Revival of
investment sentiment in the beleaguered power sector through quick
resolution of fuel rows is key to sustainable growth, leading chamber
ASSOCHAM has said.
However much the Reserve Bank is obsessed with inflation management,
it is through high growth, that too in the infrastructure sector that
the country can find solutions to its perennial problems of fighting
poverty.
Unfortunately, the growth of eight key infrastructure sector including electricity generation has been languishing. During April-August period of the current fiscal, these industries could achieve a decelerated growth of only 2.8 per cent as compared to 5.5 per cent in the same period last year.
What is worse is that a large size of capacity in power generation achieved during the 11th Five Year Plan could not be commissioned because of shortages of coal. As much 55 GW of new capacity in the thermal sector has been hit by coal shortages.
“This cannot and should not be allowed in a developing country where resources for new infrastructure projects are hard to come,” ASSOCHAM President Rajkumar N Dhoot said.
Dhoot said the new Power Minister Jyotiraditya Scindia should give his top priority to this aspect. “We urge the young minister to immediately resolve the coal linkage issue so that billions of dollars spent on creating new power generation capacity is put to use, ” said the ASSOCHAM President.
Against the coal requirement for thermal power generation during 2012-13 of 476 million tonnes, indigenous supplies may be only 407 million tonnes, requiring the balance to be met through imports.
The point has been well highlighted by the Reserve Bank as well which underscored the need for revival of investment sentiment in the infrastructure sector. It pointed out that demand-supply gap in coal is projected to rise further during the Twelfth Plan. New plants that have been commissioned on the basis of coal linkage are facing severe constraints in the absence of committed Fuel Supply Agreements (FSAs), the RBI stated.
Besides the Power Minister, the ASSOCHAM would urge the Coal Minister Sriprakash Jaiswal to give the utmost importance to increasing the coal production. Coal India must also be held accountable for achieving the production targets. Whatever the issues with the power producers must be resolved at the earliest.
Moreover, till the domestic production is boosted, the country must encourage imports of coal. “Imports of essential raw material like coal will only help add value to the Indian economy,” added ASSOCHAM President.
It said the power sector is under stress with the result that not only power distribution companies are burdened with a debt of Rs 1.90 lakh crore. Close of Rs one lakh crore of bank finance is also stuck in the power sector.
The sector which was considered a sunrise area some years ago, has been dumped by investors in the stock market. Be it generation company, or equipment maker, the investors in the stock markets are shying away from these stocks. This has come in the way of the promoters to go in for fresh equity and most of the dependence has come on the loan components creating over-leveraged balance-sheets.
“Net-net, the sector is under a severe stress and must be given the critical importance,” the chamber said.
Unfortunately, the growth of eight key infrastructure sector including electricity generation has been languishing. During April-August period of the current fiscal, these industries could achieve a decelerated growth of only 2.8 per cent as compared to 5.5 per cent in the same period last year.
What is worse is that a large size of capacity in power generation achieved during the 11th Five Year Plan could not be commissioned because of shortages of coal. As much 55 GW of new capacity in the thermal sector has been hit by coal shortages.
“This cannot and should not be allowed in a developing country where resources for new infrastructure projects are hard to come,” ASSOCHAM President Rajkumar N Dhoot said.
Dhoot said the new Power Minister Jyotiraditya Scindia should give his top priority to this aspect. “We urge the young minister to immediately resolve the coal linkage issue so that billions of dollars spent on creating new power generation capacity is put to use, ” said the ASSOCHAM President.
Against the coal requirement for thermal power generation during 2012-13 of 476 million tonnes, indigenous supplies may be only 407 million tonnes, requiring the balance to be met through imports.
The point has been well highlighted by the Reserve Bank as well which underscored the need for revival of investment sentiment in the infrastructure sector. It pointed out that demand-supply gap in coal is projected to rise further during the Twelfth Plan. New plants that have been commissioned on the basis of coal linkage are facing severe constraints in the absence of committed Fuel Supply Agreements (FSAs), the RBI stated.
Besides the Power Minister, the ASSOCHAM would urge the Coal Minister Sriprakash Jaiswal to give the utmost importance to increasing the coal production. Coal India must also be held accountable for achieving the production targets. Whatever the issues with the power producers must be resolved at the earliest.
Moreover, till the domestic production is boosted, the country must encourage imports of coal. “Imports of essential raw material like coal will only help add value to the Indian economy,” added ASSOCHAM President.
It said the power sector is under stress with the result that not only power distribution companies are burdened with a debt of Rs 1.90 lakh crore. Close of Rs one lakh crore of bank finance is also stuck in the power sector.
The sector which was considered a sunrise area some years ago, has been dumped by investors in the stock market. Be it generation company, or equipment maker, the investors in the stock markets are shying away from these stocks. This has come in the way of the promoters to go in for fresh equity and most of the dependence has come on the loan components creating over-leveraged balance-sheets.
“Net-net, the sector is under a severe stress and must be given the critical importance,” the chamber said.
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