Despite CCI push, projects still in limbo

Written by fe Bureau | New Delhi | Updated: Sep 16 2013, 08:57am hrs
The government is banking heavily on the big projects pushed ahead by the Cabinet Committee on Investment since January and expects these would show on the economy beginning the last quarter of this fiscal but a sizeable chunk of CCI-cleared projects is still stuck at some level either a central ministry or a state department.

An FE review of the status of some of the mega projects in the power, oil & gas, ports and railway sectors fast-tracked by CCI showed that the expenditure-related impact of these leave alone the revenue streams on the demand in the economy would be delayed. That many projects are still stuck and are unable to meet the CCI deadlines would mean the CCIs impact on the economy, when it begins to kick in, could also be significantly smaller than what policymakers aspire for.

For example, all 14 power sector projects cleared by the investment panel in April are still waiting to get off the ground as final clearances are held up in procedural wrangles. Four power generation projects of NTPC, NHPC and Tehri Hydro Development Corporation (THDC) collectively worth R12,000 crore have failed to meet the deadline set by the CCI for all clearances to be given. People in the know say final clearances for these could take at least a year more. Also, 10 transmission projects are yet to receive the green signal from the central ministries that were asked by the high-level committee headed by the Prime Minister to fast-track them.

Three hydroelectric projects in Arunachal Pradesh Etalin (3,097 MW), Attunil (680MW) and Lower Subansiri (1,600 MW) have an investment potential of over R50,000 crore. Despite the CCIs intervention, work on them has been stalled due to delays in securing clearance from the defence and home ministries and also an unresolved local resistance.

With THDCs Vishnugad Pipalkoti 444 MW hydroelectric plant (revised cost estimate: Rs 3,745 crore), CCI had at its April 22 meeting directed the environment ministry to award the project within two months.

Though the ministry has accorded stage II forest clearance for a portion of the project land on May 28, the Uttarakhand governments order transferring forest land to THDC is still awaited. The project is not expected to be awarded before the end of the calendar year.

As for the NHPCs 195 MW Kotlibhel hydroelectric project, estimated to cost of Rs 2045 crore, the CCI had in April directed that approval for revised cost estimates be expedited and the work awarded within four to five months, but sources said the realistic expectation now is that this would not be done earlier than March 2014. This because even the initial public investment board approval is yet be received, leave alone the subsequent go-ahead required of the Cabinet Committee on Economic Affairs. Similarly, NTPCs 500 MW Feroze Gandhi Unchahar project (Rs 3,300 crore) in Uttar Pradeshs Raebareli district, for which the CCI sought environment clearance within a week, is languishing. Though the environmental clearance came two weeks after the CCI order, the project is still to take off as the PSU has not yet placed orders for equipment with BHEL.

The Pakal Dul 1,000 MW hydroelectric project (Rs 9,697 crore), developed in Jammu and Kashmir by a joint venture of NHPC, JKSPDC and PTC, has also not met the deadline set by the CCI. So is the case with several of the 10 transmission projects approved by the CCI, including the Rs 7,075-crore Bilaspur-Ranchi 765 kilovolt transmission line project being developed by Powergrid Corporation of India (PGCIL) and its 400 kV Silchar transmission line project.

Despite the CCI, final clearances have to be given by some other departments or ministry. Unless an institutional framework is devised for the functioning and clearance process of various ministries, the CCI might not make a big enough impact to effect a strong economic revival, said a senior official in the Planning Commission, requesting anonymity.

Jindal Powers Rs 24,000-crore Etalin project, its proposed Attunil plant and state-owned NHPCs Rs 11,000-crore Lower Subansiri hydroelectric projects all in Arunachal Pradesh too have made little headway despite being on the CCIs radar for a while. The CCIs intervention has also failed to push mega thermal power projects in coastal areas, which are held up in the absence of environmental clearance. For example, Rs 9,000crore-Sagar super thermal power project of Universal Crescent in West Bengal and the Rs 6,000-crore project of Hinduja National Power Corporation in Andhra Pradesh are still stuck.

As FE had reported, some of the major oil and gas exploration blocks cleared by the CCI in recent months are unlikely to realise their full investment potential. The Reliance-BP combine, Cairn India and state-run ONGC, all of which got some of their Krishna-Godavari Basin blocks partially cleared by the CCI, have scaled down their investment plans. As the CCI cleared only 30-35% of the 835 sq km acreage at ONGC's KG-OSN-2009/4 block, the company has sought a proportionate reduction in the minimum work programme (MWP) commitment. Cairn India had earlier sought a similar reduction in MWP for a block adjacent to ONGC's. On its part, the RIL-BP combine has offered to relinquish its partially-cleared KG-DWN-2005/2 block, which too, incidentally, is situated in the KG Basin.

Economic affairs secretary Arvind Mayaram recently said that $27-billion worth of projects cleared by the CCI in the January-April period would salvage the economy and the impact would be seen latest by the fourth quarter. Last week, the Prime Ministers Economic Advisory Council highlighted a 3 percentage point reduction in Indias investment rate after the global crisis and predicted no improvement in the rate this fiscal by pegging it at 34.7% of GDP, a tad lower than last years 35%.

The railways expects investments worth Rs 3,800 crore from the private sector for six port connectivity projects. The port companies have already got railways nod for the project but work on the lines is mired in procedural wrangles. After several failed bids to revive plans to build an electric locomotive factory at Madhepura and a diesel locomotive factory at Marhowra, the Prime Minister's Office recently threw its weight behind the projects and has set a deadline of January 30 for the awarding of contract. However, progress on this front remains tardy.

Another mega project in the railway sector running behind schedule is the 63-km Mumbai elevated corridor estimated to cost Rs 25,000 crore. To be developed on the public-private partnership model, the project has already missed two deadlines set by the PMO. The request for qualification for the project was reissued last month, which is open till September 20, to be followed by the request for proposals stage. Now, the deadline for awarding the project, which has drawn interest from Reliance Infrastructure, Siemens, Gammon, IL&FS, Essar and GMR, has been set for January 2014.

Of course, there are projects that have made headway thanks to the CCI. NTPCs Rs 12,000-crore North Karnapura project and Lanco Powers Rs 8,000-crore Babandh project are examples. The North Karanpura project has got off the ground after the CCI resolved the dispute with Coal India over the site of coal reserves and restored the coal linkage. NTPC has already applied for the renewal of the time-barred environmental clearance and is preparing to initiate bidding for award of contract. We have applied for renewal of the environmental clearance. Tender for equipment supply will be floated in a months time, a senior NTPC official told FE.

Following the CCIs recent intervention, Lancos Babandh project has obtained the first-stage environment clearance from the Centre. It is expecting to secure the second-stage approval ( forest clearance) soon. A senior Lanco Power executive said: We have got stage-I clearance for the project from the ministry of environment and now waiting for forest clearance which is expected soon. The CCI had reviewed these projects in April.

(With inputs from Subhash Narayan, Noor Mohammad, Pranav Nambiar and Rajat Arora)