India Energy Forum organised its
Twelfth Annual Event "India Power Forum at Delhi on 28th October,
2009. The Conference was inaugurated by Union Power Minister, Shri Sushil Kumar
Shinde. Prior to his Inaugural Address a number of issues had been brought out
by other Speakers including Mr. Bami, the President of India Energy Forum, Shri
Brahma, Power Secretary, and myself. Mr. Bami highlighted the issues which
might prove, for future ambitious programmes of capacity additions, to be
constraints. Particular emphasis was given by him on issues such as acquisition
of land, which in the recent past, has emerged as a major problem area,
availability of fuels, clearances of projects for environment and forest and
domestic capability on manufacturing of power plant equipment. I had the
opportunity of flagging, for consideration and action by the Ministry of Power,
the following few issues:
In the last three
to four years, Ministry of Power has particularly emphasised that one BHEL with
its limited capacity, even after its expansion, would be unable to cope with the
massive expansion programmes of Indian power industry. Particularly the
Minister of Power brought this issue, in a very significant way, at the centre
of discussion, and advocated that we needed to have a number of factories to
produce boiler, turbine and generator. This has led to atleast four joint
venture companies seriously pursuing development of such factories. What is
needed is to put in place a mechanism, may be with Central Electricity Authority
or any other agency, to periodically monitor the progress of these factories.
Experience indicates that BHEL made expansion plans in 2004, based on serious
pressure and follow-up by the Ministry of Power, to expand to about 10,000 MW
per year from their then existing capacity of about 4,000 MW per year. These
plans indicated that by the end of 2006, these expansion would be completed.
However, since BHEL took their time to place orders for plant and machinery,
their programme got delayed by almost two years, inspite of follow-up from time
to time. The suggestion is to institutionalise a mechanism jointly by the
Ministry of Power and the Ministry of Heavy Industry, so that future expansions
of BHEL as also of the other four or five Companies, which have started
developing the factories, meet the schedules and make available to Indian power
industry the required equipment as per the promises they make.
Balance of Plants,
experiences have shown in last four to five years, have given even more uneasy
moments while commissioning various projects. Preparedness on the part of
suppliers of BOP both in terms of manufacturing and despatch as per schedules,
and also in terms of constructing and commissioning these systems, when
delivered, have posed to be major hurdles. There is a need to interact with
industry bodies to inspire them to set up factories covering balance of plant
systems for power plant with required quality standards. Equally important is
the urgent need for such agencies to develop construction and commissioning
capability. What is important for the entire manufacturing sector - main plant
as well as balance of plant - to understand and recognise that it is not enough
to produce plant and machinery, it is equally important that they either create
in-house capability or encourage and facilitate creation of good out-sourcing
agencies, so that once manufactured and supplied there is no gap in construction
The entire blame
for inadequate number of manufacturing organisations and also the commensurate
construction and commissioning outfits cannot be placed only on the
manufacturing sector. To be fair, a good part of the blame also belongs to
power generating companies, particularly the leading ones, which have been
somewhat harsh on formulating the qualifying requirements for considering such
new initiatives. They need to recognise and appreciate that no new factory or
any construction and commissioning outfit can have prior experience and that too
of two to three years. If they have, they would not be new, and if they don't
they would not be considered. This creates a riddle difficult to resolve. The
worst consequence of this flawed approach has obviously to fall on none other
than power sector itself. Wisdom, therefore, lies in power generating
utilities, particularly leading companies like NTPC, to formulate workable and
practical strategy which can lead to development of a number of manufacturing,
construction, erection and commissioning organisations, so that in the new orbit
of ambitious expansion of power sector, the problem of equipment supply and
their commissioning becomes the matter of the past.
restructuring and reform in the coal industry, which is so vitally linked to the
growth of power sector, and whose restructuring has been as necessary as it has
been for the power sector, the liberalisation of captive coal blocks, which was
initiated in 2005, has no doubt, been a remarkable initiative. Based on this
Policy orientation, a large number of power project developers have been
allotted coal blocks. However, progress on coal mine development in these
blocks has been rather slow. Some of the reasons do belong to power project
developers. But, a number of reasons belong to the coal industry in the public
sector and the Coal Ministry. Obviously, these captive mines developers cannot
be expected to create, in large coal bearing areas, Master Plans, common
infrastructure such as road networks, railway lines etc. which would be needed
by all these mines developers. Also, availability of reliable Geological
Reports from the Coal Mines Planning and Development Institute (CMPDI), a
subsidiary of Coal India, and land acquisition for which there is a separate
legislation, have been some of the important issues standing in the way of
smooth progress. Allotment of blocks has been a commendable beginning. But, we
may not get coal, atleast as per the required schedules, for the projects which
are being developed, if these issues are not addressed by and among the
Ministries of Power, Coal and Railways. Quite apart from captive coal blocks,
development of coal mines by the public sector coal companies, to match the
schedules of power project commissioning, is also a matter of serious concern.
Act 2003, and several other policy initiatives taken in last few years, response
of private sector as also growth plans of public sector companies have been
highly satisfying, so much so that more than 80,000 MW of projects are under
construction. Chinese manufacturing companies have taken keen interest. At
present projects aggregating to about 21,000 MW are under construction and a
large number of Chinese Engineers and Technicians are engaged in these
construction and commissioning activities. The recent decision of the
Government that all the foreign personnel need to go back by 31st
October, 2009 (earlier this date was 30th September, 2009), has put a
question mark on the construction progress in these projects. 21,000 MW is not
a small number. This type of a decision would have serious adverse consequences
and, therefore, this issue needs urgent attention and remedy.
Shri H.S. Brahma, Secretary,
Ministry of Power, responded to the two major issues concerning the doubt about
availability of coal and the problems concerning issue of VISA to Chinese
personnel. It was assure that these issues would definitely be attended to
by the Ministry. Besides, he advised the private sector that responsible and
capable EPC agencies should come up, so that the ambitious capacity addition
programmes are adequately and suitably handled by such agencies. He expressed
concerned that in North-Eastern region, a large number of private developers
have got a number of hydroelectric projects allotted to them, but most of them
are not pursuing these projects seriously. Development of hydro projects is
necessary not only to address our power problems and take care of climate change
issues, but also it is essential for the development of North-Eastern region.
Efforts of private sector companies need to be intensified.
Shri Sushil Kumar Shinde,
Hon'ble Minister of Power, addressed the Conference and extensively covered a
large number of issues which are given below:
"The Theme of this year's Conference "Challenges
of Mitigating Power Shortage" is indeed very aptly chosen. Until the time,
every household in India is provided adequate electricity, industry gets
uninterrupted and reliable power supply, agriculture does not suffer for want of
electricity and our children do not get disturbed in their studies for lack of
electricity supply, power shortage will continue to be a great challenge for
us. Equally strong is, and will continue to be, our determination to ensure
that "Power for All", the promise that we have taken, is made a reality.
It is with this Vision and Mission, that our
Ministry is making all possible efforts to meet the challenges and see that
adequate electricity is generated, that reliable transmission systems are put in
place, that customer friendly distribution practices are established and that
efficient consumption of electricity becomes a norm and a habit. All our
legislative and Policy initiatives, which we have taken in last few years, aim
at achieving the above objectives. If you just focus at the initiatives and
actions, launched in last five years or so, you would recognise that
architecture of electricity sector has not only been overhauled - a process that
still continues - but also customers have become the central point of all our
efforts and activities.
The speed, with which we are able to capture the
needs for changes and reforms, could be assessed by the series of Policy changes
that have been taking place. Only recently, we have revised the Policy on Mega
Project benefits responding to the desire of the industry to make it more
practical and workable. The new definitions of Commissioning of power plants
will, I am sure, inspire our power plant personnel to construct and commission
the new power units with desired seriousness. And, this would ensure that when
a Unit is commissioned, it really delivers electricity at almost its capacity.
Obviously, you would all agree, we should not be encouraging ceremonial
I am happy to suggest that within two and half
years of the current Five Year Plan, we have been able to commission about
18,500 MW, as compared to almost similar numbers done, in the past, during the
entire Plan period. We could have definitely done even more if only the power
plant equipment manufacturers - both main plant and balance of plant - had been
somewhat better prepared to manufacture, despatch, erect and commission.
We had the first meeting of the Power Advisory
Group, which has been constituted under my Chairmanship, on 25th
September, 2009. We analysed, in detail, the possibilities of capacity addition
during the current Five Year Plan. As you are indeed aware, power projects have
long gestation periods - ranging between four to six years. Therefore, what you
plan in one Plan period, you get them in the next Plan period. Fortunately our
preparations on the new projects - Central Public Sector, State Sector and
Private Sector - in last four to five years, have been such that more than
80,000 MW of projects have been in implementation during this Plan. We had
targeted 78,000 MW for this Plan. We could achieve this provided the equipment
suppliers could fulfill their commitments on schedules. The Reviews indicate
that even with the problems with respect to these Agencies, there is a high
degree of certainty that we could still achieve more than 62,000 MW. This will
be almost three times of what we have achieved in any one Plan period.
Quite often, a point is made in various
discussions, as also in Press and Media, that if China could achieve almost
70,000 MW per year of capacity addition why India cannot do so. This is a valid
concern. While India has its own systems of dealing with various issues of
sanctions and clearances, including environmental approvals, which are quite
different from China, yet, the biggest difference is that China has been able to
create a power plant equipment manufacturing capacity of the order of over
70,000 MW per year, as compared to less than 10,000 MW that we have in India.
In fact, the capacity of BHEL, just two years back, was only about 5,000 MW per
We raised this issue - rather loudly and strongly
- that this is the biggest hurdle in our ambitious expansion programmes. It
took sometime for these concerns to fructify into definite actions. Today,
there are atleast four Agencies, other than BHEL, which are seriously pursuing
the power plant equipment manufacturing business. We expect that in five years
time the total manufacturing capacity would rise to over 25,000 MW per year.
Power Grid Corporation of India has, no doubt,
been doing an extremely important job and has been undertaking the
responsibilities of transmission for public as well as private sector projects.
But, this organisation alone obviously cannot cope with the total requirement.
The recent initiatives of the Government include private sector transmission
projects to be developed on competitive basis, just as Ultra Mega Projects are
being developed through Competitive Bids. In a few years time, we do expect
substantial transmission capacity also through private sector route.
Our commitments and efforts .are, no doubt,
directed towards increasing the power generation capacity and commensurate
transmission systems, so that power shortages are minimised. Yet, we are
equally concerned about reforms in the distribution sector, and challenges in
the field of rural electrification. The restructured APDRP, based on the
experiences of Tenth Plan, is being implemented and monitored in a manner that
the targets in the urban area distribution should definitely be achieved.
Similarly, under Rajiv Gandhi Grameen Vidyutikaran Yojna, we are confident that
during the current Five Year Plan, the challenge of electricity access in rural
India should be behind us. Of course, another challenge to provide adequate
electricity will remain for all of us to tackle. The recent initiative, under
this Scheme, on Decentralised Distributed Generation, by the REC, would
definitely lead to a meaningful contribution towards mitigating power shortages
in rural India.
I have said this in the past. And, I will like to
reiterate. We have shortage of power. But, we also use electricity in
inefficient fashion. If only we consumed electricity efficiently, we could save
almost 20%. In last few years, we have taken several initiatives through Bureau
of Energy Efficiency. We need committed co-operation of all sections of society
- Manufacturing, Agriculture, Offices, Shops, Malls and Households - not only to
be aware of the need and methods of energy conservation, but also to effectively
act on these. This makes economic sense for them. But, more importantly it is
a national need. "
In the concluding Session, which
was addressed by Shri Bharatsinh Solanki, Minister of State for Power, I had the
task of summarising the conclusions and suggestions of the one day Conference.
It deliberated, in two important Plenary Sessions viz. "Meeting the Eleventh
Plan Targets - Issues and Possible Solutions" and "Financing, Transmission,
Trading, Open Access and Merchant Plants" on various relevant issues. Besides a
number of points already made, I would only outline a few important points
highlighted in this Session:
construction is in full swing on 80,000 MW projects meant for Eleventh Plan,
including the projects which have already been commissioned, there is a high
degree of certainty that about 62,000 MW will be commissioned.
role has been increasing and in the Twelfth Plan it could be as high as 50% of
the capacity addition, which is a very healthy sign.
There is definitely a need for coordinating the captive coal mine development by public
and private sector companies and a need for development of common infrastructure
in an institutionalised manner. Resolution of other common problems of various
captive mine developers also needs urgent attention.
The issue of VISA
for Chinese Engineers and Technicians needs immediate resolution.
Ministry of Power
may set up a mechanism whereby the expansions of manufacturing capacities (Main
Plant and Balance of Plant) are monitored closely and effectively.
coal is bound to emerge as highly critical. Development of coal mines by coal
companies, by captive mine developers and import of required amount of coal
together with acquisition of coal mines abroad, will all need to be
appropriately co-ordinated and monitored by the Ministry of Coal with the
assistance of Power Ministry.
Development Programme requires huge financial resource, both by way of equity as
well as through loans. The present cappings, for the purpose of lending, for
the business group as well as for the sector, need to be suitably enhanced.
Considering the limited number of business groups which have entered and are
entering the power sector, the existing group capping is proving to be
inadequate. The sectoral capping has all the justification to be increased
because, if we exclude railways, 50% of the total fund requirement for
infrastructure, is required by the power sector.
Open Access in
distribution is being resisted in a few States by wrongly interpreting Section
11 of the Electricity Act 2003. In this regard, the Union Power Minister, Shri
Shinde, made a very welcome declaration in the Inaugural Session itself that the
legal provisions are quite clear, that practices adopted by a few States, using
this emergency provision, to prevent Open Access, is not in accordance with
Law. However, if States continued in this manner, Ministry of Power may even
bring an amendment to the Act, if required.
are coming up. They will definitely facilitate electricity market development.
Required cushion in transmission capacities, which are of the order of 30%
additional as suggested by CEA, would go a long way in promoting transactions
through merchant plants. Completion of these transmission systems in time would
be essential and hence they need close monitoring.
Corporation and Rural Electrification Corporation could also provide, in their
portfolios, a reasonable proportion for funding equity and supporting such
promoters as may need such equity assistance. Other finance Companies and Banks
may also be approached for similar dispensation.
Thus, this one day Annual Event
of the India Energy Forum did succeed in bringing out important critical
issues. Resolution of these could definitely enhance the possibility of meeting
the targets and in preparing the sector for even higher targets in Twelfth and
future Five Year Plans.