India needs INR 6000 crore import of power equipment annually

Friday, 06 Nov 2009

According to a report brought out by The Associated Chambers of Commerce and Industry of India, Indian power industry will have to spend about INR 6000 crore annually on purchase of power equipment through imports if it has to add 14,000 MW of generating capacities every year as intended by government since domestic availability of such equipment is not beyond worth INR 2000 crore.

The report namely “Power Industry : Why it is failing?” highlights increased dependence of domestic industry on imported power equipment as it is estimated that equipment worth INR 8000 crore would be required every year to put up power projects in thermal sector.

Dr Swati Piramal president of ASSOCHAM said that Bharat Heavy Electricals Ltd the largest equipment manufacturer is unable to meet all demand for equipment with surge in power generation projects under construction.

While releasing findings of the report, Dr Piramal pointed out that BHEL is scaling up its generator ratings from 500 MW to 660 MW and even above to meet demand for new technologies and is stated to be planning for making super critical steam generation equipment that improves conversion efficiency. Its total capacity is also to be raised from equipment 6000 megawatt a year to 10,000 MW meanwhile import will become inevitable as projected above and create huge prospects for investors in power sector especially from overseas part.

This itself reveals yet another area for investors which do not include the expected surge in nuclear power generation capacities to be setup in next few years for which also equipment would be required on a mega scale.

As per current plans set for nuclear power generation of 10,000 MW by 2020 has been raised up to 20,000 MW after nuclear fuel deal was signed and could even reach 40,000 MW. The rapid expansion of power sector would also create a huge demand for manpower, points out the Study.

The big push in further (thermal) power generation would no doubt come from the leading public sector company in the sector, NTPC. Its existing generation capacity is a huge 30,644 MW. It plans to add 22,400 MW during the 11th Plan, that is as much as 28 per cent of additional generating capacity would come from this public sector major.

The private sector was to add 10,760 MW calling for an investment of INR 43,000 crores. After the recent events that have raised the private sector confidence in government’s determination to fast track and expand power generating (and related transmission, distribution) capacity, and revival of the market conditions, the private sector is now in a big way in this area.

The Chamber has pointed out that India’s first and foremost needs to reduce the cost of generation from the high of 8 to 10 cents per unit as an early goal to reduce costs across the board in the economy. The power sector reforms, properly fashioned and implemented could, like in telecom, is a big step in making growth truly inclusive because the level and cost of energy usage will determine the whole range of issues in the economy of the country.

The Chamber has also recommended a comprehensive electricity production market that pays the full global cost of fuel will help eliminate inefficiencies in the current monopolistic state electricity supply system. Open access must be expeditiously operationalized by each State Regulatory Authority notifying a rational/ reasonable cross-subsidy. With a competitive electricity sector the increasing trend in the use of diesel Gen-sets could be reversed.