That the power capacity addition in the Eleventh Plan (2007-2012) is going to be below the targeted 78,700 Mw is fairly well-known. It is now evident that there will be a slippage in the capacity addition in the Twelfth Plan (2012-17) also due to the delays in hydropower projects.
The government had initially set a target of adding 30,000 Mw of hydropower capacity in the Twelfth Plan period but later lowered the target as only 25,000 Mw capacity was found to be feasible for the Plan.
There will be a slippage by at least a fifth of the target due to delays in submission of Detailed Project Reports (DPRs).
A DPR is a document in which the project developer mentions the technical and financial details of the project.
“DPRs for around 5,000 Mw are still under preparation. It is not possible that these projects can come up in the Twelfth Plan,” said a senior official from the Central Electricity Authority (CEA), the apex power sector planning body.
The development of a typical large-sized hydropower project — right from its conceptualisation to commissioning — requires at least 10 years in India. This includes, in the first stage, preparation of a preliminary feasibility report (PFR) by the developer based on a two-year long survey of the plant site.
This is followed by submission of DPRs to the CEA which accords necessary technical and financial approvals, after which the DPR is sent to the Ministry of Environment and Forest (MoEF) for environment clearances, which requires another 2-2.5 years. Finally, the last stage of actual construction of the project takes another five years for completion.
“The process, from evaluation of DPRs to construction, takes at least eight years. Even if the remaining DPRs are submitted today, the projects are unlikely to be completed by the end of the (Twelfth) Plan,” the official added.
Earlier this year, another senior official from the CEA, while explaining the reasons for the dismal growth in the hydropower sector in the country, had pointed out how the delays in preparation of DPRs were set to hit the government’s plans of adding even 25,000 Mw hydropower capacity in the next Plan.
“When we made the plan for the Twelfth Plan in September last year, we thought that the DPRs for this 25,000 Mw would be made available to the government by March 2009. But, as against the expected reports of 8,000 Mw, we could get reports for only 2,400 Mw,” he said. “5,600 Mw have already slipped from the target of completion by March 2009,” he added.
Asked why the DPRs were being delayed, the official said that most of the private power developers “do not have the requisite technical expertise and thus try to cut short on geological investigations. And in case minimum qualifications are not met, we do not accept the report for further examination”. Another area of constraint, according to the official, is that while the developers are many, consulting agencies are limited.
| HYDROPOWER CAPACITY IN INDIA | |||
| Installed hydel capacity (Mw) | Overall installed capacity (Mw) | Percentage | |
| 11th Plan (Till Feb '09) | 36,877 | 1,47,715 | 24 |
| 10th Plan | 34,653 | 1,32,329 | 26 |
| 9th Plan | 26,268 | 1,05,045 | 25 |
All this is set to adversely affect the hydro-thermal mix of power in the country. While hydropower capacity at the end of the Tenth Plan accounted for around 26.2 per cent of the overall installed capacity, it is projected to come down to 23.8 per cent at the end of the current Plan period and further down to 22.6 per cent at the end of the Twelfth Plan.
Industry experts believe that the private developers’ hesitation in submitting DPRs for such long-gestation projects is partly due to the current economic downturn.
“The current market situation has increased the time and cost overruns associated with the hydropower projects, which already require a higher equity participation from the developer as compared to thermal projects,” said Kuljit Singh, Head, Transaction Advisory Services, Ernst & Young. “Moreover, the developers have started realising that money may start coming back in hydropower projects only in 5-6 years, as compared to 3-4 years for thermal projects,” he added.
Singh also added that a lot of private developers had taken up hydropower projects to create a capacity bank and sell it later, “but the current market situation has made it difficult. Thus they are inclined towards delaying the projects”.
