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October 8, 2001
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Indian power grid insulated from war risk: Analysts

India's mostly state-owned power generating industry, which relies largely on locally produced coal for fuel, is likely to be remain unaffected by the US air strikes on Afghanistan, analysts said on Monday.

"India's vulnerability is much less than some other countries since we rely largely on indigenously produced fuels," K Ramanathan, a former member of the India's Central Electricity Authority, a regulatory body, told Reuters, in reference to chances of disruptions in the country's power supply.

India had 100,136 megawatts of capacity at the end of 2000. Thermal plants accounted for 80 per cent of total output, hydro-electricity 18 per cent and nuclear power the rest.

Over 80 per cent of this capacity belongs to 17 state-owned power utilities, most of which use domestically produced coal as fuel. The share of natural gas and liquid fuels in thermal plants is low.

In the past, there have been disruptions in power supply in Kashmir and the northeastern states, but distribution has been quickly restored, said Ramanathan, who now works for an energy thinktank.

"I think a greater worry might be the consumption of electricity by industry, which may be hit in a variety of ways by the war scenario," said Harry Dhaul, director general of the Independent Power Producers Association of India.

Demand for power could fall as companies may face lower demand for their products and may have to contend with disruptions in spare part supplies due to slowing down of shipping and air cargo services, he said.

The industrial sector consumes nearly 34 per cent of the country's power, commercial users use six per cent, agriculture 31 per cent, the domestic segment 21 per cent, while the remaining is used by railroads and others.

In January this year, technical faults led to the collapse of India's northern power grid, plunging several states, including the capital New Delhi, into darkness for several hours.

To deal with shortages, a large percentage of the corporate sector has been forced to invest in captive power, which is estimated at 6.2 per cent of output in off-peak hours and at 12.4 per cent during peak hours in the year to March 2000.

Nearly 14 per cent of the total electricity produced in that year is estimated to have come from private power plants.

India's power industry, which is dominated by loss-making state-owned utilities, has failed to attract the necessary foreign investment. Three foreign companies, including the US energy giant Enron Corp, now plan to exit their Indian projects.

Only 10 of the country's 17 state utilities were in the black in 1998-99, the most recent year for which financial information is available.

Power theft is rampant and 26 per cent of the power supplied in 1998-99 is estimated to have been lost during transmission and distribution.

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