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WITH ALL ATTENTION on distribution reforms the last couple of years, the need to raise electricity generation capacity substantially was being lost sight of. The Union Power Minister, Mr Anant Geete, was, therefore, quite right at the recent meeting of Power Ministers of States to restore the focus to generation so that the Tenth Plan target of capacity addition is met. Given the track record in capacity addition and the mutual distrust between the State governments and private sector power producers, it is highly unlikely that any major private power project will come up, unless and otherwise there is a total change in attitude. The meeting itself assumes significance as this is the first such interaction between the Power Ministry and the State governments since the Electricity Act 2003 came into force.

The task before the States on capacity addition is enormous. They have to add 11,000 MW of generation capacity by 2007 if the Tenth Plan target of adding 41,110 MW capacity is to be achieved. So far about 2,950 MW of the targeted Plan capacity has been installed and work is on another 18,842 MW. If the balance of 19,310 MW is to be added before the end of the Plan period, work on projects has to begin this financial year itself. Significantly, a major part of the capacity addition — 55.6 per cent — is to come from the Central sector, with the State sector accounting for 27.1 per cent and the private sector 17.3 per cent. Even the Tenth Plan document points out that only 27,852 MW of capacity addition appears to be firmed up. A major portion of the incremental capacity, according to the Plan document, can materialise only in the latter part of the Plan period. Given the track record in meeting the Plan targets, it appears highly unlikely that the Tenth Plan target — itself scaled down from the 46,939 MW proposed by the working group report on power — will be achieved. The Ninth Plan envisaged a capacity addition of 40,245 MW of which only 19,015 MW was added while the Eighth Plan target was 30,535 MW and the achievement 16,422 MW. Even in terms of spending the Plan outlay, the achievement has fallen short of the targets. The Ninth Plan envisaged a larger share of capacity addition from the private sector, which did not materialise mainly because of the poor financial health of the State electricity boards and the consequent problems over adequate payment security mechanisms for the projects.

For the Tenth Plan, the Centre proposes to enhance public funding for the power sector and also encourage the public sector units to take up joint venture projects either with the private sector or with the State governments. Central PSUs, such as the National Thermal Power Corporation and the Neyveli Lignite Corporation, have drawn up plans to put up projects jointly with various State governments. It is by expediting these projects that the Centre can hope to at least achieve a much of the planned capacity addition during the period as, the problems that hindered private power development during the earlier Plan period still remain. Given the ground realities, the capacity addition target appears a tall order indeed.

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