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Finally Hitting the Mark...
Oct 7, 2016

Reforms to improve generation capacity, bring down transmission and distribution losses and improve project viability with better tariffs, have been in the works for long. The government has undertaken a slew of reforms for the beleaguered sector of late, the latest being UDAY. All of these, are expected to improve the outlook of the power sector.

But the bane of contention all these years was the poor pace of capacity additions in the sector. Capacity addition in the power sector was the highlight of past three 5-year plans. But the sector has missed targets during the tenth and eleventh plan periods, despite them being scaled down. In fact during both the plan periods just 50% and 60% of the targeted capacity addition respectively, were executed.

The Twelfth Plan period, however, promises to be different. As per Central Electricity Authority, by March 2017, when the Twelfth Plan ends, capacity addition will hit the mark. The draft Twelfth Five-Year Plan had set a target of adding 100,000 Mw of capacity. But the erstwhile Planning Commission scaled it down to 88,537 Mw. Nevertheless, the capacity increases by private and state thermal power producers have played a big role. The enhanced thermal power generation is due to improved fuel supply. Coal availability for power projects has hit a historic high and gas supply has also been brought to order through auctions.

What remains to be seen is whether the power producers get the advantage of the additional capacity with better tariffs and minimal distribution losses.

Vivek Kaul has explained the anomaly in the power sector in an in interesting piece in his Diary - In Power-Surplus India, Why Power-Cuts are Still the Norm

Data Source: CEA, Business Standard

This Chart Of The Day was published in The 5 Minute WrapUp - A Sell Strategy That Could Ruin Your Portfolio Returns

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