Policy concerns force GE to shift focus from India to Bangladesh

In a reflection of foreign firms shifting their focus from India to elsewhere because of domestic hurdles, General Electric Co. (GE) is concentrating on Bangladesh for its power generation business, attracted by the country’s fast decision-making, said Banmali Agrawala, president and chief executive for GE South Asia.With power projects of an aggregate capacity of 9,322.5MW being stranded in India in the absence of gas, gas-rich Bangladesh has emerged as the destination of choice for GE for its power business.

“In our region we have Bangladesh where we continue to do business. They have gas and let me be tongue in cheek and say that they take decisions. From the power generation perspective, at the moment there is more activity we have for the newer gas-based power plants in Bangladesh,” said Agrawala.Bangladesh has substantial gas reserves of 135.8 billion cu.m. and installed capacity of 10,264MW, with plans to achieve 24,000MW capacity in five years. Slowing growth, high borrowing costs and delays in securing regulatory approvals have hit many infrastructure projects in India, including power plants, hurting the ability of their promoters to repay creditors and vendors.

 

India has a power generation capacity of 237,745MW, of which 21,382MW is fuelled by gas. For these projects to operate at a plant load factor—a measure of average capacity utilization—of 70%, a supply of 71.7 million standard cubic metres per day (mscmd) of gas is required. But the total gas supply is much less.Also, Andhra Pradesh, Delhi, Haryana, Jharkhand, Karnataka, Odisha and West Bengal have deferred raising electricity tariffs with the Election Commission putting the decision on hold because of the elections.“We believe the governments of some other states may also be waiting for elections to conclude before announcing power tariff hikes. If implemented, the tariff hikes would be good for the state electricity board package, and would benefit the sector,” UBS Global Equity Research said in a 3 April report.GE has called for faster decision-making and clarity on policies by the Indian government.

 

This has found resonance in the ongoing election, with the opposition Bharatiya Janata Party’s election manifesto stating, “UPA (Congress-led United Progressive Alliance) Government has unleashed ‘Tax terrorism’ and ‘uncertainty’, which not only creates anxiety amongst the business class and negatively impacts the investment climate, but also dents the image of the country.”

Source:- Live mint