Rs1 lakh crore investment stuck in power sector due to fuel shortage
Over Rs 1 lakh crore of investment in the power sector is stuck, as 25,000 MW of thermal power capacity is stranded due to non-availability of coal and gas linkages, which may hamper energy generation capacity addition in the country, says a report.
"The issue of adequate coal linkage to power projects has assumed critical importance as nearly 25,000 MW of thermal power capacity is presently stranded. This implies a locking up of Rs 100,000 crore in stalled power projects," a report by industry body FICCI said.
Most critical challenges being faced by the power sector today are domestic fuel shortages and financially precarious condition of distribution utilities.
The Ministry of Power had set a target of adding 78,000 MW of power during the current Plan period (2007-12) but was curtailed to 62,000 MW by the Planning Commission due to various factors like fuel shortage, environment clearances and land acquisition problems.
The report observed that the capacity addition in the 12th Plan (2012-17) also runs the risk of getting derailed because of uncertain fuel availability and volatile international process of coal, unless immediate reforms are undertaken to augment domestic coal supply.
To tide over the problem, the report suggested a few remedies, which includes allowing captive mines to sell surplus coal at market prices which will incentives additional production and full-scale commercial mining at market prices through amendment in the MMDR Act Mines and Minerals (Development and Regulation) Act.
The government has set a target of adding 1,00,00 MW capacity in the 12th Plan period, however, the sector needs to respond quickly and definitively to the challenges, the report said.
