An item in The Economic Times (Jul 27 2011) caught my interest. This was about the fact that the private sector power generation firms were having a much higher success in meetings their capacity addition targets than have public sector firms. So what’s the big surprise, you might ask. Granted, no surprises, but am glad to get this confirmation.
Some stats will help. In 2010-11, private funded projects have added 5122 MW of new capacity, around 84% of the target set by the planning commission. Compared to this, the public sector firms have faltered…56% target achievement for central projects (total achieved: 4280 MW) and 42% of the target achievement for state funded projects (total achieved: 2759 MW). This success has led the Planning Commission to increase target for the current fiscal (11-12) for private sector capacity addition by 25% to 7610 MW while reducing targets for central and state projects by 25% and 36% respectively. The two main reasons for poor performance (and be assured there are many more than two :-)) of the public projects are the procurement policy (guess there are mandates for them to procure from specified sources) and of course poor project management by the companies. Given the efficiencies of our public sector, we should be surprised that power plants get at implemented at all!
The more we see private firms in power generation, the faster we will be able to accelerate to meet the fast growing energy demands. This is even more true when it comes to implementing power projects from renewable energy sources. Private sector companies, not surprisingly perform much better in both these respects. I understand most of the private companies purchase the major equipments from Chinese firms. Whether that is a good idea or not from quality and reliability points of view, I am not sure, but the Chinese sure deliver the stuff real quick!
Ten years down the line, I will not be surprised to see the likes of Tata Power, Adani and Reliance pretty much dominating the conventional power sector. If this is the case with stodgy conventional power, just imagine the domination that private sector will have in the more fluid and innovation driver renewable power.