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India seeks US investments in power sector

July 02, 2013 10:19 IST

Power Minister Jyotiraditya Scindia on Monday made a high pitch for American investments in India’s power sector, which he said, is projected to grow by leaps and bounds in the next couple of years.

Addressing a gathering of prospective investors at the Indian Consulate, he said India gets huge foreign investment, but that is not enough for the power sector.

“The power sector in India, I believe, has opportunities to offer to investors,” Scindia said, noting that the power sector is the most important sector in India for infrastructural development.

Foreign direct investment has dropped to about $530 million in 2012 from $1.5 billion in the previous year, due to the shortage of coal and natural gas supply that affected plant load factor resulting in losses for big firms.

While the minister admitted that shortage of coal has in the past created problems, the government is taking new initiatives to improve the environment for investors. However, he parried a direct reply in response to a question by this correspondent as to why investors should take interest in India given the facts on the ground.

Scindia said that the scenario is changing fast in the country. “We have demand growing at 6 to 6.5 per cent a year. Our generation capacity has grown since independence. The projections is between 2022 to 2032, the demand will grow from 400 to 800 gigawatts, which means we would need a lot of generation capacity from where we are today.

In the next five year plan, we will take measure to boost power generation – renewable, thermal and hydroelectric projects. Many issues and concerns have been raised in the power sector, especially in the issue of supply of coal and gas, but we are addressing all that, he said.

Scindia said that India is going to become one of the largest transmission grids in the world by 2017. “On the transmission side India is very well on its way to become one of the largest transmission grids in the world. By 2017, by connecting the southern grid with the rest of the four grids in India, the country will have the largest synchronised grid in the world,” Scindia said.

“The fundamental area that needs to be looked at is the distribution sector because I certainly believe that unless the value chains become viable, the return on investments will not be able to grow. So, for distribution we have put a couple of programs in place,” he said, adding that the viability of India’s distribution companies’ needs attention. 

“In a nutshell (despite some past problems) there is enormous opportunity in India's power sector today. There is a capital requirement of $350 billion, including close to about $250 billion in generation and another $70 billion in transmission. That gives a tremendous amount of promise as far as investments for US investors in India are concerned,” Scindia said.

The minister, who is visiting Washington later this week to meet with senior US government officials, addressed meetings at US India Business Council  (USIBC) as well as the Harvard Club in New York on Monday. 

Suman Mozumder in New York
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