A Study On Power Generation

825 Words4 Pages
The present study involves a study on power generation projects which are an important part of the economy. Power situation has been worsening in Indian economy. Reasons for this scenario is a high growth of the economy which requires enhanced supply of power and the corresponding lack of power generation firms to supply adequate power. Power generation growth has been held back due to higher fuel costs, limited fuel supply pressure to reduce prices and hence profits, power theft, corruption and other issues. In addition, being a regulated industry certain conditions are imposed by the CERC and state electricity regulation commissions which make it difficult for the firm to establish a higher sale price, change debt equity ratio, establish adequate cost of equity of the organization or in correct terms earn an economic profit over and above the accounting profit of the organization.

The economic unleashing of 1991 opened the doors for private participation in the power sector. India was facing an acute shortage of power that time. It forced the Indian Government to provide incentives to the Independent Power Producers (IPPs) to enter the power generation sector. It was envisaged that this move would drastically increase power production but this was not the case. The Indian economy grew faster and correspondingly the demand for power. According to the report titled “Load Generation Balance Report” released annually by CEA, the anticipated All India Power Deficit for the
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