EXPECTED BUDGET IMPACT: Positive
LONG TERM OUTLOOK: Neutral
Installed capacity addition during XIth plan was 54964 MW, which was 170% higher than the entire capacity addition during the Xth plan highlighting acceleration in generation capacity. For the XIIth plan, 75785 MW of capacity addition has been targeted.
As against a demand of 937 bn units, the actual generation was 877 bn units, implying a supply deficit of 9.4%. The Southern region is reeling under a massive power deficit at almost 15%.
On the flip side, the financial health of SEBs has been deteriorating at a rapid pace due to their inability to completely pass the cost increase in power to its consumers. Increase in cost of power is the prime factor that has driven losses in SEBs.
The rapid acceleration in power generation capacity has not been complemented by commensurate growth in Coal production. As a result, Coal India Ltd is struggling to meet the demand from power sector. The total coal requirement at the end of 12th plan is estimated to be 604 mn tons, leaving a shortfall of 238 mn tons, which is expected to be met through imports.
International coal prices has remained soft in 2012, which has come as a major relief for Indian utilities that burn imported coal.