Identifier
Created
Classification
Origin
09KOLKATA143
2009-05-29 11:41:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Consulate Kolkata
Cable title:  

ABUNDANT COAL AND HYDRO-ELECTRIC POTENTIAL IN EASTERN INDIA

Tags:  ENRG EMIN ELTN IN BT 
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VZCZCXRO5790
RR RUEHAST RUEHBI RUEHDBU RUEHLH RUEHNEH RUEHPW
DE RUEHCI #0143/01 1491141
ZNR UUUUU ZZH
R 291141Z MAY 09
FM AMCONSUL KOLKATA
TO RUEHC/SECSTATE WASHDC 2371
INFO RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE
RHEFDIA/DIA WASHINGTON DC
RUEAIIA/CIA WASHDC
RHEHAAA/NSC WASHINGTON DC
RUEHCI/AMCONSUL KOLKATA 2913
UNCLAS SECTION 01 OF 02 KOLKATA 000143 

SENSITIVE
SIPDIS

DEPT FOR SCA/INSB

E.O. 12958: N/A
TAGS: ENRG EMIN ELTN IN BT
SUBJECT: ABUNDANT COAL AND HYDRO-ELECTRIC POTENTIAL IN EASTERN INDIA

KOLKATA 00000143 001.2 OF 002


UNCLAS SECTION 01 OF 02 KOLKATA 000143

SENSITIVE
SIPDIS

DEPT FOR SCA/INSB

E.O. 12958: N/A
TAGS: ENRG EMIN ELTN IN BT
SUBJECT: ABUNDANT COAL AND HYDRO-ELECTRIC POTENTIAL IN EASTERN INDIA

KOLKATA 00000143 001.2 OF 002



1. (SBU) Summary: Eastern India offers immense potential for
the development of the power sector due to abundant coal
deposits and large hydro-electric potential. Public and private
sector firms are focused primarily on increasing coal-based
thermal power generation, despite the sensitivities and
challenges of land acquisition. Geological, environmental and
resettlement concerns have thus far limited hydro-electric
installed capacity to a little more than seven percent of its
potential in the northeast. State governments, particularly
West Bengal and Bihar, are promoting renewable sources of energy
as possible partial off-grid solutions for providing electricity
to rural and remote areas. End Summary.


2. (U) In eastern India there are approximately 20,100
Megawatts (MW) of total installed power generation capacity in
the states of West Bengal, Orissa, Bihar, Jharkhand, and Sikkim.
Approximately 79 percent is derived from thermal powered plants
(coal - 99 percent and natural gas - 1 percent) and 20 percent
from hydro-electric with one percent from other renewable
sources (mini and micro hydro-electric, solar and biomass).
Nearly two-thirds of the country's coal reserves are in the
eastern region, belying the producers' preference for thermal
power. State-owned and federal entities are the primary power
producers in the eastern region accounting for more than 92
percent of total on-grid electricity production capacity.
Recently private independent power producers have begun
operations either to sell their electricity into the grid or for
captive consumption.

Eastern India - Net Energy Exporter


3. (U) According to the Central Electricity Authority, in the
most recent financial year (April 2008 - March 2009) power
generating units in the eastern states supplied roughly 79,400
million kilowatt hours (kwh) of electricity against a demand of
82,000 million kwh. However, by the end of this financial year
this slight deficit of 4.6 percent is expected to turn into a
net surplus of 2.4 percent confirming eastern India's position
as a net exporter of electricity to the rest of the country. In
the current financial year (April 2009 - March 2010) India is
projected to have a net energy deficit of 9.3 percent or 78,400

kwh. In the current Five Year Plan (2007-12),the GoI has
targeted adding approximately 3,100 MW of hydro power and 14,000
MW of thermal power in the eastern region.

Producers Rely on Thermal Power for Future Expansion


4. (U) In India coal remains the key fossil fuel for
electricity production, owing to its abundant availability and
relatively low cost. Both public and private sector firms plan
to increase thermal production capacity. In the eastern region,
the Orissa state government has been very successful at
attracting independent power producers (IPP) with 21 signed
Memorandum of Understandings (MoU) representing approximately
25,000 MW, seven of which are already underway. Jharkhand has
signed MoUs for 31,000 MW worth of projects and West Bengal
plans to add approximately 3,300 MW by 2012.

Land Acquisition and Politics Slow MoU Conversion Rate


5. (SBU) Land acquisition and politics have slowed conversion
of signed MoUs into realized projects in West Bengal and
Jharkhand. According to CEA Eastern Regional Committee Head Mr.
R K Grover, a 1,000 MW power plant requires approximately 1,000
acres of land - an average of 1 acre per MW. However, large
plots of land are hard to find in West Bengal and land
acquisition for industry is a very sensitive subject in the
state. In the coal-rich state of Jharkhand, political
instability - the state is currently without a state government
and under centrally administered President's Rule - has further
compounded the challenges of converting MoUs into completed
projects.

Hydro-electric Potential in the (North) East


6. (U) India's northeast, a region abutting the Himalayas, is a
treasure trove of hydro-electric potential. The remote border
state of Arunachal Pradesh itself has more than 50,000 MW of
hydroelectric potential. Sikkim, Orissa and West Bengal are
other states with promising hydro-electric assets having the
potential to generate 11,000 MW of power. Sikkim has awarded
IPPs 26 contracts to develop approximately 4,300 MW of
hydropower, five of which are already under construction. West
Bengal recently indicated that it would like to explore
hydro-electric projects in the neighboring mountain kingdom of
Bhutan. Geological, environmental and resettlement concerns,
not to mention the remote location increasing transmission

KOLKATA 00000143 002.2 OF 002


costs, have thus far limited the development of hydro-electric
resources in the region.

Renewables - Minor Players, Primarily Off-Grid


7. (SBU) West Bengal and Bihar have begun promoting renewable
energy, primarily for off-grid electricity production. Driven
by the dynamic Director of the state owned Green Energy
Development Corporation Mr. S P Gon Chaudhuri, West Bengal has
attracted investments worth USD 1.3 billion in solar
photovoltaic manufacturing sector and has signed MoUs worth USD
84 million with eight renewable energy companies to generate 50
MW of solar and bio mass based energy by 2011-12. Chaudhuri
credits West Bengal's favorable tariff scheme and its renewable
energy policy that requires distribution companies to buy energy
offered from private producers at premium prices for its success
in attracting investment. (Power is a concurrent state/central
subject where state electricity boards may independently set
tariffs, although guidelines are provided by the center.) On
the other hand Bihar has focused on biomass, particularly rice
husk based biomass gasification, to increase renewable power
generation in off-grid areas (only 6 percent of rural households
have access to electricity). The Bihar state government has
already identified a potential 200 MW of biomass based
gasification projects.

Comment


8. (SBU) Coal is the dominant source of fuel for power
generation in the eastern region and is expected to remain so in
the near future. States like West Bengal, Sikkim, Arunachal
Pradesh and Bihar are beginning to tap into other available
natural resources (water, solar, biomass) to meet growing grid,
or satisfy nascent off-grid demands. States are welcoming
private players into the industry both for their financial
capital and technical expertise in order to meet the growing
demand for energy. An increased public awareness of climate
change and (greenhouse gas emissions),and international debate
regarding future conventions, are promising signals for the
small, but growing, renewable energy sector in India.
TAYLOR