Could new power plants bring brighter festival of lights to India?

India's Tata Power and Lanco Infratech won bids to build two, 4,000-megawatt plants from the government, which is aiming to double power generation capacity by end of the decade to ease shortages.

Tata Power will build the coal-fired plant at Mundra in Gujarat, a western state, while Lanco's unit will be based at Sasan in the central Madhya Pradesh state.

The projects may help reduce shortages that force companies to spend on captive power plants, and homes in cities including New Delhi to depend on diesel-fired generators during frequent blackouts.

"We expect construction work to begin within six months," said R.V. Shahi, secretary to India's Power Ministry.

The plants are among the four ultra-mega projects, or units with a capacity of 4,000 megawatts each, the government plans to invite bids for, Shahi said. The plants will begin production by 2012 and reach full capacity the following year, Ajay Shankar, additional secretary at the Power Ministry, said.

Tata Power agreed to sell the power from the Mundra plant at 2.26 rupees (5 cents) a unit, while Lanco bid 1.19 rupees a unit for the Sasan plant, the lowest among 16 bidders for the project, said Shyam Wadhera, director at the state-run Power Finance, which invited the bids.

"The price was much below our expectations," said Shahi.

Prime Minister Manmohan Singh has doubled the funding target for infrastructure to $320 billion by 2012, as the country seeks to revamp ports, roads and power utilities that are unable to meet growing demand from industry.

The shortage of power is one of the key factors curbing growth. The country produces about 8 percent less electricity than it needs, cutting gross domestic product by a 10th, the Finance Ministry estimates.

India has set a target of expanding generation capacity by 65,000 megawatts in the five-year period that starts in April. Of the total, 43,000 megawatts will be based on coal, 17,000 megawatts on hydropower, 3,000 megawatts on nuclear and 2,000 megawatts on gas, Shahi said last month.

New power plants and an unprecedented nuclear accord would help ensure that the future of India's power industry is safe. With power reaching the rural areas and power shortages and blackouts reduced, the festival of lights may just be an electrical affair in the future.

However, India remains as one of the world's most polluted countries. Perhaps a move towards the renewable energy sources could help ease the pollution. Only then would India be a festival in itself. Do you agree?