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Achieving Eleventh Plan Power Generation Capacity Targets , Shri R V Shahi, Former Secretary, Ministry of Power

The best that has ever been achieved in terms of power generation capacity in any Five Year Plan is about 23,000 MW. In the Eighth and Ninth Five Year Plans, the achievement was less than 50%. In the last Five Year Plan (X Plan), it was somewhat better but less than 60%. The Working Group on Power for Eleventh Plan projected an additional capacity of about 67,000 MW but a number of projects which were targeted to be commissioned during the last year of the Tenth Plan (2006-07) slipped over to the next year i.e. first year of Eleventh Plan. The capacities of these projects add-up to about 11,000 MW. Thus the overall target for the current Five Year Plan is of the order of 78,000 MW.

By any standards, and particularly keeping in view the country's past performance, the above target is, if not impossible, highly challenging. The silver lining, however, is that more than 50,000 MW of capacity is already on ground under construction at various stages of development. That is why the comfort comes from the fact that in the beginning of Tenth Plan less than 20,000 MW was under construction. While the task is mammoth, if concerted efforts are made, all inputs are coordinated and orchestrated well and, above all, a dedicated monitoring system is put in place it cannot be said that the target is undoable.

The ASSOCHAM organized on 30th November, 2007, a one day seminar with focus on achievement of Eleventh Plan capacity target. I had the occasion to make a special address in the inaugural, besides also chairing the session on the main theme. While specific issues of project management and monitoring techniques could be left for a future discussion in a separate paper, in this piece I propose to dwell upon only the fifteen specific suggestions which I presented in this seminar as a part of the special address.

  1. After commissioning of some of the projects during the current year, about 50,000 MW of capacity is under construction. What had been envisaged by the Working Group in December, 2006, before finalizing the report, that all projects identified for Eleventh Five Year Plan must be brought under construction pipeline latest by December, 2007, in case of thermal projects and latest by March, 2007, in case of hydro projects, so that sufficient gestation period is available for construction and commissioning of these projects. About 25,000 MW capacity projects are yet to be ordered. These include projects of Central Public Sector Undertakings, State Generating Companies as well as Private Companies. Meticulous monitoring is needed so that latest by March, 2008, letters of awards for these projects aggregating to about 25,000 MW are placed. If it is not done, we may have to forget about these projects having any good possibility of coming on stream during the Eleventh Five Year Plan. Placements of Letters of award (LOA's) should be put on a weekly monitoring.

  2. At the intervention and with the active involvement of Ministry of Power, a Programme of Action was identified in early 2004 for expansion of the manufacturing capacities of BHEL Boiler factory at Trichy, Turbine Generator factory at Haridwar and also of their factories at Hyderabad, Bhopal and Bangalore. It appears essential that a weekly follow-up and monitoring mechanism is put in place so that various activities of these expansion programmes are implemented as they have been targeted. There is a perception that there are considerable delays which have already caused problems in respect of Tenth Plan projects and may cause more slippages and problems for Eleventh Plan projects.

  3. Quite often delays in supplies by BHEL are entirely attributed to BHEL. Perhaps it is not commonly known that their factories, particularly the Boiler Unit at Trichy, Piping Centre at Chennai and the factory at Ranipeth are heavily dependent on outsourced supplies by ancillary units. Experience has shown that quite often these ancillary units have not kept to their schedules in turn severely jeopardizing the completion of BHEL's own supplies in time. The point is not that BHEL gets an opportunity to pass on the responsibility to these units : the point really is that it is the responsibility of BHEL to see that (a) more and more ancillary units with competence and quality are developed and (b) the existing units also take action to expand their capacities and capabilities. Here again there is a need to put in place a weekly follow-up mechanism to ensure expansion of these capacities in a time bound manner.

  4. In addition to BHEL there are a few other organizations which have also started manufacturing some of the main plant equipments. Actions proposed above in respect of BHEL and also with reference to their ancillary factories are equally relevant for these main plant equipment manufacturers. Accordingly similar monitoring mechanism will be needed to ensure augmentation of their capacities as per the targeted time schedule, as also for augmentation of their ancillary units.

  5. There are a number of instances of plants commissioned in the past, as also plants under the process of being constructed now, where a number of other systems such as Coal Handling, Ash Handling, Transformers, and other related auxiliaries are not kept in tune in terms of schedule for commissioning of the power plant. Balance of Plants (B.O.P.) has therefore also emerged as a critical bottleneck holding the process of smooth project construction. This problem is likely to get aggravated when we are trying in the range of 80,000 - 90,000 MW in a Five Year Plan. Immediate action is therefore needed to (a) create some new agencies on systems such as CHP, AHP etc. and (b) motivate and monitor expansions of existing factories under this category.

  6. A cursory examination and analysis indicates that in the B.O.P category there are a large number of manufacturing facilities which have yet not adopted three shift operations - some of them operate only in general shift. A case by case suggestion to switch over to three shift operations could release lot of additional supplies thereby reducing the pressure and problems.

  7. When the activities during the current Plan are going to multiply almost four times, transport and supply of power plant equipment is definitely going to be a major issue. Quite often, the experience shows, they became an issue even at the present level of activities. Delays in timely receipt of equipment and materials attributable to transport problems have been many in the past. Major equipment manufacturers and others need to proactively interact with transport agencies well in advance rather than make everything critical at the eleventh hour.

  8. Another issue related to transport is also the despatch strategy of some of the equipment suppliers who invariably want to bunch together supplies meant for a large number of clients and in the process end up disturbing the erection and commissioning schedules of many projects. They need to keep in mind that sometimes a very nominal saving in transportation cost which might be achieved through such bunching may lead to losses to their clients which may be many more times the savings achieved. This should be avoided.

  9. Most of the projects which slipped from 2006-07 to the current financial year, were expected to be commissioned within first 6 to 9 months of the current year. Accordingly by December, 2007, more than 10,000 MW should have been brought on stream because they were the spill over projects of last year. Unfortunately, the performances do not match this expectation and more importantly the commitment of the main plant suppliers. I have done an analysis of a number of these projects. They suffered first by way of delayed manufacturing and despatches of plant and equipment, and subsequently delayed movement resulting in late arrivals at project sites. These caused between three to eight months of delays. Now when the equipment is at the sites, these projects are suffering on account of totally inadequate strength of construction and erection agencies. There are examples - and any number of them - where if a priority given to one project then the same erection/construction people shift to that project leaving the other projects where they were working high and dry. There are also examples where if the priority is given to one unit at the same project site the other units suffer severely. These are symptoms which reflect total lack of imagination and advance planning. If the equipment manufacturing capability has to rise two times and subsequently three times, it does not have to be over emphasized, that compatible with such upgraded capacities, construction and erection capabilities have also to be in tune with. We are faced with an unprecedented growth opportunity requiring extraordinary preparations and alertness. Therefore, we have to think, deviating from oft-beaten track, and generate out-of- box solutions. If NTPC or BHEL or similar organizations in these categories were to think that erection construction is somebody else's job, conventionally they could be right but they would have failed to recognize their new and non-conventional roles. Therefore they ought to pool together their resources and facilitate creation of new construction and erection agencies, expansion of existing agencies and also assisting them so that these agencies equip themselves with modern techniques, technologies and tools and tackles. This issue will also require to be brought under scanner for regular monitoring.

  10. Inspite of there being so many Polytechnics and Industrial Training Institutes, skilled manpower is posing to be a constraint. These people are required in every sector and that too in big numbers. All sectors are growing rapidly. A few years back Civil Engineers and Diploma holders found it difficult to get jobs. Today they are the most scarce categories of people. Even bigger mismatches have surfaced for a number of skill trades - welding, fitting, electrician etc. Crash programmes of shorter durations (3 to 6 months) focused exclusively on specific skills may generate, into the system, large number of such people. Who will do this? If utilities think that it is none of their business, and if power plant manufacturers think that running their factories only is their business, both of the groups could think so, historically and conventionally they could be even right, but both of them would emerge losers : and even bigger loser will be the power sector and consequently the Indian economy. We need to get out of a routinsed approach, learn from what consumer oriented industries and banking systems have already started doing. These crash programmes, it is recommended, should be facilitated, to the point of their happening, by major utilities like NTPC and major manufacturers like BHEL. This needs to be taken up immediately in collaboration with technical training institutions.

  11. In the past, the country has been used to commissioning 10 to 15 projects in a year. Now this number will have to rise to commissioning of 50 to 60 units in a year. Commissioning teams of various equipment suppliers will be totally unable and inadequate to cope with this size of commissioning operations. As a short and medium term strategy getting back into these organizations the retired commissioning engineers could deliver the desired results. Suitable augmentation of commissioning teams in terms of numbers as also in terms of discipline, on a higher side of the need, will have to be the long term strategy. It is understood that this process has started but it is at a much lower pitch than required.

  12. Three Ultra Mega Projects of 4,000 MW capacity each have already been finalized. Deliberately in the Working Group we had not identified any significant capacities from this group of projects thinking that capacity added from them could be a bonus. What is being suggested is that a realistic targets could be given to them since more than four years are clearly available to each one of these agencies. But, hand holding to tighten the loose ends, if any, and to provide the required support from Government should continue with a clear understanding that each one of them could deliver two units within Eleventh Plan, in which case about 4,000 MW extra could come in. This exercise of continuous follow-up, both for providing support and for extracting committed performance, may lead to achieving what is being suggested.

  13. A separate Task Force to support and facilitate Merchant Power Plants and Captive Plants with periodic monitoring, say on a monthly basis could definitely provide 5,000 to 7,000 MW of capacity from each category. I am aware that there are a number of agencies which are committed and are sincerely pursuing these projects. A little bit of support from Governmental agencies to tie-up the missing links could make all the difference. An institutionalized arrangement, focusing only on these groups, with periodic follow-up could yield the desired outcome.

  14. Very nominal capacity was provided for Gas based power plants in the Eleventh Plan. The clear understanding was that when there is clarity about the schedule of KG Basin gas these capacities could be reworked. A dedicated Task Force with clear mandate to come out with about 6000 to 7,000 MW of projects which could be provided the commensurate gas linkage, it is felt, can deliver the results. It must be noted that Gas Based Plants would require a gestation of 24 to 30 months. If we are able to concretize this even in next six months we are sure to get these capacities.

  15. The Inter Institutional Group (IIG) between the Ministry of Power and financial institutions, which was set-up in early 2004, needs to be reactivated. There are a number of private sector power projects which can be financially closed and completed within Eleventh Plan. But, through this mechanism they will need the support of authorities and agencies for various inputs. The experience of IIG was highly rewarding and if it is pursued on a regular basis there could be good contribution toward filling-up the gaps, if any, on the targeted capacity.

These are, by no means, exhaustive list of actions necessary to achieve the target. An attempt has been made only to highlight the important steps which might go a long way towards achieving our goal. In addition to what power companies or what power plant equipment manufacturing companies need to do - and it is these which have been highlighted in this paper - there are a number of things which various other agencies such as Railways, Ports, Coal Companies, Gas Companies, Cement Manufacturers, Steel Manufacturers have to undertake and participate in the process of magnificent growth of Indian power sector. Commensurate expansions of capacities in each of these would be a must. Their expansion is not going to be rewarding only for power sector or to the economic activities in general but also to these organizations themselves. Their own profile and profitability will rise rapidly.