By considerably enhancing the capacity addition targets for infrastructure sectors, prime minister Manmohan Singh has sent out a clear message of urgency to all stakeholders. But he overlooked the problem of huge procedural delays that plague public-private partnership (PPP) projects, especially in sectors like ports, airports and railways. These sectors, along with the power sector, which had been a laggard until some pace was gathered, are principally to blame for the slippages in the past years.
For example, the prime minister targets to set up two new major ports on the East Coast in 2012-13, besides promising 42 projects, entailing investments to the tune of R14,500 crore and a capacity of 244 million tonne in the year.
This is clearly an uphill task, especially given the fact that lead time between conception and award of port projects in the PPP sector is roughly two years. It takes a minimum of three years to build a new major port. Says K Mohandas, former shipping secretary: ?There are avoidable delays (in project execution). Approval procedures can be considerably simplified.?
Any project worth R300 crore and above in the port sector needs Cabinet approval even after the inter-ministerial project appraisal committee clears it. Also, projects can be bid out more efficiently after upfront fixation of tariffs (which includes revenue-sharing with the port authority) and the elaborate process of tariff fixation by the regulator TAMP is eminently avoidable. Security clearances for port projects are also time-consuming. Despite these, the target for the port sector for FY 12-13 was three times what was achieved last year.
Singh?s target to add 18,000 MW of new power generation capacity this fiscal looks achievable, if the coal linkage issues are resolved expeditiously. Capacity addition in the sector in the past several years has not crossed 11,000 MW, with the only exception being the year 2011-12 when a record 20,000 MW of capacity was added, mostly flowing from delayed projects of 10th and 11th Plan periods. Power secretary P Uma Shankar told FE that achieving the target for this year might not be very difficult given that there is slippage of 25,000 MW capacity from the previous Five-year Plan.
It should, however, be kept in mind that many of the balance 11th Plan projects face severe environment and land acquisition problems besides problems on getting fuel linkage and adequate financing.
Coal India and Singareni Coalfield will together supply 384 million tonnes of coal to the power sector in the current financial year, as per the target set at the infrastructure meeting. Coal production and supply target for CIL has been set at 464 and 470 million tonne, respectively, for the year. CIL produced 435 million tonne of coal in the financial year 2011-12 against the target of 447 million tonne set for the year. CIL?s coal production was estimated at 431 million tonnes in 2010-11. Unless major reforms are undertaken coal sector outout will continue to stagnate.
?In Railways, we plan to award work on the elevated rail Corridor in Mumbai, two new Loco manufacturing units and the PPP stretch of the dedicated freight corridor, in addition to redeveloping 4 or 5 stations through PPP mode,? the PM said on Wednesday.