Shinde makes pitch for US investment in Indian power sector

Chicago, Sep 20 (PTI) Indian Power Minister Sushilkumar
Shinde made a strong pitch for US investment in the growing
power sector in India on Tuesday, asserting that lucrative
opportunities were available to investors.
He was speaking at the US-India Economic Opportunities
and Synergies Summit in Chicago organised by FICCI in
association with The Executive Club Of Chicago at the Fairmont
Hotel here.
Shinde said the average plant load factor (PLF) of
Indian generation units improved to 77.5 per cent during
2009-10 from 73.6 per cent in 2006.
The contribution of the private sector to India's
electricity output has grown from 11.6 per cent in 2006 and
further to 30 per cent as of date and is likely to go up by
about 60 per cent in the 12th plan (2012-2017), he said.
Shinde told reporters at a press conference that during
2010-11, 15,795 MW of power got synchronized and 12,161 MW
commissioned, which was the highest-ever capacity addition
achieved in a single year since Independence.
"80,000 MW is under construction as of now -- such a
huge amount," Shinde said.
"Per capita consumption of electricity has grown from
600 kwh to 785 kwh in a span of five years," FICCI Senior
Vice-President R V Kanoria told reporters.
However, while "Infrastructure has not grown, India has
grown," Kanoria added.
Shinde said while the present installed generation
capacity in India is more than 1,81,000 MW, over 80,000 MW of
new power capacity is under construction.
He added that during the forthcoming 12th Five-Year Plan
(2012-2017), the funding requirement of the Indian power
sector has been estimated at USD 230 billion.
Stating that the 12th Plan aims at capacity addition of
nearly 100,000 MW, Shinde emphasised that such a gigantic task
can be successful only with strong support from the private
sector.
Highlighting the reforms in the power sector in India,
Shinde said the Electricity Act, 2003, allows the sector to
align itself with market dynamics and clears roadblocks in the
way of greater participation by the private sector.
He said an independent regulatory framework in India now
provides business confidence to power companies and a fairly
lucrative rate of return on equity of 15.5 per cent per annum.
Underlining that the share of the private sector in
capacity expansion has gone up substantially in the 11th Plan,
with 33 per cent of total incremental capacity expected to
come from the private sector, the minister said that in the
12th Plan, this share is expected to further increase to about
50 per cent.
He said 100 per cent FDI is permitted to facilitate
private investment under the automatic route for power
generation, transmission and distribution projects.
Giving an outline of the power projects in India that
are to be implemented under a public-private partnership model
Shinde said 16 ultra-mega power projects (UMPPs) and 14
inter-state transmission schemes have been identified for
development by the private sector on the basis of competitive
bidding.
He said while the bidding for 4 ultra-mega power
projects and six transmission project has been completed, more
than five UMPPs are in the pipeline and offer unique
opportunities for investment.
Each UMPP is of 4,000 MW capacity and requires an
estimated USD 4.5 billion investment.
Regarding hydro power, Shinde said the estimated
potential in the hydro sector in India is 1,50,000 MW, out of
which only 30,000 MW has been harnessed.
The remaining capacity needs to be developed, which
offers investors a lucrative opportunity.
He said the new Hydro Policy, 2008, goes a long way in
balancing developer's concerns and the needs of the people.
The minister added that to enable project developers in
the hydro sector to reasonable and quick returns on their
investment, merchant sale of up to 40% of the saleable energy
without any regulatory interference has been allowed, making
investments in hydropower projects more attractive.
Stating that India is actively pursuing a low carbon
growth strategy, Shinde highlighted India's focus on super
critical technology in thermal plants, the rapid induction of
clean coal technologies and a sharper focus on renewables.
He said that international majors like Mitsubishi,
Toshiba, Hitachi, Alstom and Ansaldo have already started the
process of partnering with Indian manufacturers to set up
super critical manufacturing facilities.
On the renewable energy front, Shinde said that India
has launched the Jawaharlal Nehru National Solar Mission and
is committed to adding 20,000 MW of solar power by 2022.
He said State Electricity Regulatory Commissions (SERCs)
are mandating minimum Renewable Purchase Obligations (RPOs)
for Discoms and a mechanism for trading renewable energy
certificates (RECs) through power exchanges has been
operationalised in India.
Addressing the concerns of investors on the financial
health of distribution companies, the minister said an
"Accelerated Power Distribution and Reforms Programme (APDRP)"
has been launched in urban areas, the main objective of which
is to bring down the aggregate technical and commercial (AT&C)
losses by around 15 per cent.
He said the budget for the R-APDRP programme during
2007-2012 is about USD 11 billion.
With regard to energy efficiency, Shinde said the Indian
government has given due emphasis on this issue.
Stating that 37 energy service companies (ESCOs) have
been accredited by the Bureau of Energy Efficiency (BEE), he
said tremendous opportunities exist for Foreign ESCOs
operating either independently or in JVs for taking up energy
efficiency projects.
He said it is estimated that an investment of USD 15
billion is required on energy efficiency initiatives in India.
Shinde said that in order to improve confidence among
the financial institutions, a robust energy audit system has
been created.
He added that a Partial Risk Guarantee Fund and Venture
Capital Fund are being created for boosting investments in the
area of energy efficiency and a National Mission on Enhanced
Energy Efficiency has been approved.
Shinde is on a five-day visit to the USA, which aims at
enhancing cooperation between the two countries in the power
sector.
He will also go to New York, where besides addressing
the press conference organised by the Counsel General of
India, he will meet Chief Executive Officers of various
organisations, organised by the United States-India Business
Council (USIBC).
He will also deliver the keynote closing address at the
8th Annual India Investment Forum.