Large power projects continue to face chronic delays

India’s power sector continues to struggle with delays despite the government’s efforts to speed up capacity generation plans. The problems are particularly compounded with the ultra mega power projects (UMPPs) through which the government hopes to bridge the huge gap in supply and demand of power that currently exists in the country.

Currently, at least three large power plants proposals. each having potential power generation capacities of 4,000 MW or more, are locked in delays due to issues like disagreement over the project site or profit sharing contracts with the state governments.

One of the plants, which is proposed in Orissa is battling with the government’s demand for higher profit share. On the other hand, another plant proposed to be implemented in Tamil Nadu is facing objection from the state tourism ministry regarding the project site that has resulted in delays for getting clearances. Yet another delay could be a new government policy, which aims at restricting local coal supply for smaller power projects thus forcing the UMPPs to import their coal requirements. A number of infra players have said that the kind of huge investment that is required in the UMPPs cannot  be committed until the government gives an assured coal supply.

With the kind of delays being faced by the UMPPs, it seems difficult that the government would be able to enhance the country’s power generation capacity to fuel the needs of an expanding economy. Currently, India has a power generation capacity of 150,000 MW and expects to add 78,577 MW by 2012. While the power minister had earlier accepted that the target might be missed by up to 20%, the actual achievement may be limited to just 50% or even lesser in wake of the chronic delays being faced by power projects.