Hydro power sector not seen recovering soon: Voith3 min read . Updated: 02 Dec 2012, 11:03 PM IST
Mechanical engineering firm postpones investment plans on lower orders despite having enough capacity
New Delhi: India’s moribund hydro power sector isn’t expected to change trajectory in the next two years, said Hubert Lienhard, president and global chief executive officer of Voith GmbH, which makes electro-mechanical equipment, reflecting the state of the sector and prospects for revival.
While the government has been trying to attract investments to the country, there have been concerns that faltering hydro power generation could hit India’s energy security plans. Hydro power accounts for 39,291.40 megawatts (MW), or 19%, of India’s 205,340.26MW power-generating capacity.
“In the next two years, nothing will happen in the country," Lienhard, whose firm has postponed its investments in India, said in an interview earlier this month.
The €5.6 billion Voith, which has a presence in other businesses including hydro power as a system supplier, is present across 50 countries and employs 40,000 people. It has a presence in India through Voith Hydro Pvt. Ltd with a workforce of 1,000. India contributes €147 million to Voith’s global sales of €5.6 billion.
With state-owned firms such as NHPC Ltd (NHPC), SJVN Ltd, THDC India Ltd and North Eastern Electric Power Corp. Ltd (Neepco) failing to meet capacity addition targets, even the Comptroller and Auditor General of India (CAG) has criticized the functioning and performance of these firms. Also, a total of 41,601.5MW of hydro power capacity allotted by various states to private companies were either yet to be taken up for construction or still in the award stage as reported by Mint on 23 October.
According to the CAG report, while hydro power capacity addition was initially set at 11,813MW in the 11th Plan period (2007-2012), even the revised target of 6,794MW couldn’t be met due to project delays. State-owned units added just 1,550MW at the end of the plan. The country’s top auditor is of the view that these public sector units (PSUs) are likely to add only 3,774MW capacity in the 12th Plan (2012-17) against a target of 14,535MW.
“We have postponed our plans for our investments. There is no need. While we have enough capacity, we don’t have enough contracts. It is a reflection on the sector," said Lienhard, whose company supplies electro-mechanical gears to state-owned Bharat Heavy Electricals Ltd (Bhel). “As Bhel has declining sales, we have declining sales."
Constructing a hydro power project takes time. Apart from a thorough survey and investigation, preparation of a detailed project report and infrastructure development, it also involves the tedious process of relocation and resettlement of the affected population, which could involve legal battles. On average, it takes around five years to execute a hydro project after it is cleared for construction.
Also, at a time when state-owned NHPC is struggling to compete with its private sector rivals, the Union power ministry is yet to appoint a full-time head for the PSU. The last incumbent retired around two years ago.
“NHPC doesn’t have a chairman for the last two years. It tells us something when such an important position is empty," Lienhard said.
To be sure, the appointment of board-level executives is a time-consuming process and takes at least one year to be completed.
U.D. Choubey, director-general of the Standing Conference of Public Enterprises, the apex body of state-owned firms, said, “It is unfortunate for PSUs (public sector units) such as NHPC as no decision is being taken by the decision makers. The real problem starts after the panel is selected by Public Enterprises Selection Board (PESB), as then the problem of anonymous and false complaints start."
PESB short-lists a panel of two candidates in order of merit and sends the names to the parent ministry, in this case the Union power ministry. The short-listed names are then sent to the Central Vigilance Commission for background checks.
“With the inquiry taking time, either the panel is scrapped, or it is put in abeyance. In such a situation, a temporary charge is given and the PSU suffers," Choubey said.
G. Sai Prasad, joint secretary in charge of hydro power in the power ministry, holds additional charge as chairman and managing director of NHPC.