42,000 MW power projects stuck for 1-12 years

Though the world may be moving towards clean power, countries like India still depend on thermal units as their main source of power supply. Power generated by burning coal alone contributes 50% of the total power supply. Each month, the amount of power demand and consumption is on the rise in all states. To cater to this increasing power demand, thermal and hydro projects were proposed and conceptualised in various are pending completion for the past 6 to 12 years. Eighteen thermal projects and 41 hydro projects totalling over 42,000 MW are stuck for between 1-12 years.

As of February 2023 end, 18 thermal projects are pending with a total capacity of 24,640 MW  in states like Andhra Pradesh, Bihar, Jharkhand, Maharashtra, Odisha, Telangana, Tamil Nadu, Uttar Pradesh and West Bengal. All these projects are either 800MW capacity each or 660 MW capacity.

Similarly, there are 41 hydro electric projects totaling 17,803.5 MW which are under implementation in various States/UTs of the country. The states in which hydro projects are pending include Andhra Pradesh, Arunachal Pradesh, Assam, Himachal Pradesh, Kerala, Madhya Pradesh, Maharashtra, Punjab, Sikkim, Tamil Nadu, Uttarakhand and West Bengal.

Incidentally, in Bihar and Jharkhand it is only NTPC’s thermal units which have been delayed. Although Jharkhand provides coal to several thermal units across the country, the North Karanpura thermal project has been pending for the past 4 years due to various reasons. Similarly in Bihar, Barh STPP-I (NTPC) Units 1 and 2 have been delayed for the past 12 years. The two units were to be commissioned and start generating power in December 2010 and October 2011 respectively, but both the units are expected to be completed by this year and next year, as per data released by the Union Ministry of Power (MoP).

The main reasons for the delay include contractual issues, lack of readiness of railway line/railway sidings to bring fuel for the thermal units, delay in supply by equipment manufacturers, delay in land acquisitions, disruption of work due to local issues, litigations, delay due to change in design, and geological surprises in case of hydro projects.

Many thermal projects which were announced by various state-owned distribution companies (discoms) could not begin construction as the contractor chosen did not have enough funds to start work or land acquisition could not be completed. The MoP mentions that it is taking the following steps to ensure timely completion of power projects: “The Central Electricity Authority (CEA) monitors the progress of under construction power projects through site visits and interaction with the developers and other stakeholders. CEA holds review meetings periodically with the developers and other stakeholders to identify and resolve issues critical for commissioning of projects. Regular reviews are also undertaken by the MoP to identify the constraints and facilitate faster resolution of Inter-Ministerial and other outstanding issues. In case of Central Power Sector Undertakings (CPSU’s) projects, the project implementation parameters/milestones are incorporated in the annual MoU signed between respective CPSUs and the MoP and the same are monitored during the Quarterly Performance Review (QPR) meetings of CPSU and other meetings held in MoP/CEA.”

Various matters related with project implementation are being taken up with state government/district administration for expeditious resolution of issues. In Tamil Nadu, two units of 660MW each at Ennore SEZ Super Critical Thermal Power Project have been delayed for the past 6 years and 7 months. Both the units were to be commissioned November 2017 and October 2018. The contract for this project was given to Lanco and former chief minister J Jayalalithaa laid the foundation in February 2014.

Soon after this, Lanco went bust and the project came to a standstill before work could begin. In this case, the discom did not do their due diligence about the company before it was given the contract. Tangedco went to court over the matter and finally the contract was given to another company who subsequently started construction. Both the units are expected to be completed by the next year or by 2025 at the latest. “Since most of the discoms are owned by the state governments, land for a new thermal project is not a problem unless it is very close to a town or city. Most of the projects are delayed as the contractor providing the boiler and other equipment is a Public Sector Undertaking (PSU) is causing the delay. There are instances of a boiler falling in a river during transit from Uttar Pradesh to North Chennai,” said a former NTPC chairman.

The delay in commissioning thermal projects means a discom has to depend on private power generators whose cost per unit is ₹5. “It is always advantageous for discoms to have their own thermal capacity. The cost per unit of power generation by a state-owned discom will be less than ₹4 per unit. For pit-head thermal units, the cost will be lesser. Thus Jharkhand which has several coal mines can generate power at less cost,” said the former chairman.

Tamil Nadu Generation and Distribution Corporation (Tangedco) is a classic example of a discom which is dependent on private power generators and the electricity exchange to provide power without any shortage. “The last thermal unit which was commissioned by Tangedco was in 2014, and since then its own thermal capacity remains at 4,320 MW. At the same time the demand has increased from 10,000 MW to around 18,000 MW,” said a former Tangedco chairman. “Though after 2014, the state is not facing any power cuts, the secret is that Tangedco is purchasing a majority of power from long-term, medium-term and short-term agreements with private power generators who charge between Rs 5 and 8 per unit. This has reflected poorly in Tangedco’s finances,” said the former chairman. Tangedco’s losses which were around ₹7,500 crore in 2017 are around ₹13,000 crore in 2020-21. “Tangedco has incurred the maximum loss among all discoms. Though the state is blessed with wind power generation, it is seasonal. The discom’s losses are on the rise since 2017 as it has been purchasing power at Rs 7 to 8 per unit. This is due to the lack of thermal capacity. The cost per unit of power generated in thermal units owned by Tangedco comes to around ₹4,” said a senior Tangedco official. Thus after 9 years, Tangedco is hopeful of adding 800 MW to its capacity as the North Chennai Third Unit is close to being completed. It is worth mentioning that this was scheduled to be commissioned in 2019 but due to various reasons, including Covid lockdown, it is expected to be commissioned in September this year.