The Economic Times 01.07.2013
Push for infra sector: Govt to award projects worth Rs 1.15 lakh crore
NEW DELHI: In a renewed effort to fire up the infrastructure sector, the Prime Minister on Friday set a target of awarding projects worth Rs 1.15 lakhcrore through the public-private partnership (PPP) model by the end of this financial year.
A steering group will be formed to monitor the award and implementation of mega projects that have been stuck in the pipeline, including the Rs 30,000-crore-Mumbai Elevated Rail Corridor and power projects worth over Rs 40,000 crore. While the announcement was made in a bid to boost the steadily declining investor sentiment, industry members are still skeptical and believe there are many issues on the ground that need to be resolved first.
Infrastructure sectors like road were the worst hit with the road ministry managing to award only 14% of its ambitious 9,500-km target for FY13, which has now been scaled down to about 5,000 km (about 4,028 km to be done by NHAI and 900 km by the ministry).
Stung by the poor performance last year, the ministry has now changed its strategy. Its own targets, as informed to the PMO, are significantly less ambitious (see table) and their focus will now be on making sure all obligations, including approvals, clearances and land acquisitions are met before rolling out any new projects.
"We should be able to achieve 100% of the target in the fourth phase of the National Highways Development Project, the projects in the left-wing extremism areas as well as the first phase of the World Bank-funded National Highways Inter-connectivity Improvement Project. The grey areas, however, would for projects in the north-east where the preparatory work is poor and those under the build-operate-transfer (BOT) model since market conditions are too uncertain," said a senior road ministry official.
In the wake of the dismal response by the private sector to PPP projects for highways, the government has approved a slew of proposals, including relaxations in environment norms and exit options.
"These are positive steps but there are still issues, including bankers not being too keen to lend. Multiple projects are yet to achieve financial closure because of problems with getting 100% land acquisition, forest clearances, etc. Unless the approval process is expedited, bidders will continue to be cautious," said a CEO of the highways wing of an infra major.
The shipping ministry too missed its target and was able to award port projects worth Rs 6,765 crore out of the Rs 14,353 crore planned. This year's investment target has been kept higher at Rs 25,000 crore and the government is also planning to award two new port projects worth Rs 20,000 crore — in Sagar, West Bengal and Durgarajapatnam in Andhra Pradesh — this financial year.
Both these projects have been in the works for a while with the ministry initially struggling to zero in on a site for the port project in Andhra Pradesh; the techno-economic feasibility study for Durgarajapatnam is yet to be completed.
Investors continue to be wary over issues like security clearances and the rigid tariff norms. The shipping minister GK Vasan recently took care of the concerns, assuring that the government will soon finalise the new tariff guidelines, expected to provide autonomy to the port terminals to fix market-linked tariffs for major ports in India.
A steering group will be formed to monitor the award and implementation of mega projects that have been stuck in the pipeline, including the Rs 30,000-crore-Mumbai Elevated Rail Corridor and power projects worth over Rs 40,000 crore. While the announcement was made in a bid to boost the steadily declining investor sentiment, industry members are still skeptical and believe there are many issues on the ground that need to be resolved first.
Infrastructure sectors like road were the worst hit with the road ministry managing to award only 14% of its ambitious 9,500-km target for FY13, which has now been scaled down to about 5,000 km (about 4,028 km to be done by NHAI and 900 km by the ministry).
Stung by the poor performance last year, the ministry has now changed its strategy. Its own targets, as informed to the PMO, are significantly less ambitious (see table) and their focus will now be on making sure all obligations, including approvals, clearances and land acquisitions are met before rolling out any new projects.
"We should be able to achieve 100% of the target in the fourth phase of the National Highways Development Project, the projects in the left-wing extremism areas as well as the first phase of the World Bank-funded National Highways Inter-connectivity Improvement Project. The grey areas, however, would for projects in the north-east where the preparatory work is poor and those under the build-operate-transfer (BOT) model since market conditions are too uncertain," said a senior road ministry official.
In the wake of the dismal response by the private sector to PPP projects for highways, the government has approved a slew of proposals, including relaxations in environment norms and exit options.
"These are positive steps but there are still issues, including bankers not being too keen to lend. Multiple projects are yet to achieve financial closure because of problems with getting 100% land acquisition, forest clearances, etc. Unless the approval process is expedited, bidders will continue to be cautious," said a CEO of the highways wing of an infra major.
The shipping ministry too missed its target and was able to award port projects worth Rs 6,765 crore out of the Rs 14,353 crore planned. This year's investment target has been kept higher at Rs 25,000 crore and the government is also planning to award two new port projects worth Rs 20,000 crore — in Sagar, West Bengal and Durgarajapatnam in Andhra Pradesh — this financial year.
Both these projects have been in the works for a while with the ministry initially struggling to zero in on a site for the port project in Andhra Pradesh; the techno-economic feasibility study for Durgarajapatnam is yet to be completed.
Investors continue to be wary over issues like security clearances and the rigid tariff norms. The shipping minister GK Vasan recently took care of the concerns, assuring that the government will soon finalise the new tariff guidelines, expected to provide autonomy to the port terminals to fix market-linked tariffs for major ports in India.
