Indian officials say the Modi government has asked power companies to order $33 billion worth of equipment this year to ramp up additional coal-fired power for the rest of this decade.
Normally, the government leaves the timing of tendering timing to the companies themselves, but two government officials said the request was made because the nation is struggling to meet significant electricity demand.
The unprecedented move, which would result in record tendering in a year for the equipment by major power firms such as state-run NTPC and SJVN, as well as by private companies Adani Power and Essar Power, will help add 31 gigawatts (GW) in the next 5-6 years, the sources said.
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Expediting 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, the sources said.
The targets are ambitious given the country has ordered equipment for about 2-3 GW capacity annually in prior years, barring last year’s orders for 10 GW.
Rush to add more coal plants
India is rushing to add fresh coal-fired plants as it is barely able to meet power demand with the existing fleet in non-solar hours.
Post pandemic, the country’s power demand scaled new records on the back of the fastest rate of economic growth among major economies and increased instances of heatwaves.
India saw its biggest power shortfall in 14 years in June, and had to race to avoid night time outages by deferring planned plant maintenance, and invoking an emergency clause to mandate companies to run plants based on imported coal and power.
State-run Bharat Heavy Electricals Ltd (BHEL), which bagged all power equipment contracts in auctions in the last year, is likely to get most of the contracts for the new equipment, the sources said.
Larsen & Toubro, the only other power equipment producer in the market, had not participated in most of last year’s bids, they said.
Policy flip-flops
The Power Ministry, BHEL, Adani, NTPC, SJVN and L&T did not immediately respond to emails sent by Reuters. The sources did not want to be named because they were not authorised to talk to media.
“The last large orders for power equipment were placed for about 20 GW around 2009-10 when Chinese companies bagged a major pie,” one of the sources said.
Policy flip-flops and lack of orders for coal-based plants over the past several years forced other equipment suppliers such as Thermax–Babcock, BGR–Hitachi and South Korea’s Doosan to shut their manufacturing units in India.
The country, since 2020, discourages contracts with companies in countries sharing a land border such as China by mandating regulatory approvals.
Since late last year, India has fast tracked coal-fired power plants to meet its power needs, threatening to undermine progress made by the world’s No-3 greenhouse gas emitter in weaning its economy off carbon.
In March Reuters reported private Indian firms have expressed interest in building at least 10 GW of coal-fired power capacity over a decade, ending a six-year drought in significant private involvement in the sector.
- Reuters with additional editing by Jim Pollard
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