During the financial year of 2012-13, the investment in Indian Power Sector by the private companies have been decreased by 44% compared to the previous financial year of 2011-12.
During the FY12-13, investment done by the private companies in the power sector was around Rs. 54,953 Crores which in FY11-12 was around Rs. 98,283 Crores.
According to Independent Power Producer's Association of India, the major reasons behind this decline were uncertainties on fuel supply, issues related to regulatory & policy framework. It further assumes that the investment has further declined in the current financial year.
According to various industry experts:
- The investment was low as there was no demand for electricity from state distribution companies and also as no new projects are being bid by the government. Whatever investments we have seen so far are on projects that were planned earlier. Companies with existing plants are suffering losses due to fuel scarcity so the ability to invest is low. No major power procurement tenders from state distribution companies besides Uttar Pradesh, Tamil Nadu and Rajasthan.
- Thermal power plants are stranded or underutilized due to shortage of gas and coal shortage. Data available with the Central Electricity Authority shows that coal-based plants operated at 63% of their capacity in June, while gas power plants at 29%. Coal-based power plants can be run partially on imported coal but that raises costs leading to non-purchase by state distribution companies.
- Power regulator Central Electricity Regulatory Commission (CERC) has allowed companies like Tata Power and Adani Power that operate imported coal-based plants to recover additional costs from state distribution companies. The government has also recently allowed power-generating companies to bill the distribution utilities for additional cost incurred on imported coal. But poor financial health of distribution companies does not allow them to purchase power generated from imported gas or coal.
- The government is yet to finalize new guidelines for bidding power plants that was stopped in 2011.
The country's power generation capacity increased by 20.6 GW in 2012-13, however due to issues related to fuel such as coal and gas on an average, 27% of the country's available 1,46,000-mw power generation capacity is under outage.
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