Fuel shortage will cripple India’s power plans: Deloitte

India's plans for growth in electricity supply are almost certain to be derailed by lack of fuel. The poor financial health of power distribution companies will exacerbate the problem, says global consultancy firm Deloitte Touche & Tohmatsu.

The lack of electricity is crippling India's ambitious economic growth programmes. Already grappling with a severe power supply deficit, the country's planners have projected a capacity addition of over 50,000 MW in the ongoing 11th five-year plan (2007-12). However, this is increasingly looking like an impossible target.

"Major issues faced by the Indian power sector are related to fuel side issues for thermal power projects and worsening financial health of distribution firms," Deloitte India's senior director consulting (energy and resources) Shubhranshu Patnaik said in New Delhi on Tuesday.   

Apart from uncertainties in fuel supply under existing coal linkages, planned investments on coal import are likely to be hit, especially due to regulatory changes in countries such as Indonesia and Australia, the Deloitte study adds.

The mismatch between power tariffs and the cost of generating electricity is also hurting the financial health of power distribution companies. Electricity distribution losses touched Rs70,000 crore in 2010-11, according to Deloitte.    

By Central Electricity Authority (CEA) projections, peaking shortage of electricity in 2011-12 is expected to be 12.9 per cent.