India dominates the Asian power generation market, with its generating projects that have either been announced, approved or under implementation together accounting for 63 per cent of all the Asian capacity during the first quarter of 2010.
The monthly project tracker carried by the Platts' publication Power in Asia indicates the predominant position of the country, especially at the early stages of the project development process. In March 2010, the figure rose to the even higher figure of 77 per cent.
Platts, a division of The McGraw-Hill Companies, is a leading global provider of energy and commodities information on the oil, natural gas, electricity, emissions, nuclear power, coal, petrochemical, shipping, and metals markets.
''There is no getting round the fact that India has been here many times before, and the outcome has not been that satisfactory on any of the occasions," says Martin Daniel, editor - power, Platts, The McGraw-Hill Companies.
"For instance numerous Indian generating projects were proposed throughout the 2000s, but the ratio of delayed and abandoned projects to operating plants has been much higher than in China. Many of the Indian projects covered by the tracker have fallen by the wayside as a result of a range of issues ranging from red tape to financing and fueling problems."
Elaborating on this, Daniel said, ''The level of activity and the consequent need for funding in the Indian power generation sector is a key driver behind the amount of IPO activities. The type of much of the activity, with an emphasis on merchant projects which are not underpinned by long-term contracts could be seen as more risky for limited recourse financing, is also pushing the drive for IPO cash.''
An offering of a minority stake in the state-controlled hydropower generator SJVN Ltd was successful at an oversubscription of more than six times. While there is considerable liquidity in the Indian debt market, the appetite for acquiring further equity in power generating companies will be tested by the plethora of other initial public offerings approaching the market.
Some of these include an offer of equity in the private developers Jindal Power and Avantha Power & Infrastructure. These offers will take place on the local bourses while another offer will see Essar Energy test overseas interest through a planned float in London.
The financial attractiveness of Indian generating plants will also depend on perceptions about the fuel supply risks associated with the power sector. The Indian generating market is dominated by coal-fired plants, with most of the planned capacity also being coal-fired.
Of the 34,793 MW of announced, approved and contracted Indian capacity listed in the table for the first quarter of 2010, almost all - 34,285 MW - of the plant is coal-fired. Gas use increased by 32.6% between the 2008-09 and 2009-10 to reach 92.8 TWh in the fiscal year ending March 31, 2010.
''With the recent increase in imports, and a trend to investment in overseas mines by Indian power and energy companies, foreign coal is likely to play an increasing role in the Indian power sector. But indigenous coal production will remain fundamental, meaning that the current moves to partly privatize leading producer Coal India Limited and other developments, including the rules affecting captive coal mining, will be of central importance to the sector,'' Daniel added.
About Platts: Platts, a division of The McGraw-Hill Companies, is a leading global provider of energy and commodities information on the oil, natural gas, electricity, emissions, nuclear power, coal, petrochemical, shipping, and metals markets from 17 offices worldwide.
| Asian power projects reporting progress during the first quarter of 2010, MW | |||
Announced | Approved | EPC contracts agreed | |
| India | 21,670 | 8,219 | 5,654 |
| Rest of Asia | 10,222 | 6,590 | 3,489 |
| Total | 31,892 | 14,809 | 9,143 |
| Source: Platts- The McGraw-Hill companies | |||
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