Step it up!

The power figures have just been altered. As per my last column against a total capacity of 25,000 mw, the figure just got upgraded to 32,302 mw of capacity addition achieved in the 11th Plan so far. About 10,000 mw of captive power projects are expected to be commissioned by the end of March 2012 too. Thereby, capacity addition would cross 70,000 mw, another record since Independence. India had added 21,180 mw in the 10th plan, 19,119 mw in the 9th plan and 16,423 mw in the 8th plan. We need power to fuel our growth, which has to remain at 9-10 per cent for the next decade and hence the deficit in the targeted capacity addition from 78,000 mw to 60,000 mw is a cause for worry. World power demand is expected to shoot up 2.2 per cent per year between 2008 and 2035, from 16,189 TWh to about 30,300 TWh. More than 80 per cent of that growth will come from developing countries - led by China and followed by India - spurred by economic activity, industrial production, population, and urbanisation. Over the next 15 years, China is projected to add generating capacity equivalent to the current total installed capacity of the US. India too has to follow suit and construction of power plants will be high on the agenda in the 12th plan. About 35-40 per cent of total energy is used by buildings during construction and later in lighting or air-conditioning systems. If all buildings in urban areas were made to adopt green building concepts, India could save more than 8,400 mw of power, which is enough to light half of Delhi or 5.5 lakh homes a year, according to estimates by TERI. India is witnessing a surge in building projects fuelled by the recovery in the IT sector and by a strong inflow of investments from overseas. However, the building boom is likely to see a correction in line with a likely upward revision in interest rates and a consequent decline in transactions. The construction industry has been affected with input costs scaling highs and the project pipeline slowing down. The recent results declared by L&T disappointed the bourses as the stock sunk. Delay in decision-making by clients has resulted in a 25 per cent year-on-year decline in order inflow in the third quarter of 2010-11 at Rs 13,366 crore. In the nine months ended December, L&T won orders worth Rs 49,456 crore, clocking a modest growth of 8 per cent. Its order book is worth Rs 114,882 crore as on December 31. Reportedly, public and private-sector clients have delayed finalising orders owing to unavailability of land or clearances, lack of finances for projects or, in some cases, a cut in capex because of low demand from respective sectors. L&T has great expectations from March as it needs to fulfil its order book targets. Lately, the project pipeline has shown signs of fatigue or 'red tape' as everyone ranging from Environment Minister Jairam Ramesh to Chief Minister of Maharashtra Prithviraj Chauhan is keen to review projects rather than push them forward, whatever their compulsions. The only big project that appears to have seen a positive green light is POSCO, which is awaiting clearance for several years; quite a setback to our track record as an investor-friendly country. According to an analysis done by Project Reporter Digest 2011, among projects, the power and steel sectors have a lion's share (62 per cent) in investment with each cornering over $80 billion of investments followed by transport - including roads, highways, bridges - with $30 billion. The challenge lies in the coming Budget session. Hopefully, the government will get on track and focus its attention on stepping up the pace.