Why private sector investments stay away from power

Shortage of funds, uncertainty about fuel supplies and limited scope for tariff revisions. All these bottlenecks have ensured that critical private sector investments stay away from power sector. The result being that not just power generators but also power equipment makers like BHEL suffer. Bharat Heavy Electricals Ltd (BHEL) has an order book of nearly 55,000 MW. But according to the PSU, commissioning of new projects is a problem. As reported by Business Line, the chief of BHEL believes that lack of private sector investments in the power sector is a huge problem. Number of pro jects that were in the pipeline earlier are now getting stalled. Problems of NPAs from state electricity boards (SEBs) have also made banks wary of lending to the sector. During 2008-2010, tenders for more than 30,000-40,000 MW were floated. The same shrunk to just 4,000 MW in 2011. The sector has thus become a black box for suppliers, vendors, consumers and investors alike. Without any clarity in reforms, the deterioration in the sector's prospects could deal a heavy blow to the economy.