India would add 100,000 Mw capacity (equal to what China does in a year) in the 12th Plan period.

Setting ambitious targets is something that Sushilkumar Shinde is quite comfortable with. Early last week, the power minister said the country would add 100,000 Mw capacity (equal to what China does in a year) in the 12th Plan period. This is on top of his target to add 60,000 Mw in the current Plan period, which ends in 2012.

Like most ministers who are enthusiastic about setting high targets, Shinde is also setting up a committee comprising former power secretaries and industry experts to advise the ministry on how to reach the set targets. The committee will have a tough time, for sure.

For, the actual performance has been woefully short of target. For the record, the ministry failed to add even half of the targeted 44,000-Mw capacity during the Tenth Plan (2002-07).

Shinde, however, has been quick to blame it all on the public sector Bharat Heavy Electricals Ltd (BHEL), which is committed to supply close to 70 per cent of the required machinery for the upcoming power projects, and other equipment manufacturers. The minister said the slow progress was mainly on account of delay in supply of equipment from BHEL.

BHEL Chairman and Managing Director K Ravikumar said the company had delivery issues because of capacity constraints, shortage of equipment for logistics and the like, “but we are rectifying it. Our capacity will double to 10,000 Mw by 2010 and we are on schedule”.

BHEL is sitting on an order book worth over Rs 1,26,000 crore and is attempting to float four joint ventures to tap the boom in the power sector, besides venturing into manufacturing of locomotives.

Coming back to the current Plan’s target, the ministry has to commission around 47,500 Mw capacity in the three years to 2012 if it has to meet the target of 60,000 Mw. This is because the first two years have seen an addition of just over 12,500 Mw.

The government is banking on the private sector to generate over 30 per cent, or 20,000 Mw, to reach that target. But the private sector has so far been able to set up just 3,750 Mw and the rest is ‘under construction’.

“We are targeting to complete one or two units of Rosa Power (600 Mw) , Butiburi (300 Mw) and a few units of Sasan (1,320 Mw) before 2012,” said J P Chalasani, chief executive of Anil Ambani’s Reliance Power, which is setting up over 32,000 Mw of power projects, including three ultra mega power projects, or UMPPs. This means R-Power’s contribution will be only about 2,200 Mw for the period.

India’s largest private sector power utility Tata Power is planning to reach a group power generation target of over 5,800 Mw from the current 2,800 Mw by 2012, an addition of about 3,000 Mw in three years. According to the company, this includes a few units of the Mundra UMPP. The company’s joint venture with Damodar Valley Corporation (DVC), 4,000-Mw Mython, is also slated for commissioning before 2012-end. So far, half of Mython’s civil work has been completed and one-fourth in the case of Mundra.

Other major private players like JSW Energy, Lanco Infratech, GVK Power, Adani Power and Indiabulls have projects under implementation, but large-scale capacity addition is unlikely before 2012.

Issues such as land acquisition, environmental and other procedural hurdles are delaying most of the projects, besides other issues like lack of skilled manpower and delay in delivery of equipment. The global recession is also delaying financial closure of the projects.

India’s largest power producer National Thermal Power Corporation (NTPC), which has an installed capacity of over 36,000 Mw and accounts for about 30 per cent of the country’s power generation, is targeting to reach 50,000 Mw by 2012. Considering the pace at which the NTPC projects are progressing, that target may remain just a target.

Former power secretary R V Shahi said the private sector would not invest in unfamiliar businesses until they were sure about the returns. “We opened up other sectors like telecom and airlines and it took many years for the private sector to start investing in them. Anticipating this and the future demand, we should not have allowed monopoly by one BHEL for power equipment making, NTPC for power generation and NPCIL for nuclear power in the public sector,” he said on the sidelines of a power conference organised by the India-Tech Foundation.

The scene with hydropower, which contributes one-fourth of India’s power requirement, is also not bright. State-run hydel power company NHPC’s plans are to commission about 250 Mw in 2008-09, 2040 Mw in 2010-11 and another 2,000 Mw in 2011-12 — together only about 5,000 Mw in the Eleventh Plan period.