• JULY 26, 2000

IPPs to chug India's power generation engine

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.

Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (Research Analyst) bearing Registration No. INH000000537 (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA, Canada or the European Union countries, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

Equitymaster Agora Research Private Limited (Research Analyst)
103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407