The steady growth of infrastructure will require higher demand for power in the years to come, but the power sector has to be on guard against constraints impeding its development, the A T Kearney Report on “Sustaining Growth – Future of Indian Power Sector” has said.

The report was presented at the flagship CII event, Energy Conclave 2009, here last week.

According to the report, if the power sector successfully meets the challenges, it will directly improve the socio-economic well-being of the people. It said the sector evolved from a nascent to a developing phase with demands largely unmet. The new generation capacity focus on higher plant load factor should reduce the base load deficit by 2014, it added.

The report also cited new business opportunities across the value chain, but warned against constrained fuel supplies that pose a major threat to growth. Distribution and financing concerns will also intensify with the slow rate of reforms of the distribution companies that will hurt the industry, it said, adding that financing may present a challenge to industrial growth.

Investments of about 200-250 billion dollars will need to be undertaken in the power sector in the next nine years to fuel the planned growth. Sectoral and group caps of the financial institutions may be potential constraints in securing large funds and execution capabilities, it said.

According to the report, the government needs to de-regulate the coal sector on a priority basis and set up an independent regulator for the same. It should also give priority access to gas at reasonable prices while strengthening gas transmission. Besides, the government should accelerate the pace of reforms in the power exchanges and de-regulate the trading segment.

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