Land, coal availability must meet 88,000 MW target: Shinde

State governments should proactively facilitate land procurement for power projects to help meet the capacity addition target of 88,000 MW over the next five years, Power Minster Sushilkumar Shinde said on Tuesday.

Besides, he said the deteriorating financial health of state power distribution companies and issues pertaining to fuel supply to plants are big challenges facing the power sector and need to be addressed urgently.

"With the target of about 88,000 MW, which includes 5,300 MW from the nuclear power proposed during the current plan period (2012-17)...we will have to address the issue of fuel availability and equally important is the issue of finding adequate land for setting up new power stations," Shinde said at a meeting with state power ministers.

"More projects would move faster if the state governments play a proactive role in identifying and facilitating the procurement of land," he said.

Besides, he added, the focus in the 12th Plan period (2012-17) has to be on increasing domestic coal production.

The problem of land is no less in the setting up of the transmission infrastructure, given the fact that in the current plan period we have a target of erecting some 37,800 MW of inter-regional transmission capacity, Shinde said.

He also expressed concern over the viability of state discoms.

"The single biggest challenge to the viability and sustainability of the power sector is the deteriorating financial health of the distribution utilities in most states."

Planning Commission Member (Energy) B K Chaturvedi said the major focus in the next five years would be on renewables.

The share of renewables will increase to 30,000 MW in the 12th plan, from 14,000 MW in the 11th plan.

"There is a need to adopt a proactive approach in the procurement of electricity from gas-based generation plants to encourage the use of domestic gas and LNG (Liquefied Natural Gas) to make optimal use of the generation capacity installed," he said.

Chaturvedi also said that financial restructuring package is being worked out by the Ministry of Power in consultation with Ministry of Finance and state governments which have large losses.

The Cabinet is likely to soon take up the proposal of restructuring about Rs 2 lakh crore debt of power distribution companies, whose precarious financials have raised concerns of default in the banking system.

As per the proposal, about 50 per cent of the debt would be converted into bonds, that would be issued by the state governments.

The rest of the liabilities would be restructured.

Discoms would be provided a three-year moratorium and during that period, they would not have to repay the principle amount on the loans taken.

As per the Shunglu panel report released last year, the net loss, after subsidies, of 15 discoms -- which account for over 90 per cent of the country's power consumption -- was Rs 27,000 crore for the year ended March 31, 2010.

Further, discoms would have to repay the whole debt within seven years.