KOLKATA (miningweekly.com) - India’s woes over augmenting fossil fuel supplies, coal and gas, have started to scare away private capital investment in new energy capacity, particularly thermal power generation.

According to government data, private investment in the power sector slumped 44% during 2012/13 to $8.30-billion, down from $14.85-billion reported in the previous financial year.

“Private power developers have either slowed down or postponed their investments owing to uncertainties over fuel supply, regulatory issues and shortcomings in the policy framework,” a spokesperson of the Association of Power Producers said.

However, commenting on the fall in investment in power generation, an official in the Power Ministry argued that attributing the fall directly to a shortage of feedstock, particularly coal, was too simplistic since it did not factor in other aggregate macro indicators and demand in the economy.

He pointed out that the fall in private investment in the power sector was a corollary to the tapering of gross domestic production growth, which was recorded at 6.5% in 2011/12 and which was down to 5% in 2012/13, adding that despite the investment slowdown capacity generation of 20.6 GW was completed in 2012/13, the highest ever in a single year, indicating that feedstock shortage alone was not the sole cause fof lower investment in energy generation capacity.

The phenomenon was compounded by slowing economic growth meaning there was no additional demand for power from distribution companies operated by provincial governments, and until there was demand uptick, private investors would remain averse to announcing new projects, he added.

However, data sourced from the regulator, the Central Electricity Authority (CEA), revealed that several new thermal power plants were left idling owing to failures to conclude fuel supply agreements or were operating at lower capacity owing to shortages in coal supplies.

In June, the CEA reported that coal-based thermal power plants were operated at 63% capacity, while gas-based plants had capacity utilization averaging 29%.