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Power to see Rs 68 lakh-crore investment flow in 15 years

business Updated: Feb 16, 2016 01:43 IST
Beena Parmar
Make in India week

From left: Raymond Group CMD Gautam Singhania, Sun Pharma MD Dilip Shanghvi, Tata Sons chairman emeritus Ratan Tata and Maharashtra chief minister Devendra Fadnavis during the Maharashtra Investment seminar at the Make in India event in Mumbai on Monday.(Pratham Gokhale/HT)

The government will soon announce a new policy on coal swapping and is targeting a total investment of $1 trillion (Rs 68.07 lakh crore) in the power sector by 2030, including in coal renewables.

A policy to promote coal swapping — under which companies will be allowed to use coal from their captive mines, allocated for a specific steel or power plant, for another project — has been in the making since last year. Through this policy, the ministry is looking to increase power generation and raise savings by discarding obsolete power plants.

“We are coming out with a new policy on coal swapping. It is under discussion and we are engaging with stakeholders before we can take a final decision. We don’t want to do this in a hurry,” power minister Piyush Goyal said at the Make in India event.

While the long-term plan is to bring in investments of $1 trillion, the government has set an ambitious short-term target of fund flows of about $250 billion by 2020.

Investments in the power sector had fallen sharply during the previous UPA regime mainly due to a rise in coal prices and delayed environmental clearances for power projects, which discouraged private producers from building power plants.

“We are taking efforts to create one nation-one grid and for that, we have already created a capacity of 71% in 18 months in southern India, which has led to power costs in Tamil Nadu, Telangana, Kerala and Andhra Pradesh to fall drastically,” Goyal said.

A different framework is also being designed for 12 states and Union territories, so that they do not have to own distribution companies, which will be included under the UDAY scheme. In the electricity sector, the scheme will save `180,000 crore annually.

Ujjwal Discom Assurance Yojana, or UDAY, was formed to revive ailing electricity distribution companies. The scheme will see state governments take over 75% of discom debt, with the remaining covered by state government-guaranteed bonds issued by the discoms.

The government is also revamping ultra-mega power projects (UMPPs), one of the flagship schemes of the previous UPA regime. Goyal said the scheme was hit due to the faulty drafting of the bids. Banks were reluctant to finance UMPPs as project documents were not bankable. “We have got a senior team of experts to look at documents, which are in the public domain. We will go to the Cabinet for approval of new documents,” the power minister said.

Speaking on improved prospects for Coal India, Goyal said the state-run company saw production growth of 6.9% last year, with 32 million tonnes being the increased production, higher than last four years put together. This has led to reduced coal imports.