of the current Plan period, the sector, especially generation projects, saw investments of Rs 2.28 lakh crore against the projected Rs 1.84 lakh crore, according to preliminary estimates complied by the Planning Commission.         

“Investment inflows have been buoyant in the power sector, well beyond projections, mainly on account of private developers coming into the picture. The private sector's contribution to capacity addition has gone up from 8 per cent in 2007-08 to 25 per cent in 2008-09 and now to 45 per cent during 2009-10. A number of these projects has come up as unplanned capacities,” an official involved in tracking project schedules in the Central Electricity Authority said.

According to the Planning Commission data, the power sector, easily one of the laggards among key infrastructure areas, is projected to see the highest levels of investment inflows during the Eleventh Plan. The projected investment in the electricity sector, including renewables, is pegged at Rs 6.66 lakh crore during the Eleventh Plan period, against Rs 3.14 lakh crore in roads, Rs 2.58 lakh crore in telecommunications, Rs 2.62 lakh crore in Railways, Rs 2.53 lakh crore in irrigation, 87,995 crore in the ports sector, Rs 30,968 crore in airports and Rs 16,855 crore in the gas sector. The cumulative investments being targeted during the five-year period is Rs 20.56 crore.

During the Tenth Plan, about 25 per cent of the total investment in infrastructure came from the private sector. This is expected to rise to about 36 per cent, during the current Plan, with the power sector leading the charge.

In the power sector, private promoters are primarily eyeing coastal regions of Tamil Nadu, Karnataka, Andhra Pradesh and Orissa, which are close to industrial hubs, to set up merchant capacities. States such as Jharkhand, Chhattisgarh, Sikkim, Uttarakhand and Himachal Pradesh are also being targeted by developers.

In terms of capacities on the ground, private developers accounted for 45 per cent of the 9,585 MW of generation capacity added during the last fiscal. The private sector's contribution to capacity addition has shown a progressively improving trend during the first three years of the current Plan period, despite difficulties in getting site clearances, problems in open access, lower preference in allocation of fuel linkages, and impediments such as the need to furnish bank guarantees for getting transmission corridors built.