Most power capacity remains unused due to shortage of fuel

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Power assets are getting stranded. Though generation capacity is being added, it cannot be utilised optimally to service the loans due to shortage of fuel. Most plants are operating at a plant load factor of 50 per cent and a further decline would hurt the plants, according to power industry officials.

The installed capacity in India is about 1,86,000 mw (some industry officials say it has crossed 2,00,000 mw) but the peak delivery was not more than 1,20,000 mw.

With over 57 per cent of the total installed capacity being coal fired power plants, the demand for coal from the power sector was estimated to be 682 million tonne by the end of 12th Five Year Plan.

“Though 70,000 mw equipment was needed for various plants, orders have been placed only for 30,000 mw so far,” said S Chandrasekhar, MD of Bhoruka Power Corporation, at the Regional Power Conference, organised by Confederation of Indian Industry.

About 45,000 mw of the 88,000 mw planned to be added in the next five years would have to come from private parties. However, the land acquisition costs have gone up significantly and this would affect the plans.

Over 5000 mw gas-based capacity is underutilised due to shortage of natural gas. Evacuation of coal from mines, availability of wagons, congestion of routes, unavailability of labour have led to several plants operating below their optimal potential. With almost 50 per cent of the 189 million tonne of imported coal expected to land in ports along the East Coast.

“Over 30 cent of the existing plants are over 25 years old and therefore not efficient. Changes to these would increase the availability of power,” said A Pattabhi Ram, CEO of East Coast Energy, which is setting up a 1320X2 mw coal based thermal plant in Srikakulam district of Andhra Pradesh.

According to B Ramesh Krishna, head, business development (PG SBU) of Tata Projects Limited, things would work out better if companies setting up power plants adopted a new model- giving equity to landowners.

“Long duration contracts with fixed prices were a challenge. Banks are reluctant to enhance the lending limits to the power sector due to the present performance of the plants,” he said.

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