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Power





Fact Sheet:
  • India’s power industry is growing faster as compared to most of the other countries. In the last decade with substantial capacity addition, India has moved to 5th rank from 8th in terms of generation capacity globally.
  • The country has installed generation capacity of 126 GW as on July 2006, and a transmission & distribution network of more than 6.3 million circuit kms (2004).
  • India consumes about 3.7% of the world’s commercial energy and is ranked 5th  largest consumer of energy in the world.§
  • India’s power generation is largely coal dependent with 55% share in the total capacity mix.
  • With India’s booming economy and vibrant industrial scenario, per capita consumption of power had almost doubled from 350 units in 1998 to over 600 units in 2005 and is further expected to reach 1000 units  in 2012. (source: IBEF)
  • With the targeted GDP growth rate of over 8%, energy demand is expected to grow at the rate of 5.2% annually. To support this the power supply of the country needs to be augmented by 10% annually.
  • The mismatch in energy demand and supply in the country had resulted in the increased energy shortage from 27 BU in 1995 to 80 BU in 2005.
  • Peak demand is expected to increase by 77% to 157,107 MW by 2012. Also the energy requirement is expected to increase by 274% to 975,222 MU by 2012.

Opportunities for Private Investors
  • The Government envisages to provide power to all the households under its ambitious plan “Electricity for all villages by 2007” and “ Power for all by 2012”. The mission aims at enhancing the installed capacity upto 200,000 MW by 2012, accompanied by an increase in transmission and distribution network.§
  • The investment required in this regard in the sector is estimated to be over USD 200 bn. Almost 50% of this amount would be required for generation projects alone. The scale of investment required in power sector along with the need of advanced technical inputs, has carved out a significant role for private players in power sector.
  • Nearly 5000 MW has already been added by the private sector under the 10th five year plan. It is expected to contribute 11,912 MW during the 11th plan from 2007-12.
  • Government has initiated a string of reforms by enactment of Electricity Act, 2003 to attract foreign and private investment in the power sector. From allowing FDI upto 100% via the automatic route in all the segments  (generation, transmission and retail distribution), to extending tax holiday for mega power projects, the government is keen to create an investor’s friendly environment.

Given the projected demand scenario coupled with favorable investment policies, the sector offers huge opportunities for foreign and private  players.

Policy initiatives by GOI
§100% FDI is allowed under the automatic approval route in all segments of the industry i.e generation (based on coal, gas, or hydro), transmission and retail distribution
§Under the Mega Power Policy, incentives such as capital import duty concessions, waiver of local levies to improve cost attractiveness are extended to large generation projects.
§All power projects are extended a tax holiday i.e deduction of 100% of profit of the generation, transmission or distribution company, for 10 consecutive years out of 15 years from commencement.

Key initiatives under the Electricity Act 2003
§Generation other than for large hydro projects, is de-licensed
§Open access on transmission and distribution networks
§Retail competition mandates that by July 2008 all consumers above 1MW are free to choose their suppliers
§For rural power development, generation and distribution is de-licensed in rural areas
§Power trading and market development are recognized
§Strong anti-theft and malpractice provisions
§Functional unbundling of the integrated state electricity boards and setting up of State Electricity Regulatory Commission made mandatory by states.

Other policy initiatives
§Competitive bidding for awarding projects
§Incentives for  mega power projects
§Relaxation of 40% cap for debt exposure by Indian financial institutions
§Inter institution group for speedy financing
§Encouragement to FDI in transmission via Joint Venture route and Independent power Transmission Company Route
§National Electricity Policy & National Tariff Policy notified
§Initiation of Ultra Mega Projects


The Power House of India

Overview:
  • M.P. has nearly 5% of the total installed capacity of India with 6449.25 MW as on July 2006 including the Central, State and private sector. The sources of power generation in the State includes thermal, hydel, wind power, methane gas etc.
  • The State’s share in the installed capacity was about 3000.2 MW in the year 2005-06. Out of which ~72% is thermal power and remaining is hydel power.
  • The total energy availability in the State has increased from 26,606 MUs to 29,237 MUs during 2001-02 to 2005-06 at a CAGR of 2.68%, wherein power purchase of the State has outgrown the own generation of the State.
  • The State is witnessing rapid industrialisation which would lead to very high increase in energy demand in coming years. Further, the installed capacity is also expected to increase in the coming years, with new projects coming in the State.
  • The State Government has taken necessary policy initiatives to facilitate the power sector reforms in the State.
  • Agriculture sector is one of the main energy consumers in the State. The HT consumers such as railway traction, coal mines, HT industrial and non-industrial activities etc. together accounted for 6549 MU of sales followed by domestic consumers in the year 2005-06.§
  • The State has various organisations (mostly public undertakings) in the areas of power generation, transmission and distribution. These organisations are presented in the schematic below.
  • The Private sector has a very insignificant presence as of now with their major presence only in non-renewable resources and captive plants. However, various major companies are contemplating to set-up their units in M.P.


Generation
Transmission
Distribution
PUBLIC SECTOR
§Madhya Pradesh Power Generation Company Ltd (MPPGCL)
§Narmada Hydro Development Corporation
§
PRIVATE SECTOR
§MP Wind Farm, Dewas (wind power)
§Kalani Industries, Indore (wind power)
§Goetze India, Dewas (wind power)
§Som Distilleries, Bhopal (biomass)
§Kalchury Trading Co., Jabalpur (biomass)
§Shri Maheshwar Hydro Power Corporation
Madhya Pradesh Power Transmission Corporation Ltd.
POWER PURCHASE
§Madhya Pradesh Power Trading Company Ltd
POWER DISTRIBUTION
§M.P.Poorva Kshetra Vidyut Vitaran Company Ltd.
§M.P.Madhya Kshetra Vidyut Vitaran Company Ltd. 
§M.P.Pashchim Keshtra Vidyut Vitaran Company Ltd. 


Local Analysis

§The State has following power generation units:
Power Plant
Installed Capacity
(MW)
MP’s Share
(MW)
Locations
MPPGCL Thermal Power Plant
2272.5
2147.5
3 major plants located in Satpura, Amarkantak and Umaria where vast coal reserves are available.
MPPGCL Hydel Power Plant
575
575
8-10 plants are located near Pench, Banas, Gandhi Sagar  and other rivers.
Intrastate Project
591
322.17
Gandhi Sagar, Ranapratap & Jawahar Sagar, Rajghat, Pench
Joint Venture Project
2450
1826.5
Indira Sagar & Sardar Sarovar
Non-Conventional Energy Plants
26.7
-
Small wind power, biomass based plants are set-up in Dewas, Indore, Bhopal etc

Classified Regions in M.P.
Energy Sales
No. of Customers
Growth Drivers in the Region
West Discom (Indore, Ujjain)
7392.59 MkWh
2.40 million
The Discom contributes to highest energy sales in M.P. This is due to the highly developed and growing industry in and around Indore region. Further the establishment of SEZ would also contribute to sales.
East Discom (Jabalpur, Rewa, Sagar)
5548.31 MkWh
1.82 million
Presence of number of cement and cable factories in the region leads to high energy sales.
Central Discom (Bhopal, Gwalior)
5484 MkWh
2.32 million
The domestic consumption and small scale industries drives the sales in this region.


Offers following Advantages to Power Industry

Potential to be Energy Hub for Power Generation
Centrally located and well connected to all the major cities
Accounts for ~ 8% of national coal reserve i.e. 18,205 million tons
Availability of coal bed methane reserves of approximately 144 bn cubic meters
Large rivers flowing across the State gives ample potential for hydel power generation

Established Infrastructure
Well connected through roads and railway
Availability of vast contiguous land for setting up big plants
Extensive power distribution and transmission network with about 185 sub-stations
Transmission network of about  19,817.7 Ckt Km

Government Support
Key incentives for private players establishing plant in the state, based on non-conventional energy resources like wind, bio and solar energy and mini micro hydel projects
Restructured power sector in accordance with the provisions of the Electricity Act 2003
MP Electricity Regulatory Commission (MPERC), has laid down the tariff plan for next 3 years


An Investment Destination
  • With the growing industrialisation in the State along with the Rural Electrification Programme initiated by the Government, the demand for electricity would increase manifolds in the State.

Industry Drivers in MP
  • The demand for energy in the State is estimated to increase by 45% by the year 2011-12.
  • M.P. is likely to face the energy deficit in the next five years and its energy deficit in 2011-12 is expected to be as high as 10.5% (source: MPSEB)
  • The natural resources available in M.P such as thermal, hydel, wind power and coal bed methane has the potential to generate 15000 MW of power in next 5-10 years.

Government Initiatives
  • The thermal and hydel power plants set-up in the State will receive incentives from the Central as well as State Government (mentioned in prior slide).
  • The State Government offers various incentives for organisations installing power generation unit utilising non-conventional feed stocks. These incentives include electricity duty exemption, sales tax benefits, land incentives etc. These investors have the option of using the power themselves as captive power  and selling it to the MPEB @ USD 0.05 per unit (source: MPERC)
  • Government also provides incentives for setting-up captive plants in the State.

Ultra Mega Project in MP
  • The central government is setting up Ultra Mega Power Projects 5 locations in the country.§
  • The project is first initiated in MP and is at an advanced stage of establishment.
  • Sasan in M.P., a pithead location based on domestic coal availability (while other proposed plants would be imported fuel based) is identified for setting up this project.
  • It is a large project of 4000 MW at a single location thereby ensuring economies of scale.§
  • Project would require an investment of about USD 3.3 billion.
  • The project would utilize super critical technology to ensure higher efficiency and lower CO2 emissions§
  • The projects would be awarded to developer through tariff based competitive bidding to ensure cheaper power.


Up-Coming Projects In M.P. (Indicative)
Thermal Power Projects
Malwa TPS,
Purni, Dist. Khandwa
2X500 MW
Essar Group Project,
Mahan coal field at Sidhi-Singrauli fields
1000MW
Jaypee Group
Siddhi
1000 MW
Hydel Power Projects
Marhikheda hydro project, extension,
Shivpuri.
1x20 MW
Tawa HEP (M/s Hindustan Electro Graphite)
Hoshangabad
13.5 MW
Coal Bed Methane
Reliance Energy
Shahdol
-


Way Forward

With the increasing demand for power in the State and State’s objective to provide power to all by the year 2008, there lies several opportunities for public-private partnership in the sector.



Opportunities across the value-chain

Power Generation
  • Power generation plants based on:
  • Coal reserves
  • Hydel power
  • Biomass
  • Coal bed methane
  • Wind


Power Transmission
  • The Transmission could be taken through Joint Venture or Independent Private Transmission Company (ITPC) route.
  • 400 KV Bina-Nagda-Dehgam D/C line in Western Region has been taken up as a pilot project by POWERGRID and would be awarded to private party soon.


Power Trading & Distribution
This activity could be taken independently or under joint venture by private players under public-private partnership in the State.


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23 July 2017
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