The massive global industrialisation can easily be attributed to the availability of electricity. Be

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it 24/7 workplace efficiency or faster connectivity and global reach, electricity has had a role to play.

In India, while rapid industrialisation has raised the dema-nd for electricity, its supply has been far short of expectations. Successive governments have failed to meet targets set under the five-year plans. The target of 78,000mw of additional power generation, which was set under the 11th five-year plan, looks too distant to achieve.

Surya P Sethi, principal advisor to the Planning Commi-ssion, recently said, “The power generation target of 78,700mw is not achievable by 2012. If everything goes well, then generation capacity of around 40,000mw would be added.”

“To what extent we will reach the plan target of 78,700mw is a question mark,” Planning Commission member Kirit Parikh has said.

Power gap

Despite the setback, there is a genuine desire on the part of the government to bridge the demand-supply gap. The government changed its strategy to meet the widening gap by announcing 14 coal-based ultra-mega power projects (UMPPs), with a capacity of 4,000mw each.

As of now, the government has allotted four projects — three to Reliance Power and one to Tata Power. Three other power projects are coming up for bidding in two months.

Most state-owned and private power companies have big capital expenditure plans for the coming years. Companies such as Reliance Power, Tata Power, Adani, Suzlon and even smaller players such as Ghodavat Energy hope to increase existing capacities by diversifying into renewable sources, such as wind and solar power.

“Tata Power, which has a total installed capacity of about 2,300mw both in thermal and hydro-based plants, plans to add another 5,760mw over the coming three to four years. The company’s largest project, the 4,000mw UMPP plant in Mundra, its first unit, is expected to go on-stream by 2012,” Prasad Menon, managing director of the company, said after presenting the fourth quarter results recently.

“Another 200mw capacity is planned during the present financial year, including the 120mw unit-5 of the Jojobera plant in Jharkhand, 30mw in Haldia and 50mw of wind power. The first 525mw unit of the Maithon power plant in Jharkhand is planned to be commissioned in financial year 2011, followed by the second unit in the same year,” he said.

Similarly, Adani Power, a subsidiary of the Adani Group, has four thermal power projects under various stages of development with a combined installed capacity of 6,600mw. In addition, the company is also planning to develop two power projects with a combined installed capacity of 3,300mw.

Also, making an entry into mega thermal power, Adani Power started power generation at the first unit of its 4,620mw coal-based thermal plant in Mundra. It commissioned and synchronised its 330mw unit by producing 50mw of power. The project involves an investment of around Rs 20,000 crore and comprises four units of 330mw each and five super-critical units of 660mw each. The company intends to start these units over the next three months.

The company also plans to utilise the proceeds from its initial public offering (IPO), which is likely to open in July, to part finance the construction and development of the 1,980mw Mundra Phase IV power project and to part finance the construction and development cost of a 1,980mw project at Tiroda, Maharashtra.

Reliance Power has already bagged three UMPPs and has other gas and coal-based power projects, which are in various stages of development. Besides, highly-industrialised states such as Gujarat are always in need of additional capacities. To ensure long-term power supply, state power utility Gujarat Urja Vikas Nigam (GUVNL) intends to ink long-term purchase agreements with power companies. It is aiming to attract power suppliers for 2,400-3,600mw of power. GUVNL’s move will attract Rs 15,000- 20,000 crore of additional investment in the power sector in the next few years. Gujarat has a deficit of close to 2,000mw during peak hours.

Rising domestic need is pushing both government and private players to look at alternative energy sources. The targeted capacity addition to wind power during the 11th plan period has been estimated at 10,500mw. During 2007-08, about 1,663.32mw of capacity was added and in 2008-09

(till January-end) 998.76mw was added.

“With fast depleting fossil fuels, dependence on renewable energy to produce power is going to increase. Wind, being the most proven of all technologies, will play an important role. We expect renewable energy to contribute about 15 per cent of the total power requirement by 2015, with sizable contribution from wind energy,” Shrenik Ghodawat, managing director, Ghodawat Energy, said.

Analysts believe power transmission and distribution (T&D) losses in India are one of the highest in the world. It is even more than that of Pakistan. A large part of the power produced is not reaching customers. The government needs to upgrade the T&D network. In addition, more private participation is required, which will be possible only if more incentives are offered.

Stock performance

While power counters rode the latest bull rally on the stock exchanges, scrips of private companies outperformed those of state-owned utilities.

Year-to-date, the 15-stock BSE power index has returned 54.80 per cent, against 50.52 per cent rise in the BSE Sensex. Lanco Infratech emerged as the major beneficiary, rising 120.75 per cent. Reliance Infrastru-cture, Crompton Greaves, Torrent Power and GMR Infrastructure followed suit, rising 117.78 per cent, 108 per cent, 93.93 per cent and 90.58 per cent, respectively. Tata Power and Reliance Power rose 55.59 per cent and 53.44 per cent, respectively.

However, the three state-run stocks — Bhel, PowerGrid and NTPC — remained at the bottom of the charts, climbing 53.44 per cent, 30.11 per cent and 9.45 per cent respectively.

The same stocks were among the best performers of the BSE power index, which has inched up 8.70 per cent in the past one year. Bhel, PowerGrid and NTPC have soared 48.75 per cent, 21.49 per cent and 19.95 per cent, respectively.

Torrent Power climbed 29.49 per cent while Reliance Infra-structure and Crompton Greav-es jumped 31.14 per cent and 15.99 per cent, respectively. On the losing side, Suzlon Energy, ABB, Lanco and Tata Power plunged 54.34 per cent, 19.86 per cent, 7.62 per cent and 7.08 per cent, respectively.

(With inputs from Amit Mudgill)