World Energy Outlook 2007

in 1991 – right when the market opened – investment in India's power sector
topped $840 million. At that time, this was 62% of total investment going into
electricity projects in middle- and low-income countries. Between 1992 and
2005 this share fluctuated between almost 0% and 13%, with the exception of
2004, when investment surged again and the share reached 29%. That year,
total Indian private-sector electricity investment reached $4 billion, a sign that
the private sector evaluation of the conditions for investment had changed. It
is too early to say if this trend will be sustained: there was a sharp fall in 2005.
The government remains fully alert to the need to get the conditions right.
Figure 17.18: Private Investment in India's Electricity Sector, 1991- 2005
million dollars (2006)
4 500
3 750
3 000
2 250
1 500
750
70%
60%
50%
40%
30%
20%
10%
0
1991 1993 1995 1997 1999 2001 2003 2005
0%
Investment
Share in total* (right-axis)
* Total in low- and middle-income countries as defined by the World Bank, including the transition economies.
Source: IEA analysis based on the World Bank's Private Participation in Infrastructure database.
Most private investment has been directed towards greenfield (new) power
stations, with a few projects involving transmission, connections and changes
of ownership. The companies involved in these projects have been mainly
Indian, particularly in recent years. Companies outside India have come mainly
from the United States, but companies from the United Kingdom, Japan,
Switzerland, Norway, China and Malaysia have also been involved.
Many private projects have faced delays and many have been criticised as being
too costly. Some projects have faced fuel supply problems once they became
operational. For example, as noted earlier, some gas-fired power plants have
had to rely on expensive naphtha, because gas supply was short, while others
17
Chapter 17 - Reference Scenario Supply Projections 527