Accessibility links

Breaking News

India's Private Sector to Help Nation Overcome Energy Deficit

Birds sit on high voltage electricity towers on the outskirts of New Delhi (April 2010 file photo)

A top Indian official says billions of investment dollars are needed to overcome the huge energy deficit India faces. Domestic companies are expected to lead the way in building new power plants in the country.

India Power Secretary P. Uma Shankar says the energy sector needs about $400 billion over the next six years to meet the country's growing needs.

India's energy requirements are huge. Millions of rural households do not have electricity. Even big cities face frequent power outages, especially during the summer months. The shortages are dragging down an economy growing at nearly nine per cent.

However the government says it will miss its latest target of augmenting power generation over the next year. It has repeatedly fallen behind in its plans to build new power plants.

V. Raghuraman, a former energy advisor to the Confederation of Indian Industry, says large investments by the private sector will change that.

"For the last nearly 20 years, I think we have never been able to add the capacities intended. But now there are some silver lining because private sector is coming to the fore, so we find that maybe this position will get corrected in the next three to four years," said Raghuraman.

Nearly half of the estimated $400 billion India needs is expected to come from private companies. They are building large power plants with capacities of up to 4,000 megawatts, the first of their kind in India.

The private sector began making investments in the power sector following changes in laws that previously did not allow them to sell directly to consumers.

Energy expert Raghuraman says private companies now see good opportunity.

"We find that the private sector will definitely be able to get into the game much better, much faster. We have the ability to sell power to new entities like distribution companies and individual customers. There is a good market developing, there is a big un-satiated market," said Raghuraman.

Most of the investment is coming from domestic companies as problems of acquiring land for new plants and environmental clearances have deterred many foreign investors.

As India's huge power deficit and other infrastructure shortages hold back the economy, the government has been calling for both private and foreign investment to build new roads, railways and ports.