March 22 (Bloomberg) -- Mumbai, India's commercial capital, may have its first daily blackouts in a century next month because the government failed to plan for soaring demand.

Offices and households may lose electricity for 30 minutes a day starting mid-April, said Lalit Jalan, executive director at Reliance Energy Ltd., the city's main supplier.

``We're trying very hard but this looks inevitable,'' Jalan said in an interview on March 13 in Mumbai. ``We're approaching every supplier, every state in India to sell us spare power for the city, but everyone has a deficit.''

Mumbai's insulation from rolling outages that plague most of India is poised to end due to soaring demand and a failure to build new power stations. India's high economic growth is threatened unless hurdles to electricity investment are overcome.

Power cuts don't ``cover us with glory, especially when our leaders say that Shanghai is the benchmark for Mumbai and Mumbai is going to be the new Shanghai,'' said Rajendra K. Pachauri, Chairman of the United Nations' Intergovernmental Panel on Climate Change. ``This is clearly a case of poor planning and a lack of policy response.''

Mumbai's 16 million people contribute 40 percent of the nation's income tax. The city, home to India's biggest private companies including Reliance Industries Ltd., will lose immunity from an infrastructure crisis that shaves two percentage points off growth in Asia's fourth-biggest economy.

`India's Manhattan'

``We used to call this city India's Manhattan,'' said Ashok Pendse, head of the energy unit at Mumbai Grahak Panchayat, a consumer rights group. ``Bad planning will ensure that even this economic showcase for India will join the rest of the country in the dark.''

The Power Ministry estimates that India must add 70,000 megawatts of generating capacity to its existing 120,000 megawatts to cope with surging demand. Instead, 23,250 megawatts will be added in the five years ending March 31, according to the ministry. China plans to add 95,000 megawatts of capacity in 2007 alone.

Power demand is outstripping supply as consumers are using record disposable income and easier credit terms to finance air conditioners, refrigerators and washing machines. Loans are growing at the fastest pace since 1971, while India has the highest salary increases in the Asia Pacific.

Mumbai, the capital of Maharashtra state, has been spared the scheduled blackouts, lasting as long as 16 hours, imposed daily on surrounding cities and towns over the last two years. Priority rights to power have effectively insulated it from shortages in the rest of the state.

Power Shortfall

The power supply shortfall in Mumbai, the headquarters for the Tata and Aditya Birla groups, will more than double to 540 megawatts this summer, Jalan said. Last year's 201 megawatts shortfall was the first ever. Consumers were asked to cut power usage and the state stopped supplies to neon signs.

``We managed to tide over last year's problem by buying power from neighboring states,'' Jalan said. ``This year demand has risen further but there's been no new supply.''

Government mismanagement includes a refusal as recently as 2001 to allow Tata Power Co., which generates 77 percent of the 22,000 megawatts used by Mumbai, to add capacity at its power station on the city's outskirts, Pendse said.

That has forced Tata Power and Reliance Energy, the city's two main suppliers, to seek power from other companies and provinces. ``Tata Power is leading the effort in scouting for alternative sources to augment Mumbai's power supply this summer,'' the company said in an e-mailed statement.

Everyone Loses

Ordinary people are losing, along with major corporations.

Vinod Waghmale runs a training institute for graphics and multimedia in Mulund, along with Bhandup the only two Mumbai suburbs supplied by state-owned Maharashtra State Electricity Distribution Co. The 30-year-old says he's been losing money for two years because of the lack of planning. The suburbs have been suffering three-hour power cuts for almost a year.

``We're forced to cancel classes at least once a week because of unscheduled cuts,'' said Waghmale, who had to invest 40,000 rupees ($914) in inverters and diesel generators to keep his 15-odd computers running.

In Maharashtra, India's most industrialized state, cities such as Nagpur, Nasik and Kolhapur have power cut for 4 hours a day. Villages have compulsory 13-hour power cuts, according to Ram Dotonde, a spokesman for the state-owned Maharashtra State Distribution Co.

Maharashtra's power shortages would have been halved but for the failure of the Dabhol power project, according to Pendse. The 2,184 megawatt facility begun by Enron Corp. in 1996 was idled in May 2001, only 10 months after it began generation, because the local state-owned electricity company and only customer refused to pay the higher cost of electricity.

Since then, it has never worked at more than one-third of capacity because disputes over power prices, the collapse of Enron and a lack of gas for the furnaces. Today, it operates at 15 percent, burning the costlier oil product naphtha.

``Dabhol is the classic example of all that is wrong with the power sector in India,'' said Ashok Pendse.

To contact the reporter on this story: Archana Chaudhary in Mumbai at achaudhary2@bloomberg.net.

Last Updated: March 21, 2007 18:41 EDT