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We do need much larger power plant equipment manufacturing capacities, Shri R V Shahi, Former Secretary, Ministry of Power

1. In the last couple of weeks in April several reports have appeared on concerns and disappointments expressed by NTPC, state generating companies and Electricity Boards that due to supply constraints of plants and machinery by power plant manufacturers in general, and BHEL in particular, commissioning of several power plants has slipped to the first year of Eleventh-five year plan and that if supply and erection constraints were not there these plants could have been commissioned. The projects which have slipped include (a) Hydro projects - Maneri Bhali (Uttaranchal), Ghatghar PSS (Maharashtra), Jurala Priya (Andhra Pradesh), Balimela ST-II (Orissa), Purlia PSS (West Bengal) and (b) Thermal projects - Sipat-II U4, 5 (Chhatisgarh), Kahalgaon II U6, 7 (Bihar), Ratnagiri DHABOL JV (Maharashtra), Mejia U-6 (West Bengal), Dholpur (Rajasthan), GH TPP-II (Pune), Korba East Ext U 1, 2 (Chhatisgarh), Birsinghpur Ext. (Madhya Pradesh), Kutch Lignite TPS (Gujarat), Dhuvran (Gujarat), Paras Ext. (Maharashtra), Rayalaseema U4 (Andhra Pradesh), Bellary (Karnataka), Sagardighi U 1,2 (West Bengal), Bakreshwar U 4 (West Bengal), Santaldih U5 (West Bengal), Durgapur Ext U7 (West Bengal), Sugen Torrent (Gujrat), Raigarh, Jindal (Chhatisgarh), Konaseema (Andhra Pradesh), Gautami (Andhra Pradesh).

2. The capacities which were being attempted and have slipped are as follows:

Type Capacity Executing agencies
BHEL Others
Hydro 970 MW 550 MW 420 MW
Thermal 8,270 MW 5,825 MW 2,445 MW
Total 9,240 MW 6,375 MW 2,865 MW

3. All these are now being attempted to be commissioned is next few months. It is also true that part of the above capacity of 9240 MW was being tried in 2006-07 on "Best Efforts" basis. About 3,000 MW was in this category and balance about 6000 MW was definitely expected. It is a pity that we missed them primarily on account of supply of power plant parts and components; about 1500 MW for want of gas and part of them also on account of inadequacies on the part of construction and erection agencies. Some of them also suffered due to suppliers of balance of plants.

4. To be fair to BHEL it is a fact that a large number of orders were placed on BHEL and others in last four years thus leading to bunching of the commissioning requirements on a number of projects towards the end of tenth plan, an argument which BHEL has been rightly advancing. Most of the projects which have slipped were ordered in 2003-04. But it is equally true that they were doable, though challenging. It required augmentation of manufacturing on emergency basis, in certain areas.

5. For a sustained economic growth of 9-10% over a long period of time, electricity generation growth must be compatible. Even if we do not adopt a highly optimistic scenario, by the end of 15th five year plan i.e. 2032, our electricity installed capacity must rise to about 8,00,000 MW from the present about 1,31,000 MW. This obviously is a very challenging task. But if we have to provide the much needed support to all the segments of economic growth namely manufacturing, services and agriculture and provide power in rural India where success achieved is not at all satisfactory, the projected growth of capacity of power is essential.

6. In 1950 China was only 1,000 MW ahead of India in terms of installed capacity of power. Today China is above 4,00, 000 MW and we are at 1,31, 000 MW. According to the latest book "China Facts & Figures 2006" China produced 2475 billion units of electricity in 2005 as compared to 617 billion units (2005-06) in India. China achieved a growth rate of 12.3% in electricity generation. It added 92,000 MW of capacity, produced 2190 million tons of coal as compared to 350 millions tons in India. Unless our capacity base in each of the related sectors increases we could not hope of achieving satisfactorily a sustained double digit economic growth.

7. How China could achieve the type of economic growth as it did? Apart from many others factors, perhaps the most important would be a role of electricity. How could China create a capacity of almost 4,00,000 MW in last 55 years during which much period India could add 1,30,000 MW? Here again, apart from a number of other inputs the most important and crucial would be the role of the manufacturing base for power plant equipment and all related services China has an annual capacity in the manufacturing sector on power plant, of more than 70,000 MW. They have four main power plant manufacturers, the largest one has the capacity of the order of more than 25 thousands MW per year. In last 50 years of development of Bharat Heavy Electricals Ltd., we have been able to reach the figure of 5 thousands MW of manufacturing capacity per year.

8. In order that the subject does not getting to into a derailed discussion, it must be pointed out that within their limitations and capacity that BHEL have, they are doing well. Their plants are performing with NTPC, with electricity boards and generating companies, exceedingly well. One of the reasons that their turnover and profits have mounted in last five years is that from the limited infrastructure, they have been able to extract maximum output. This is indeed commendable. But all these are micro level issues, perhaps limited to a company. The macro level consideration would require whether in the national interest we could not have thought of larger manufa cturing base, if not at par with at least half of it as compared to China. Have we been very late even in raising this issue?

9. Shri Sushil Kumar Shinde, Hon'ble Union Power Minister has been emphasizing on setting up new Co. for creating additional manufacturing capacity for last one year. While preparing for 11th five year plan in early 2004 a very comprehensive interaction with BHEL indicated that they will have to go a long way to enhance their capacity from 5,000 MW to 8,000 MW and subsequently to 10,000 MW. BHEL top team assured the Ministry of Power that immediate actions would be initiated commencing from the middle of 2004 itself so that by the end of 2006 they are at a level that they could deliver 8,000 MW per year. Teams from the CEA, NTPC and Power Grid were deputed to assess the existing capacity, in the middle of 2004. They made suggestions to them. CEA team visited BHEL manufacturing plants towards the end of 2006 again. They came to the conclusion that they were far behind their preparation and progress in reaching the assured level of capacity.

10. NTPC and a number of electricity boards and state generating companies have been highlighting serious concern about supplies for new projects and also for the spare parts for the plants under operation. Visit to BHEL works and associated industrial units ancillary to their boilers works at Trichy, Ranipet and pipe center at Chennai clearly indicated that they needed to augment their capacity by at least 100% to cope with the massive demand. The issue is not limited to only BHEL but also to many others manufacturing factories which supply to power sector.

11. Interactions between BHEL and Power Ministry in early 2004 as referred to above also revealed that on the transmissions side they would need to prepare even more. Our dependence for extra high voltage transmissions system of 765 KV and for HVDC on outside is fraught with a number of problems. Domestic preparations on this score have been far from being satisfactory.

12. Problems faced in Tenth Plan should lead to learning aimed at urgent actions at BHEL level, in other manufacturing facilities and as a matter of fact at the national level. When we started Tenth Plan, capacity of about 22,000 MW was under construction. With the required thrust on commencing construction on new projects, in the last few years, a large number of projects were started. In the beginning of the Eleventh plan, projects of about 47,000 MW capacity are under construction at various stages. And, more will come in the pipeline. For 11th plan, preparations have been such that in the next one year we may expect another 20,000 MW to be awarded and to come under construction. This is going to place extraordinary pressure on manufacturers, and on construction and erection agencies.

13. If we have to meet the capacity projection of 800 GW by 2032 we should be planning in terms of following manufacturing capacity over next twenty five years.

Plan Addition BHEL Share
XI plan 70 GW 40 GW
XII plan 100 GW 50 GW
XIII plan 130 GW 65 GW
XIV plan 170 GW 85 GW
XV plan 200 GW 100 GW

14. It would call for multiple actions - manufacturing capacity, construction and erection agencies capability, project management. Manufacturing base in the country should be created and enlarged on a war footing keeping in view the following broad approaches.

  1. BHEL could think of retaining 50-60% market share. This in itself would mean that progressively every five year BHEL should raise the annual capacity to 10,000 MW, 15 thousand MW, 20 thousand MW and 25 thousand MW. This would take care of the domestic requirement which BHEL could hope to meet.

  2. One of the other flawed approach which manufacturing sector follows, is to create capacity link to their perceived demand of Indian market. Why should they not think that a good part of their production could also go out. In which case BHEL's preparation will have to be even on higher side.

  3. If BHEL were to meet 50-60% of domestic demand, balance will have to be met through import and by creating new manufactures. They could contribute in the successive five year plans to the extent of 5,000 MW per year initially rising to 10,000 MW per year. Such new organizations should definitely be aiming at top class state of the art manufacturing facilities and also new technologies. We may also assume about 20% through import.

  4. Linked to the above, similar projections and preparations would be necessary for balance of plants e.g. - coal handling system, ash handling system, D.M. plants, C.W. Systems, transformers and other electrical systems, control and instrumentation etc.

  5. Ministry of Power had also organized interactions with cement and steel manufacturers for their own perspective plans and preparations to match with the expansion requirements of the power sector.

  6. Construction Technology, Construction Infrastructure and construction manpower for the above would be another important aspect which manufacturing sector would need to attend to.

15. There is considerable scope for major expansion of BHEL. They must grow and become a leading manufacturer comparable to those in top five category in the world. At the same time there is scope for couple of new organizations to come up, which needs to be facilitated.