IPPS the silver bullet in India's power debacle?

India is thirsty, and its not for a cold glass of water, which is a necessary companion for a serving of rogan josh. If India is to quench its insatiable thirst for power, India's Independent Power Producers (IPPs) must come to the fore and take some responsibility from the government. But, who can do the impossible and satisfy India's escalating power demands? Most Indian's believe that solving the country's power debacle is the government's responsibility.
A deeper look into the issue, we can see that it is the IPPs that should be doing more, such as Reliance Energy which just happens to be owned by India's richest man, Anil Ambani. "Private players need to come forward, including companies such as Reliance. There is a consortium of all these private players in the market who can contribute, identify and meet these power challenges," said Vishwas Sachedra, Deputy COO of Hallex.

Why are IPPs backing off?
If India is serious about meeting the power needs of one sixth of the world's population, IPPs such as Reliance Energy need to start making their presence felt at key meets like this years Power-Gen India & Central Asia 2008. If Anil Ambani's spectacular no-show is anything to go by, the IPPs seem to be backing away from the kaleidoscope of challenges facing India's power sector. Ambani decided not to grace us with his presence at Power-Gen this year after he pulled out of his scheduled speech on the the morning of the inauguration ceremony.
The Minister of Power, the CMD's of NTPC, NHPC and BHEL and industry delegates alike must have been asking each other where Ambani was. Well he was definately not at Power-Gen, which is considered by most to be the premier event in India's power sector. This begs the question, is Ambani serious about India's power sector or is he just content to sit back and relax in his plush high-rise while India goes it alone?
But, the government should take some of the blame for IPPs backing away from meeting India's power challenge. IPPs are being restricted at every turn it seems, thanks to India's rampany bureaucracy and conservative reform policies.
India has been on its path to power reform since 1991, when India's Ministry of Power published a series of notifications, promoting the inclusion of IPPs into India's electricity sector.
The revolutionary policy gave IPPs the right to establish, operate and maintain power generation plants. Despite the government propaganda and much excitement, India's reform policy turned out to be a dud. Against its target of 40,000mw between 1992-1997, India fell short significantly by adding 17,000mw. India is starting to realise if it is a little to late, that the problem lies with the states. The problem is that without radical reform in the bureaucracy, the likelihood of IPPs coming to the rescue of India's power sector remains a distant dream. Hallex Deputy COO, Vishwas Sachedra was just one of many companies at Power-Gen that felt IPPs such as Reliance Energy needs to be contributing more to India's power sector.
But, there are steps the government could take to help IPPs come forward and help India meet this demand. The government must promote the rationalisation of tariffs through independent regulatory commissions.
It must adopt transparent policies and propose a country-wide agricultural tariff at the minimum of 50% of the cost of supply.
India must introduce 100 % metering and energy audits, reduce T&D losses, strengthen both sub-transmission and distribution systems. Finally, the government must sponsor the privatisation of distribution in major medium sized urban areas and decentralise distribution management in India's rural areas. Despite the plethora of conferences such as Power-Gen which hosting a large contingent of big-wigs and bureaucrats, the resolutions passed at meetings such as these remain a low priority on India's list for power sector reform, thus significantly deterring the impact of IPPs.

Meeting the demand
So what kind of problems do IPPs face in help India's power sector? India has plans to install more than 78,000mw from 2008 to 2012 in order to meet the demand of its booming power sector, which is predicted to surge to 210,000mw in 2012. India has a blueprint for the installation of a 600,000mw base in 2025.
"The government is very progressive, they are making a lot of positive steps forward, that's good for both the industry and the economy," said Pawan Mehndiratta, Sales Manager of GE. India's power sector is peaking due to swelling power demands and the depletion of India's electrical supply. The massive power expansion programme that India is undertaking at the the moment is a positive sign for the country, but it still needs to address its decline in resources for raw materials.
It is high time for big players such as Anil Ambani and Ravi Kumar, CMD of India's state-owned utility BHEL to work together to solve India's power problems. BHEL is in a unique position as it supplies electricity to three out of four homes in India, thus meeting 80-90% of the country's power needs. BHEL it seems is doing its bit to satisfy India's power demand by developing a series of power plants, through key partnerships with Alstom for boilers, Siemens for turbines and generators and GE for gas turbines. Siemens, Cummins and Hallex are also leading by example. Siemens must think it is a good time to be in India with its steam turbine factories, gas turbines and automation systems popping up left, right and centre.
Cummins says it too is playing a key role in meeting India's significant shortfall in both demand and capacity.
"We play a very crucial role in terms of not only backup but distribution generator solutions to many parts of the country," said Cummins, CMD, Anant Talaulicar.
Hallex, on the other hand has roughly 15% of the power sector's market share is planning to supply at least 13 to 15% of India's power supply. With India's power sector needing to grow by as much as 9-10% by 2012, the balance between supply and demand seems lopsided.
But, not all hope is lost. India's power sector is finally catching up to the rest of the world thanks to the government's radical policy shift towards the acceptance of IPPs and its planned liberalisation of the power sector. "It is a sunrise sector in India, people have been talking about the power sector moving, but this is the time that maximum impetus has been given to the sector and there is a thrust from all corners, both the power sector and the government," said Ranjith Nair, Manager of Marketing and Sales at Siemens. "There was a time that there was a big gap between what is happening in the rest of the world and here, but now that is not the case, we are on par with the rest of the world," added Nair.


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