By Sarita Chaganti Singh
NEW DELHI (Reuters) – India has asked power companies to order $33 billion worth of equipment this year to speed up the addition of coal-fired power capacity in coming years as the South Asian country struggles to meet rising electricity demand, two government officials said.
The unprecedented move by the government, which would result in record bidding in a year for the equipment by power majors such as state-run NTPC and SJVN as well as private firms Adani Power and Essar Power, will help add 31 gigawatts (GW) in the next 5-6 years, sources said.
Normally, the government leaves the tendering schedule to the companies themselves.
The acceleration of equipment orders for new coal-fired plants was discussed at a meeting held by Power Minister Manohar Lal soon after the formation of Prime Minister Narendra Modi's federal cabinet early last month, sources said.
The targets are ambitious given that the country has ordered equipment for a capacity of between 2 and 3 GW per year in previous years, except for last year's orders of 10 GW.
India is rushing to add new coal plants as it can barely meet high power demand with its existing fleet during the hours when there is no solar power.
In the aftermath of the pandemic, the country's energy demand hit new records thanks to the fastest economic growth rate among major economies and rising cases of heat waves.
India suffered its biggest power shortage in 14 years in June, and had to scramble to avoid nighttime outages by postponing planned plant maintenance and invoking an emergency clause to force companies to operate plants based on imported coal and power.
State-run Bharat Heavy Electricals Ltd (BHEL), which bagged all the electrical equipment contracts in auctions last year, is likely to bag the majority of contracts for the new equipment, sources said.
Larsen & Toubro, the only other electrical equipment producer in the market, had not participated in most of last year's deals, they said.
The power ministry, BHEL, Adani, NTPC, SJVN and L&T did not immediately respond to emails sent by Reuters. The sources declined to be named as they were not authorised to speak to the media.
“The last big orders for power equipment were for about 20 GW around 2009-10, when Chinese companies took a significant share,” one of the sources said.
Policy changes and a lack of orders for coal-fired plants in recent years have forced other equipment suppliers such as Thermax–Babcock, BGR–Hitachi and South Korea’s Doosan to close their manufacturing units in India.
Since 2020, the country has discouraged contracts with companies from countries that share a land border like China, requiring regulatory approvals.
Since late last year, India has accelerated the construction of coal-fired power plants to meet its energy needs, threatening to undermine progress made by the world's third-largest greenhouse gas emitter in weaning its economy off carbon.
In March, Reuters reported that Indian private companies have expressed interest in building at least 10 GW of coal-fired power capacity within a decade, ending a six-year drought of significant private participation in the sector. ($1 = 83.5040 Indian rupees)
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