Financial turmoil to have little impact on energy capacity growth

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Mumbai, Nov 26 (UNI) The global financial turmoil may not hit hard the deficit power situation in India with the capacity augmention to meet the current mismatch between demand and supply expected to take place only between 2015 and 2017, a study here reveals.

The latest CII-KPMG outlook on power, released at the India Energy Conclave 2008 here today, indicated that financing new projects will be a challenge in the current environment.

''However, assuming that the effects of the current turmoil will last for 12 to 18 months, we expect that the overall impact on the 'cross over' point (to supply side from demand side) would be to a lesser extent, as supply will eventually catch up and the demand side impact would also be present during the current slow down,'' the report said, adding that the study is based on an assumption of GDP growth of eight per cent till 2017.

The country is currently facing a very significant power deficit of around 20,000 MW (18 per cent peak deficit), the report said, adding that there were plans for very large supply additions going forward.

Earlier, constraints on capacity augmentation were mainly due to government procurement procedures, equipment sector problems and project implemention delays, the report said, adding that moving forward the constraints would largely occur on account of fuel sector issues, including allotment and development of coal mines.

While over 81 coal mines have been allotted, delays were being seen in mine development on account of reasons ranging from land acquisition delay in government clearances, multiple mine allottees for a given mine with differing view points on mine development plans and even lack of mine development capabilities.

The report said the government would still have a very important role to play if the crossover from demand side to supply side had to be acheived sooner than later. The government should evolve a more efficient and transparent solution to coal mine allocation and streamline procedures relating to government clearances.

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