From disinvestment to cementing nuclear energy pacts, 2010 saw India's power sector strengthen its foundations for the massive capacity expansion required to meet the growing needs of the energy-starved nation.
The year also saw a shift in the process for awarding power projects to a tariff-based bidding system.
These developments augur well for the sector, as India -- which is eyeing a GDP growth rate in excess of 9 per cent -- aims to add 1,00,000 MW of electricity during the XII Five-Year Plan (2012-17), with the major contribution expected to come from private power producers.
However, the government had to scale down the generation target for the ongoing XI Plan (2007-12) from 78,577 MW to 62,374 MW.
In particular, the mood during the year gone by was exemplified by big-ticket disinvestment in four PSUs, which generated about Rs 20,000 crore for the government.
A number of public offers by private power players are also in the pipeline for the coming months, which are targeted at raising the funds required for their investment and expansion plans.
What is more, a deal was signed with France for the exchange and transfer of nuclear power technology and fuel. The pact was aimed at reducing the India's reliance on thermal and hydro-energy and increasing the share of nuclear power in the country's overall energy mix in the coming years.
India and France signed a $9.3 billion dollar framework agreement for the sale of two nuclear reactors to India for a proposed new plant at Jaitapur, in Maharashtra, during the visit of French President Nicolas Sarkozy to New Delhi in early December. France's state-run nuclear firm, Areva, will supply the reactors.
With regard to new projects identified by the government, they will henceforth be granted on the basis of tariff-based bidding, as against the current cost-plus tariff policy. This is likely to facilitate smaller private sector players with lower tariffs becoming more competitive and garnering lucrative contracts that might have otherwise gone to large public sector power producers.
Cost-plus tariffs include a lumpsum fee charged by the power producer, as well as a per-unit charge levied by the distribution companies or discoms.
Disinvestment in state-run power gencos kicked off early in the year, with the country's largest power producer, NTPC, launching a follow-on public offer (FPO) in February.
NTPC raised over Rs 8,800 crore through its FPO, the proceeds from which went to the investment fund that finances social sector schemes. The government's stake in the public sector company came down to 84.5 per cent from 89.5 per cent following the allotment of shares under the offer.
NTPC generates over 32,000 MW of electricity at present and plans to hike this capacity to 40,000 MW by March, 2012, and further to 75,000 MW by 2017.
NTPC's public stake sale was closely followed by the FPO of state-run power sector lending agency Rural Electrification Corporation (REC) in the same month.
The Centre divested 5 per cent of its stake, while the company issued 15 per cent fresh equity under the FPO. Following the conclusion of the offer, the government's stake in REC has been reduced to 66.80 per cent.
