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Global Slowdown Of Power Sector

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Global Slowdown Of Power Sector

Global Slowdown Of Power Sector

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    Global Slowdown Of Power Sector Global Slowdown Of Power Sector Presentation Transcript

    • Global Slowdown and Power Sector - Impact, Survival & Opportunities
      4th November 2009
    • Extent of global slowdown
    • global slowdown
      World wide GDP growth slow down in 2008
      ** Estimated based on current data
      Negative growth in industrial production across economies
      Source: World Bank, Global Economic Prospects, 2009
    • Global commodity prices movement
      Fall in steel, crude oil and cement prices to benefit power generation companies
      Source: Commodities steel - NCDEX,; crude oil – Energy Information Administration (EIA); cement – Cement Index, Economic Times
    • power Sector “Opportunity “
    • Month-wise power supply situation (FY08-09)
      Peak power deficit at same level across the year indicating base load power shortage
      Source: CEA Monthly power supply situation (Apr 08-Jan 09)
    • Opportunity in power generation sector
      Required
      Capacity by 2031-32 to support GDP growth of
      8% -9%
      960-1200 GW
      Annual Capacity Addition Requirement
      40,000 MW
      Requires Addition
      20,000 MW p.a.
      Actual addition: 15,000 in 2 years
      Target: 78,000 MW in 5 years
      Source: Ministry of Power, Feasible Capacity Addition Plan by CEA (Sep 08), Power Scenario at a glance (Feb 09)
    • GDP expected to grow by 7.1% in FY09 (6.75% growth of electricity demand)
      Source: Handbook on statistics of Indian Economy, Integrated Energy Policy (India), Review of Economy 2008-09 (EAC to PM)
      Demand growth of power
    • Trends in global power sector
      Decline in orders placed globally (in MW)
      Decline in new orders of top 2 Chinese EPC contractors
      -33%
      -67%
      Sharp decline in new orders placed expected to lead to shorter delivery schedules
      Source: McCoy Power Reports Annual Survey 2008; Asia Utility Sector – Citigroup – 26 Nov 08
    • Impact of slowdown on power sector in India
      Lower demand of equipments
      Cheaper BTG/EPC contracts
      Shorter equipment delivery schedules
      Earlier commissioning
      Decrease in commodity prices
      Decrease in project cost
      Lower demand for BoP/other contracts
      Contracts at cheaper rates
    • Opportunities in power sector
      Long term GDP growth possible only with corresponding growth in power sector
      Huge opportunity due to current power deficit situation in India
      Impetus by government on infrastructure/power sector funding and banking reforms
    • power Sector “Challenges” Ahead…
    • Challenges for power sector
      Adequate capital not available to meet demand of power generation capacity
      Clearances and approvals process too complicated and slow
      Shortage of fuel (coal, gas, etc) to support generation capacity growth
    • What next…
      Remove capital constraints and make exposure norms of financial institutions more flexible
      Improve and speed up clearances and approvals process
      Increase investment in coal sector and open it for private sector participation
    • Thank You