IPPs to chug India's power generation engine - Views on News from Equitymaster

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IPPs to chug India's power generation engine

Jul 26, 2000

India produced 480,011 MU (million units) of power in FY2000. This was approximately 7% higher than power generated in FY99. Currently the power scene in India is dominated by central institutions like National Thermal Power Corporation (NTPC) and the State Electricity Boards (SEBs). But so is true for other Asian and even the western countries.

India's generation stats
(MU) FY99 FY00 growth (%)
Total SEBs/EDs 244,177 260,294 6.6
Total Central Sector 172,777 181,033 4.8
Total Private Utilities 20,401 21,488 5.3
Total Private IPPs 11,304 16,993 50.3
All India 448,367 480,011 7.1
Source: CEA

Like the developed world, India is slowly moving towards increased private participation in power generation, distribution and even transmission. If you look at the tables, the picture becomes clear.

IPPs: Looking good...
  FY99 FY00
SEB contribution 54.5% 54.2%
Central Sector contribution 38.5% 37.7%
Private Utilities contribution 4.6% 4.5%
Private IPP contribution 2.5% 3.5%

All segments i.e. SEBs, central sector, private utilities and private independent power producers (IPPs) , have shown a positive growth in power generation in absolute terms. But it is the IPP segment which has shown real growth. It has not only grown by a whopping 50% in absolute terms, but its actual contribution to the total power generated has also improved. All other segments have actually recorded a decline in their contributions.

Even in distribution segment, state governments are giving serious thoughts to first corporatising their distribution networks and subsequently privatising them. Orissa has already initiated such a process whereby private utilities BSES and the Tata Electric Company have been assigned management control of its distribution circles .

This is a sign of things to come, despite the slow moving power sector reform process. It will definitely see private party contributions growing at a rapid pace in the next few years.

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