‘Delays raise power project costs by 18% to Rs 4 lakh cr’

By: | Published: July 13, 2018 5:20 AM

Delays in setting up of thermal power plants, hydro power projects, grid strengthening and transmission network have spiked costs of power projects by nearly 18% to Rs 4 lakh crore, Care Ratings said in a recent note.

power project, hydro power projects, thermal power plants, RK Singh, hydro sectorThe power sector accounts for 9.3% of the number of projects under implementation and 21.8% of the projects by value. (Reuters)

Delays in setting up of thermal power plants, hydro power projects, grid strengthening and transmission network have spiked costs of power projects by nearly 18% to Rs 4 lakh crore, Care Ratings said in a recent note. Of the 121 projects being implemented by the Centre, 48 are facing cost overrun, the note said. The overall cost of implementation for 1,304 central sector infrastructure projects, costing Rs 150 crore and above, are now estimated to be at Rs 18.4 lakh crore from their initial valuation of Rs 16.2 lakh crore. Only 321 such projects are on schedule. The power sector accounts for 9.3% of the number of projects under implementation and 21.8% of the projects by value.

Project delays have posed a larger threat to hydro power projects which are reeling under cost overruns of more than Rs 52,700 crore. Long construction periods and delays in cash inflow result in higher finance charges, and contribute to unattractive tariffs for hydro power projects, rendering them stranded. While speaking about the upcoming hydro power policy at the conference of power ministers of all states held earlier this month in Shimla, Union power minister RK Singh had blamed benefit-driven activism as a contributor to such delays, leading to higher project costs.

A parliamentary committee report had attributed the sluggish growth of the hydro sector to “lack of coordination among the ministries, state governments, departments, and agencies related with the development of hydro power”.

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