CCI needs a NIB to enforce its writ

Barely six months after the creation of the Cabinet Committee on Investment (CCI) to facilitate faster clearances to the projects costing over R1,000 crore and to monitor them, Prime Minister Manmohan Singh constituted a project monitoring group (PMG) of officials to keep tab on implementation of large public sector and private sector projects and resolve issues leading to the time and cost overruns, in consultation with state-level officials.

This clearly shows sceptics were not off the mark in questioning the efficacy of a CCI-type body, when majority of the problems delaying the stuck projects concerned local issues requiring clearances from the states?what CCI has succeeded to do since its creation in January is to clear projects mostly in the oil and gas and power sectors which in any case were stuck in the administrative ministries and should have been cleared earlier. What the CCI approvals actually mean is also evident from the fact that in cases like Cairn and RIL-BP, the companies have offered to return oil/gas blocks as two-thirds of their areas were still inaccessible to them even after the ?clearance?.

And who better than finance minister P Chidambaram, who was instrumental in putting in place the CCI framework though it is not the body which he had originally envisaged, knows this. At the meeting called by the PM to put in place the PMG in Cabinet Secretariat, Chidambaram told his Cabinet colleagues that his ministry has compiled a list of about 215 such projects where the banks have already funded more than R7 lakh crore?which showed while some of the bottlenecks being faced are in the domain of regulatory authorities at the central level, a large number of impediments are those that lie in the domain of state governments and local bodies. And hence the need for having an institutional mechanism which has sufficient authority to coordinate with the concerned state authorities and get these projects moving on the ground. The PMG has now selected 150 such projects from various sectors and has put out the list of these projects which it is tracking.

For the record, CCI has so far cleared 157 projects with total cost of R1,60,900 crore, and the PMG has succeeded in getting environment ministry clearance for 5 projects with an investment of R9,658 crore.

All told, whether it is the CCI or PMG, things are not going to be different?clearing the stuck projects in real sense would need a more comprehensive body like the National Investment Board (NIB) with representation from the states, which probably was the original plan but got diluted into a lame duck CCI. Linking the NIB with the National Development Council (NDC) will make its decisions more meaningful as the states will then play an active and abiding role in clearing big projects.

The latest ministry of statistics and programme implementation (MOSPI) project implementation status report (January-March 2013) of the central sector projects costing R150 crore and above in itself explains why the states? role here is so critical.

The quarterly report covers 587 projects?215 mega projects each costing R1,000 crore and above and 372 major projects each costing between R150 crore and R1,000 crore, with an anticipated cost of R9,69,361.89 crore. Out of 587 projects, 4 projects are ahead of schedule, 163 projects are on schedule, and 322 projects are delayed with respect to the original schedule of commissioning.

The analysis shows that 189 projects have accounted for cost overruns of R1,52,850.10 crore?69.9% from their original sanctioned cost. There is an increase in terms of number of delayed projects with respect to their original schedule as compared to December 2012 and 157 projects have reported additional delays in the range of 1-36 months?road transport and highways (58), power (28), railways (19), petroleum (16), coal (15), steel (13), telecommunication (3), shipping & ports (2), civil aviation (2) and fertilisers (1).

The finance ministry study of the 215 stalled projects of R250 crore and above also as on December 31, 2012, indicates state-level issues as the major bottlenecks besides fuel-supply agreement, coal linkage and gas allocation. While Chidambaram on his part is meeting the banks and promoters of these projects at the regional level, he has already held meetings in Mumbai and Chennai to sort out the issues plaguing these projects; the government should also look at broadening the scope of CCI and PMG and merging them into a larger national body. Give it any other name if there are reservations to Chidambaram?s NIB!

santosh.tiwari@expressindia.com