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Issue 1, August 25, 2006 |
Energy deficiency in India is seeing
large investments in mega projects
in refinery, pipeline installations,
new power generation projects, power
line grid deployment, and even
private sector nuclear plants. Many
companies recently announced plans
to create new projects specifically
targeting energy and
power-generation.
Power Grid Corporation of India Limited (PGCIL) is setting up a joint venture with 5 major companies to lay a 5,000 kilometer power grid line at a cost of over USD 1 billion. The other companies in this joint venture are Oil & Natural Gas Corporation (ONGC), Essar Power, Torrent Power, Jaiprakash Group, and Teesta Urja Limited. The PGCIL will hold 24% of equity in this joint venture and the balance held by its partners. ONGC’s new 750 megawatt (MW) plant in Tripura, Essar’s and Torrent’s new 1500 MW and 100 MW gas-fired plants respectively in Gujarat, Jaiprakash’s existing 1000 MW project in Karcham Wangtoo in Himachal Pradesh, and Teesta’s existing power plant in Sikkim will use this grid to carry their power. Tata Power Company may also join this grid from June to transport power from its 1050 MW hydroelectric power in Bhutan. India also signed an agreement with Bhutan to buy power from the 1020 megawatt (MW) Tala hydro-electric project, the largest bilateral cooperation project funded by India in a foreign country, which is also the framework for future hydro-electric cooperation. The Federal Power Ministry has also unveiled ambitious plans to create several ultra mega power plants that can generate 4000 mega watts (mw) at the cost of Rs.150 billion each. These plants are expected to generate power between Rs.1.50 to Rs.1.80 per unit. Two plants located in Chhattisgarh and Madhya Pradesh will use domestic coal. Two others located in coastal Karnataka and Gujarat will use imported and domestic coal. A fifth project at Ratnagiri in Maharashtra is also being considered. These plants are expected to use the efficient 800 mw supercritical boilers which Bharat Heavy Electricals Ltd will import through foreign collaborations. In addition to these 5, Power Minister Sushil Kumar Shinde said that India would add two more 4000-megawatt (MW) mega power projects one each for Andhra Pradesh and Orissa each costing about USD 3.6 billion using a private-public investment vehicle. Boilers from French Alstom, turbines from German Siemens will provide the technology. Other companies from Russia and South Korea are also being considered. Leading financial institution, Power Finance Corporation (PFC) will invite "expressions of interest" and the Life Insurance Corporation (LIC) has already expressed willingness to invest in these financial special purpose vehicles. The plan is to parallelize the process by getting independent clearances for these companies and make the deal open to investors by end of 2006. PFC will also initiate company registration, invitation of bids, and complete all necessary studies by end of next month. Pre-qualification of potential investors is expected to be out by March. All 7 projects are expected to start January 2007 and take 4 years to become operational. Shinde said that 18 American companies have expressed interest to bid on these projects. However, a major source of worry is the availability of fossil fuels at affordable prices and its transportation to India. India has been exploring three major pipelines to bring natural gas. The Myanmar-Bangladesh-India (MBI) pipeline is dogged by intransigence by Bangladesh to allow transiting pipelines causing India to invest heavily in Myanmar to upgrade its Sittwe port as a portal to take Liquefied Natural Gas to India even if that meant a loss of resources. The Iran-Pakistan-India (IPI) pipeline project is stalled because of Iran’s pricing plan that is pegged to the crude oil rates without floor to ceiling levels and at exorbitant rates. The Turkmenistan-Afghanistan-Pakistan-India (TAPI) is another project that is stalled because of the over-subscription to the gas reserves in Turkmenistan. Further, the IPI and TAPI projects are plagued by concerns that Pakistan will be a reliable and secure transiting partner. Another USD 22 billion major energy deal with Iran to source 5 million tons (mt) for 25 years starting 2009-10 is stalled because Iran wants to renegotiate the deal for higher prices and also to punish India for voting against it in the International Atomic Energy Agency (IAEA). Plagued by severe fossil fuel crisis, India is trying to evolve different strategies to overcome these hurdles that could affect its growth plans.
While there are many positives in
India’s strategy and efforts to
assuage its excessive dependence on
external sources of fuel, there are
also many flaws in energy based
policy making that need
rectification:
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Internal Initiatives
Reforms & Liberalization
Research, Development, and Collaboration
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External Investments
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