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Jaipuria Institute of Management, Jaipur

POWER SECTOR IN INDIA

Submitted To: Dr. ABHIJIT NAIR

BUSINESS COMMUNICATION

Submitted By:

NIKITA THOMAS

PREETI SINGH

SUBHAM DARUKA

ANUBHAV GUPTA

SACHIN GUPTA

AJIT KUMAR ROY

LATIKA CHHABRA

FIRDAUS JAMAAL


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DECLARATION

We hereby declare that all the work presented in the project report entitled POWER

SECTOR IN INDIA of the subject BUSINESS COMMUNICATION is an authentic

record of our own work carried out under the guidance ofDr. ABHIJIT NAIR.

Date: 29.12.2012


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ACKNOWLEDGEMENT

We thank our advisorDr. ABHIJIT NAIR, Jaipuria Institute of Management, Jaipur

for assigning us this project and believing in us. He and his continuous support during the

project were always there to listen and his valuable advice enabled us to complete the

project on time. He taught us how to be inquisitive and express our ideas. He showed

different ways to approach a problem and the need to be persistent to accomplish any

goal. Their advice and suggestions have been remarkable in handling different types of

situations at work. Sincere thanks to Jaipuria Institute of Management, Jaipur.


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Table of contents


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Introduction - World Energy Consumption

World Energy Consumption refers to the total energy used by all of human civilization.

Typically measured per-year, it involves all energy harnessed from every energy source we use,

applied towards humanity's endeavors across every industrial and technological sector, across

every country. Being the power source metric of civilization, World Energy Consumption has

deep implications for humanity's social-economic-political sphere.

Various institutions (Such as the IEA, EIA, and EEA) record and publish energy data

periodically. Improved data and understanding of World Energy Consumption may reveal

systemic trends and patterns, which could help frame current energy issues and encourage

movement towards collectively useful solutions.

According to IEA (2012) the climate goal of limiting warming to 2 C is becoming more

difficult and costly with each year that passes. If action is not taken before 2017, all the

allowable CO2 emissions would be locked-in by energy infrastructure existing in 2017. Fossilfuels are dominant in the global energy mix, supported by $523 billion subsidies in 2011, up

almost 30% on 2010 and six times more than subsidies to renewable.

Fossil energy use increased most in 2000-2008. In October 2012 IEA wrote last decade ca half of

the increased energy use is coal, growing faster than all renewable energy. Since Chernobyl

disasterin 1986 investments in nuclear power have been small. The volume of renewable energy

is not yet substituting fossil energy use.

Energy use (TWh)

Fossil Nuclear Renewable

1990 83,374 6,113 13,082

2000 94,493 7,857 15,337

2008 117,076 8,283 18,492

Change 2000-2008 22,583 426 3,155
http://en.wikipedia.org/wiki/Energyhttp://en.wikipedia.org/wiki/Civilizationhttp://en.wikipedia.org/wiki/Industryhttp://en.wikipedia.org/wiki/Technologicalhttp://en.wikipedia.org/wiki/Socialhttp://en.wikipedia.org/wiki/Economichttp://en.wikipedia.org/wiki/Politicalhttp://en.wikipedia.org/wiki/International_Energy_Agencyhttp://en.wikipedia.org/wiki/Energy_Information_Administrationhttp://en.wikipedia.org/wiki/European_Environment_Agencyhttp://en.wikipedia.org/wiki/Chernobyl_disasterhttp://en.wikipedia.org/wiki/Chernobyl_disasterhttp://en.wikipedia.org/wiki/Chernobyl_disasterhttp://en.wikipedia.org/wiki/Chernobyl_disasterhttp://en.wikipedia.org/wiki/European_Environment_Agencyhttp://en.wikipedia.org/wiki/Energy_Information_Administrationhttp://en.wikipedia.org/wiki/International_Energy_Agencyhttp://en.wikipedia.org/wiki/Politicalhttp://en.wikipedia.org/wiki/Economichttp://en.wikipedia.org/wiki/Socialhttp://en.wikipedia.org/wiki/Technologicalhttp://en.wikipedia.org/wiki/Industryhttp://en.wikipedia.org/wiki/Civilizationhttp://en.wikipedia.org/wiki/Energy


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INTRODUCTION OF INDIAN POWER INDUSTRY

Power can be generated from coal, water, wind, nuclear & non-renewable energy resources.

Power sector is broadly divided into generation, transmission & distribution. The Indian Power

Industry is one of the largest and most important industries in India as it fulfills the energy

requirements of various other industries. It is one of the most critical components ofinfrastructure that affects economic growth and the well-being of our nation. India has the

worlds 5th largest electricity generation capacity and it is the 6th largest energy consumer

accounting for 3.4% of global energy consumption. Due to the fast-paced growth of the Indian

economy, the countrys energy demand has grown at an average of 3.6% p.a. over the past 30

years. In India, power is generated by State utilities, Central utilities and Private players. The

share of installed capacity of power available with each of the three sectors can be seen in the pie

chart below:

NTPC is the leader in power generation with installed capacity of more than 30000 MW.

Transmission & distribution loss had always been a key concern for the Indian power companies.

Indo-US Nuke Deal: On November 16, 2006 the US Senate passes the 'United States-India

Peaceful Atomic Energy Cooperation and US Additional Protocol Implementation Act' to

"exempt from certain requirements of the Atomic Energy Act of 1954 United States exports of

nuclear materials, equipment, and technology to India." 9 Ultra Mega Power Projects of 4000

MW each: The Centre has so far allotted four Ultra Mega Power Projects out of which Reliance

Power has bagged three, located at Sasan (Madhya Pradesh), Krishnapatnam (Andhra Pradesh)

and Tilaiya (Jharkhand). Tata Power is developing one project in Mundra (Gujarat). State-

Location: Chattisgarh-Akaltara; Gujarat-Mundra; Karnataka-Tadri; Madhya Pradesh-Sasan;

Maharashtra-Giriye; Andhra Pradesh-Krishnapatnam; Orissa-Lankahuda(Sundergarh district);

Tamil Nadu-Cheyyur; Jharkhand-Tilaiyya. In order to install 1 MW, one needs a cape of Rs 4-4.5 crores.

:

As per the latest Report of CEA (Central Electricity Authority) i.e. as on 31-03-2011, the Total

Installed Capacity of Power in India is 173626.40 MW. Of this, more than 75% of the installed

capacity is with the public sector (state and central), the state sector having the largest share of

48%.
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Thermal Power: - In India, major proportion of power is generated from thermal sources where

the main raw material used is coal. Around 83% of thermal power is generated using coal as a

raw material whereas 16% of thermal power is generated with the help of Gas and 1% of thermal

power is generated with the help of oil.

Hydro Power: - Hydroelectric power or hydroelectricity is electrical power which is generated

through the energy of falling water. India has hydro power generation potential worth 1,50,000

MW, of which only 25 % has been harnessed till date.

Nuclear Power: - A Nuclear Power Plant is a thermal power station in which the heat source is

one or more nuclear reactors. A nuclear reactor is a device to initiate and control a sustained

nuclear chain reaction. In the process, heat is generated which is then used to generate electricity.

Renewable Energy Sources:The energy obtained from renewable sources like sun, wind,

biomass can be converted into power. Renewable energy sources have great potential to

contribute to improving energy security of India and reducing green-house gas emissions. India

is among the five largest wind power generators in the world
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Power Sector: History/Background

Electricity, as we know it, is largely a product of eighteenth and nineteenth century scientific andengineering developments. Many electro-scientific discoveries were made in the early part of thenineteenth century, but it was only when significant engineering breakthroughs were made

resulting in the development of electro-mechanical generators and transformers that substantialamounts of electricity could be produced and distributed. Very soon it became possible togenerate electricity at large central power stations, where economies of scale meant thatwidespread electrification switched from dream to reality.

The US was the first country that generated electricity followed by United Kingdom after 6years. CESC Limited is the pioneer in the history of generation of electricity in India. Itcommenced power generation and distribution in Kolkata, in 1899. CESC started as Kilburn &Co when the company acquired the license to provide electricity to Calcutta city on January 7,1897. The electrification of Kolkata city took place seventeen years after New York, whichboasted of Electricity in 1882 and eleven years after London, which was electrified in 1888.

India also started hydro electric generation by the end of 19th century. The power plant atDarjeeling and Shimsha (Shivanasamudra) was established in 1898 and 1902 respectively and isone of the first in Asia. The 4.5 megawatt hydroelectric power station near Sivasamudram fallsof the Cauvery in Karnataka was the first major power station in India.

The Indian power sector has been regulated for almost a century and the Electricity Act 1910was the first act that was introduced to govern the Indian power sector. The Electricity (Supply)Act 1948 was introduced after independence, but it did not achieve the desired results. , as thepower sectors performance started to deteriorate and a need was felt to restructure the sector.Several regulatory changes were made since 1991, which transformed the industrys

performance.

Based on the governments regulations and policies, the evolution of the Indian power industrycan be divided into two broad phases, pre-reform and post-reform phases. The pre-reform phase(up to 1991) can be divided into pre-independence phase (prior to 1947) and post-independencephase (1947-1990) and post-reform phase.

Post-independence, the Government of India decided to entrust the development of the electricitysector to respective states through the creation of State Electricity Boards (SEBs). SEBs wereexpected to develop networks of transmission lines which till then had been quite under-developed, and add generation capacity. But SEBs fared miserably and by the 70s, many of theSEBs started incurring losses because of many factors including direct political interference inSEBs operation by their respective governments, mismanagement, poor industrial relations, etc.

The low tariffs for agricultural sector were sought to be covered through higher tariffs onindustrial and commercial consumers. But the distortions of such cross subsidization, resulted inincreasing theft and leakages, loss of accountability of revenue and misreporting. Losses of theSEBs mounted this made SEBs increasingly dependent on budgetary allocations from theirrespective governments reducing their ability to add generating capacity, and most importantly tocarry out the periodic maintenance and upkeep of their distribution assets.

Given the deteriorating financial performance and poor operating performance of SEBs, the onusof setting up new generation capacities fell increasingly on the Central Government. It was in


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such a situation that the central government set up two central sector utilities; NTPC (NationalThermal Power Corporation Limited) for thermal generation and NHPC (National Hydro PowerCorporation Limited) for hydro power. Over the 1980s, energy shortages and poor financialcondition of SEBs continued. The need to control fiscal deficit led to initiation of reforms in theElectricity Sector in early 1990s with opening of the sector for private Independent Power

Producers (IPPs).Following the liberalisation and reform of the economy in 1991-92, the electricity sector toowitnessed major policy and regulatory initiatives. Recognizing that electricity and otherinfrastructure sectors required substantial investments in the face of resource constraints;investment by the private sector (including foreign capital) were allowed in electricitygeneration. Prior to this, save some private sector licensees operating in a few urban areas, theelectricity sector was mostly in the hands of state electricity boards (SEBs) or centralgovernment owned utilities created to supplement the efforts of SEBs in generation andtransmission sub-sectors. As the entities got unbundled and the role of the private sector inelectricity was set in motion through the IPPs, the need for independent regulators was obvioussince now there was private sector when the state itself had a significant market role.

The institution of independent regulation, the Central Governments guidance and direction of

reform efforts, unbundling of the sector, legal initiatives to bring in competition, programmes toimprove technical and operational efficiency of the sector to effectively procure power on a longterm basis on behalf of state governments, have been initiated since then. The changes that theseinitiatives have brought about, while significant, have not necessarily been in the directionintended, and the core problems of leakage, viability of distribution, tariff reform andcompetition still remain to be addressed successfully.

The most important amongst all the policies announced by the government is the enactment ofthe Electricity Act. The year 2003 marked a new beginning of reforms in the Electricity Sector inIndia with enactment of the Electricity Act replacing the legal framework for the sector hitherto

governed by the Electric Supply Act of 1948 and the ERC Act of 1998. There have been a slewof regulatory changes after the enactment of the Electricity Act in 2003 which have opened upthe power generation sector and driven the sector on a high growth trajectory.

In pursuance of the provisions of the Electricity Act 2003, the Central Government came outwith National Electricity Policy on 6th February 2005. Over the past few years, the Governmentof India has undertaken several legislative measures and carried out extensive policy reformswith a view to accelerating the growth of the power sector and encouraging greater privateparticipation. Some of these measures include National Tariff Policy, National Electricity Plan,Competitive Bidding Guidelines, and Ultra Mega Power Projects.

Now 100 percent Foreign Direct Investment (FDI) is allowed in generation, transmission and

distribution segments. Incentives are given to the sector through waiver of duties on capitalequipments under the Mega Power Policy. These policy initiatives have resulted in building upinvestor confidence in the power sector and have created an ideal environment for increasedparticipation by the private sector.


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When India became independent in 1947, the country had a power generating capacity of 1,362MW. Generation and distribution of electrical power was carried out primarily by private utilitycompanies. Notable amongst them and still in existence is Calcutta Electric. Power was availableonly in a few urban centers; rural areas and villages did not have electricity.

After 1947, all new power generation, transmission and distribution in the rural sector and theurban centers (which was not served by private utilities) came under the purview of State andCentral government agencies. State Electricity Boards (SEBs) were formed in all the states.

National Thermal Power Corporation (NTPC), National Hydro-electric Power Corporation(NHPC) and Power Grid Corporation Limited (PGCL) were formed by the government to assistin meeting the increasing demand for electricity throughout the country. The electricity sector isin the 'concurrent list', meaning that both, State and Central governments, participate in thesector's development. The Ministry of Power in the Central government formulates the policiesfor the power sector. The Central Electricity Authority (CEA) was established as a statutoryauthority to develop a 2nd National Power Policy and also to function as a regulatory authority.

As per government guidelines, all power projects above a certain capacity have to obtain techno-economic clearance from CEA before they can be implemented. A new Ministry of Non-Conventional Energy Sources has also been formed to focus on renewable energy sources toaugment the generation capacity of electrical power.

The Public sector units (PSUs) provided a vital service to the nation in the post-independenceera. From the few transmission and distribution networks existing at the time of independence, infew urban centers, the PSUs have established networks covering the entire length and breadth ofthe country. Besides, massive rural electrification programs have boosted agricultural productionin a big way. Today, India is self-sufficient in food grains primarily because of this.

FUTURE FORESIGHTS

According to the latest reports of Indian Power Sector Analysis, the Indian power sector haswitnessed a significant period of growth in recent years backed by factors including strongdemand, active private sector participation, increasing investments, and favorable governmentsupport in the form of feasible programs and policies. The total installed capacity in the countrygrew from 132,329 MW in 2006-07 to 173,626 MW in 2010-11, which is an impressive growthover the recent past. However, much is needed to be done in order to bridge the demand-supplygap. It is estimated that due to effective investment patterns and well enacted public policies, the

total installed power generation capacity will reach to 203,594 MW by 2013-14.

We have found that solar power has emerged as one of the leading sources for power generationin India. With states, such as Rajasthan, Gujarat, Tamil Nadu, and Maharashtra exploring newsolar energy avenues, the country is likely to invest more funds in solar power. Private playershave also been spending huge amount of money in solar power plants, thereby supporting a fast


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growing sector. According to government plants, the country is likely to produce 1,300 MW by2013, another up to 10 GW by 2017, and more by 2022.

The report, Indian Power Sector Analysis,is an effective source of knowledge and analysis

on the fast growing power sector in India that provides an in-depth investigation of the marketdrivers and prominent trends. The report thoroughly studies the current market status with thehelp of reliable statistics and proper presentation. Moreover, it analyzes the renewable energypotential in the power generation and illustrates the recent state-wise developments.

The report is an outcome of an extensive research and prudent analysis of the Indian powersector that will help clients to analyze the driving forces and leading-edge opportunities criticalto the success of the power industry. The forecasting in key sections of the report makes use ofeffective methods and techniques that seek to present a realistic market outlook.

Proposed Capacity Additions during 11th Plan (2007-12): The 11th Plan recommendsgeneration planning based on an estimated 9.5% growth in required energy each year. As aresult, a capacity addition of 78,577 MW is recommended in the 11th Plan as given below:

Sector Hydro Thermal Nuclear Total (%)

Central 9,685 26,800 2,658 39,865

(50.7%)

State 3,605 24,347 - 27,952

(35.6%)

Private 3,263 7,497 - 10,760

(13.7%)

All India 16,553 58,644 3,380 78,577 (100%)

Source: Working Group on Power-11th Plan (2007-12)

Required capacity additions foreseen by the 12th Plan:

The requirement of installed capacity and capacity addition to meet the generation requirementduring the 12th Plan period is given in table below:

Capacity addition required during 12th plan (2012-17):


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GDP Growth GDP / Electricity

Elasticity

Electricity

Generation

Required (BU)

Peak Demand

(MW)

Installed Capacity

(MW)

Capacity Addition

Required During

12th Plan (MW)

8% 0.8

0.9

1,415

1,470

215,700

224,600

280,300

291,700

70,800

82,200

9% 0.8

0.9

1,470

1,532

224,600

233,300

291,700

303,800

82,200

94,300

10% 0.8

0.9

1,525

1,597

232,300

244,000

302,300

317,000

92,800

107,500

Source: Working Group on Power-11th Plan (2007-12)

Under various growth scenarios, the capacity addition required during 12th plan would be in therange of 70,800 - 107,500 MW, based on normative parameters. The 11th Plan Working Group

recommends a capacity addition of 82,200 MW for the 12th Plan based on the scenario of 9%GDP growth rate and an elasticity of 0.8%.

Long term demand of power

The Ministry of Power has set a goal - Mission 2012: Power for All. Based on the 17th EPS, thetotal energy requirement in India will increase to 968,659 GWh by fiscal year 2012, 1,392,066GWh by fiscal year 2017 and to 1,914,508 GWh by fiscal year 2022. This would lead to anannual electric peak load of 152,746 MW in fiscal year 2012, 218,209 MW in fiscal year 2017and 298,253 MW in fiscal year 2022. The northern region is expected to contribute 30.1% and

the western region contributes 28.4% of the overall annual electric peak load in fiscal year 2022.The Government has estimated the total investment potential of the sector at Rs. 9,000 billion fora specified period up to fiscal year 2011. This represents a significant opportunity for capacityexpansion and growth opportunity for power generation companies, both in the public and theprivate sector


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CURRENT SCENARIO OF POWER SECTOR IN INDIA

As of March 31, 2012 India had an installed power capacity of almost 2,00,000 MWHydro Thermal Nuclear R.E.S. Total

Coal Gas Diesel Total (MNRE)

STATE 27,380 49,457 4,965 603 55,025 0 3,514 85,919

PRIVATE 2,525 23,450 6,713 597 30,761 0 20,990 54,276

CENTRAL 9,085 39,115 6,702 0 45,817 4,780 0 59,683

TOTAL 38,990 112,022 18,381 1,200 131,603 4,780 24,503 199,877

The power generation capacity has increased from 1,362 MW in 1947 to 160,000 MW by mid of2011


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MAJOR PLAYERS IN THE WORLD

Vestas, orVestas Wind Systems, is the leading and the largest wind turbine manufacturer in the

world. Vestas has a total market share of 28%. The company operates plants in Denmark,

Germany, India, Italy, Britain, Spain, Sweden, Norway, Australia, China, and Windsor, Colorado

and employs more than 20,000 people globally.

The General Electric Company, orGE is a multinational American technology and services

conglomerate incorporated in the State of New York. In terms of market capitalization as of

September 2008, The General Electric Company is the worlds tenth largest company.

Gamesa Corporacin Tecnolgica is a manufacturing company mainly concerned with the

fabrication of wind turbines and the construction of wind farms. Its headquarters are in Vitoria-

Gasteiz, Spain. It develops, manages and sells wind farms, for which it also supplies the turbines.

It is the market leader in Spain and is the second largest company in the sector worldwide with a

market share of 15.5 % in 2008.

Enercon GmbH is based in Aurich, Northern Germany and is the

fourth-largest wind turbine manufacturer in the world and has been the market leader in

Germany for several years.
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Suzlon Energy is a wind power company from India. In terms of market share, the company is

the largest wind turbine manufacturer in Asia (and the fifth largest worldwide. In terms of net

worth, it is the worlds most valuable wind power company. With headquarters in Pune, it has

several manufacturing sites in India including Pondicherry, Daman, Bhuj and Gandhidham as

well as in mainland China, Germany and Belgium.

Siemens AGis Europes largest engineering conglomerate. Siemens international headquarters

are located in Berlin and Munich, Germany. The company is a conglomerate of three main

business sectors: Industry, Energy and Healthcare with a total of 15 Divisions.

Worldwide, Siemens and its subsidiaries employ approximately 480,000 people in nearly 190

countries and reported global revenue of $110.82 billion as of 2008.

Acciona SA is a Spanish conglomerate group dedicated to civil engineering, construction and

infrastructures. The company was founded in 1997 through the merger of Entrecanales y Tavora

and Cubiertas y MZOV. The companys headquarters is in Alcobendas, Community of Madrid,

Spain. The companys U.S. operations are headquartered in Chicago.

Xinjiang Goldwind Science & Technology Company is a Chinese wind turbine manufacturer

based in Urumqi, Xinjiang. The company is the largest turbine manufacturer in China and one of

the ten largest in the world. Goldwind acquired a 70% stake in Vensys Energy AG for 41.24

million on February 1, 2008.
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Nordex was founded in 1985 in Give, Denmark and in 2000 they moved their headquarters to

Germany and became Nordex A.G. and launched their IPO in 2001. Today, their primary

production facilities are in Rostock, Germany and also have manufacturing joint ventures in

China. The company has a total global work force of over 1500 people. In 2006, Nordex was

ranked in 7th place for worldwide wind turbine sales, holding a 3.2% global share of the global

wind turbine market.

Sinovel Wind Co., Ltd is a high-tech company engaged in developing, engineering,

manufacturing and marketing of the wind turbine generator system. Sinovel Wind is the first

company which introduced the technology of 1.5MW wind turbine generator system into China.

MAJOR PLAYERS IN POWER SECTOR IN INDIA

1) NTPCwith around 33 GW of power generation capacity is Indias largest power utility by

far and is planning to more than double that capacity to 75 GW by 2017 .

2) NHPC The company aims to double its electricity generation of 5 GW in the next 5 years

or so by focusing on hydro electricity generation in the Northern states of India.

3) Tata PowerThe largest private utility in India and has a presence in thermal, hydro, solar

and wind areas of power generation, transmission and retail with a capacity of nearly 3 GW.

4) Reliance Power.The company is currently constructing 3 4000 MW projects and has plans

of building 35 GW capacity with a mix of hydel,gas and coal based plants.The company also win

a solar thermal project in JNNSM bidding.

5) Adani PowerPower Limited is part of Adani Group with capacity of 1980MW.The

company currently operates Indias only super-critical power plant in Gujarat. The company is

currently implementing 16500 MW at different stages.
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6) Damodar Valley CorporationDVC is a state owned organization with interests in flood

control, irrigation, generation, transmission and distribution of electricity located in the Damdoar

Valley in the east of the country DVC is expanding its thermal power capacity and with the

completion of its present plans by 2012 it would be generating more than 11000 MW of power

7) Lanco Infratech - Lanco is fast emerging Andhra Pradesh based Group and has become a top

private sector power developer with 2 GW capacity.

8) SJVNThe company owns the largest hydro plant in India the Nathpa Jhakri Hydroelectric

1500 MW Power Project .The company is trying to expand like NHPC but has been facing

execution problems.

9) Nuclear Power Corporation of India( NPCIL)The company operates around 4.5 GW of

Nuclear Capacity in 6 locations.The company is expected to expand hugely in the future with

India planning to add around 2 GW of Nuclear Power over the next decade

TRENDS OF THE INDUSTRY

Investment Opportunities

The investment climate is very positive in the power sector. Due to the surge in the sector, the

power sector has witnessed higher investment flows than envisaged. The Ministry of Power isbelieved to have sent its proposal for addition of 76,000 MW of power capacity in the 12th five-year plan to the planning commission. The power ministry has set a target for adding 76,000MW of electricity capacity in the 12th Plan (2012-17) and 93,000 MW in the 13th Five-YearPlan (2017-2022).

The Working Group on Power for formulation of the 12th Five Year Plan has estimated totalfund requirement of INR 13,72,580 crore for the power sector. During the Twelfth Five YearPlan, the main sources of financing are commercial banks, public financial institutions, dedicatedinfrastructure/power finance institutions, insurance companies, overseas markets,bilateral/multilateral credit, bond markets and equity markets. In addition, steps have been taken

by Government to make available funds through Credit Enhancement Schemes andInfrastructure Debt Fund etc.

Foreign Investment in Power Sector

The present installed power generation capacity in the country as on October 31, 2011 was182689.62 MW. Thermal power projects of 78545 MW and hydro power projects of 15707 MWare under construction in the country for likely commissioning during 11th and 12th Plan. In


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order to attract foreign investments in the power sector, Foreign Direct Investment (FDI) up to100 per cent is permitted under automatic route for projects of electricity generation (exceptatomic energy), transmission, distribution and power trading. Major contributing countries to theFDI equity inflows during this period are France, Mauritius, Singapore, UAE, United Kingdom,USA and Morocco.

The Cabinet Committee on Economic Affairs (CCEA) has approved foreign direct investment(FDI) proposals worth US$ 1322.4 million of two power sector entities. The CCEA, which metunder the leadership of Prime Minister Manmohan Singh on Tuesday, gave the green signal toGrid Equipment for bringing in FDI to the tune of US$ 915.5 million. It also approved EnergyGrid Automation Transformers and Switchgears India's proposal for a US$ 406.9 million FDI.These proposals are for downstream investments and transfer of the entire equity shares of GridEquipment and Energy Grid from Areva T&D India and other resident shareholders. Equityshares of the two entities - Grid Equipment and Energy Grid - would be transferred to AlstomGrid Finance and other foreign collaborators and their nominees. Alstom in India is mainly intopower generation equipment while Areva T&D India is a leading transmission and distribution

player.

Meanwhile, Japanese power equipment companies and lenders are keen to work with Indiancompanies. "This engagement will only get stronger as some of the Japanese companies are keento work in the entire chain of power right from equipment supplies, maintenance, and alsorefurbishing old plants and upgrading them," as per Tsuneyuki "Hiro" Ito, Deputy Director inMinistry of Economy, Trade and Industry, Japan.

Investment Policy Updates

The Government has initiated several policies to promote and garner investments in the powersector. To accelerate capacity addition, several policy initiatives have been undertaken by theMinistry of Power. The National Electricity Policy (NEP) in fact, stipulates power for all andannual per capita consumption of electricity to rise to 1,000 units by 2012.

Some of the prominent policies which have boosted the private player's confidence in the sectorare:

National Electricity Policy Ultra Mega Power Project Policy Mega Power Policy CERC Policy Tariff Policy


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conclusion

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