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GOVERNMENT MAY LOWER POWER GENERATION TARGET

India may be lowering power capacity addition target for the 12th Plan (2012-2017) by as much as 25,000 megawatts (MW), making it even less likely that the country’s long-standing electricity shortage will end any time soon.

The target may be cut to 75,000MW from 100,000MW from conventional sources, according to a government official, owing to chronic fuel shortages and resistance to land acquisition, among other reasons.

A final target will be fixed following discussions among the ministries of power, coal and the Planning Commission, India’s apex planning body, this person added, asking not to be named.

Power minister Sushilkumar Shinde confirmed that the earlier capacity addition target was being revisited due to fuel availability issues.
“A final number is yet to be fixed,” he added.

India, primarily dependent on coal for power generation, is facing its worst shortage of the fuel. Power firms consume 78% of the total domestic production of coal, with some 55.7% of the installed power generation capacity of 186,654MW fuelled by it. Much of the proposed addition of 100,000MW was also expected to be coal-based. It takes around 5,000 tonnes of coal to generate 1MW of power.

Similarly, the focus on gas-based capacity is being scaled down in the wake of declining production from Reliance Industries Ltd’s D6 block in the Krishna-Godavari basin, India’s largest reservoir of the fuel.

“The Planning Commission will take a final view after taking everything into consideration,” added the official.

The country’s per capita electricity consumption is at around 700 units, less than one-third the global average, yet it faces a 10.2% shortage during peak hours, between 5pm and 11pm. The shortage is expected to worsen with electricity demand expected to soar by 55.5% by the end of the 12th Plan.

“We’re now looking at around 75,000MW from conventional sources of energy such as coal, gas, nuclear and hydro. In addition, captive power and other sources would add to a total of around 93,000MW,” said the official.

Unable to mine enough coal, state-owned Coal India is expected to miss supply targets for the current fiscal. While CIL has an 82% share of the country’s coal production, it has been unable to keep pace with rising demand. India has 75 thermal power projects that depend on CIL for fuel supplies.

Rating agency Fitch said in a January report: “Fitch believes that domestic fuel availability will be low in 2012 compared with the rising demand from power projects due to environmental and land issues faced by the largest domestic coal supplier—Coal India.”

CIL’s production remained stagnant in 2010-11 at 431 million tonnes (mt), but has been targeted at 452 mt in the year ending March, despite being crippled by a strike and flooding in east India.

The quantity of coal committed to the power sector is 347 mt in the current fiscal, with the estimate based on a 10-12% increase in coal production. Regulatory and environmental hurdles have, however, curbed this growth to 2%, limiting the supply to 320 mt. The scarcity has widened from 4 mt in 2004-05 to 40 mt in 2010-11.

India’s track record in adding power generating capacity is poor. It’s set to miss a revised target of 62,374MW and will only be able to add around 52,000MW by March-end. The original target was 78,577MW. In the five years to 2007, the country added 20,950MW of capacity, against a target of 41,110MW.

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