Uncertainties over availability of fuel, land and water leave projects out of power…

• India is heading for a huge power deficit in three years as developers have slowed execution of projects worth about Rs 1,50,000 crore due to uncertainty over availability of fuel, land and water, industry and government officials said. Many of these projects are unable to progress because of regulatory and fuel-supply obstacles, while in other cases the developers have consciously slowed down project implementation because of uncertainties surrounding the sector, officials said. The government is worried as PSU banks have high exposure to the projects and their non-execution could mean black outs in future.

• However, companies with allotted coal blocks plan to cash in on the opportunity by selling power in the open market. Power companies worry the government over lesser draw down of loans. Finance minister Pranab Mukherjee expressed concern over slow progress on Rs 1,74,000 crore infrastructure projects of which 90% belong to the power sector. Typically a thermal power project requires Rs 5 crore per megawatt. Mukherjee had in September reviewed progress on loans disbursals by projects that borrowed more than Rs 100 crore. Industry experts said disbursals were less even as sanctions to major power projects in the current year remained satisfactory.

• Despite banks' reluctance, power generation projects worth about Rs 85,000 crore h ave achieved financial closure so far in the current fiscal. Hinduja group, Jindal Power, Adani Power, GMR Energy and KSK Energy have been able to secure financial closure for their projects. A power ministry official said slowing down by developers was natural as companies would want to be certain about fuel availability. The disbursements are affected as there has been no coal supply agreement in the past 18 months. Coal production declined by 17.8% in September and by 4.8% during April-September compared to a marginal growth of 0.2% during the same period last fiscal. Electricity generation grew by 9.3% during April-September 2011-12 as against 4.1% growth during same period of 2010-11.

• Coal deficit is likely to grow to 137 million tonnes by this fiscal. A coal ministry official said securing land and regulator clearances were thwarting Coal India's expansion plans. Imported coal-based projects are also hit due to changes in regulatory mechanis m in exporting nations. Monnet Ispat & Energy executive vice-chairman and managing director Sandeep Jajodia said the company expects acute power shortage in 2014-15 as many of the proposed projects may not see light of the day due to different reasons. The company proposes to kickstart a 660-mw unit in Orissa with attached coalmine to sell power in the open market. A Lanco Infratech executive said the country pushed for development without its backend in order.

• "Banks are extremely wary of lending as every power generating company is getting late payments from distribution companies. Secondly, coal that is the primary source of energy is unavailable." However, the Lanco executive said that a recent order by appellate tribunal for electricity asking state distribution utilities to revise tariff every year comes as a relief for the power sector. The tribunal in its order has said that every state commission has to ensure that annual performance revi ew, accounting of past expenses and annual revenue requirement and tariff determination is conducted on year to year basis as per specified time schedule.