May 1, 2012
Addressing the US-India Business Council in Washington, D.C., on April 16, 2012 Minister for Power Mr. Sushilkumar Shinde called upon the U.S. industry to explore emerging investment opportunities in Indian power sector and consolidate existing partnerships and projects between the two countries. Giving an outline of the growth of Indian power sector, Mr. Shinde said that the present installed generation capacity of India was about 200 GW of which 55 GW had been added during the 11th five year plan (2007-12). He underlined that this addition was about 2.5 times of what was done during the 10th plan and more than the combined capacity generated during the 8th, 9th and 10th plans. Stating that the share of the private sector in the capacity expansion had gone up substantially from 10 percent during the 10th plan to 33 percent during the 11th plan, Mr. Shinde added that 50 percent of the capacity in the 12th plan would come from the private sector. He said that total investment in power generation segment during the 12th plan would be around $120 billion. He observed that by the end of 12th plan, inter-regional transmission capacity would be more than 38 GW. He also shared that the highest voltage level in the world, 1200kV UHVAC test station had been test charged at Bina in Madhya Pradesh while the world’s longest b800kV HVDC multi-terminal bi-pole link of 2,000 kms from Biswanath Chariali in the northeast region to Agra in the northern region was undergoing implementation.
Further, he added that the transmission sector had also been opened for private sector, which is expected to have an investment of $36 billion during the 12th plan. Addressing concerns of the investors, Mr. Shinde said that the government is taking various steps to facilitate reforms in the power sector. He said the Electricity Act 2003 allowed the sector to align itself with market dynamics and facilitate greater participation by the private sector. He made a special mention of the budget proposals of 2012 that could help stimulate investments in the power sector. The minister said that the rate of withholding tax on interest payment on external commercial borrowings (ECB) was proposed to be reduced from 20 percent to 5 percent for 3 years. He added that the ECB had also been allowed to partly finance the debt of existing power projects.
Moreover, he shared with the delegates that as far as fuel is concerned, Coal India Limited was likely to sign fuel supply agreements with power plants having long-term PPAs with distribution companies and getting commissioned on or before March 31, 2015. He also touched upon health of discoms. Mr. Shinde said the total investment estimated in distribution sector in the 12th plan was $60 billion. The minister appreciated the emphasis given to the use of environ-mentally clean renewable, hydro and nuclear energy in the 12th plan. He discussed the low-carbon growth strategy to ensure sustainable development of the power sector. He would also seek increased use of super critical technology in 13th Plan and will encourage initiatives on energy conservation.
Source: India Review, A Publication of the Embassy of India, Washington, D.C., USA