Finance minister P Chidambaram has asked cash-rich public sector units (PSUs) to invest more aggressively ? Rs.1.2 lakh crore over the next 18 months ? in his bid to bolster economic growth, but what stymies these companies is red tape rather than a lack of will to let their cash work harder.
FE spoke to senior officials of some large PSUs with huge investible surpluses (ONGC, NTPC, GAIL India and BHEL), all of whom cited the lack of fuel linkage, delays in approvals and difficulty in acquiring land as reasons for their slow pace of investment. These companies said they are awaiting the proposed Prime Minister-led committee for clearing high-impact infrastructure projects in what would be a new trade-off between development and other considerations like protection of the environment.
RD Goyal, director (projects) at state-owned gas utility GAIL, said the company was facing problems in acquiring land in Tamil Nadu and Kerala for projects. ?In this region, farmers are not supportive, while the government is trying its best to support us. We also need various clearances from forest and defence authorities, which take a lot of time,” said Goyal.
State-run explorer ONGC too faces difficulties in securing some of the clearances for its hydrocarbon hunt. ONGC director (finance) AK Banerjee said the company has a capital expenditure plan of Rs 33,065 crore for this fiscal. ?There are a few hindrances in getting defence clearance for some blocks auctioned under the New Exploration Licensing Policy. We hope we will get those clearances soon,” said Banerjee.
Capital goods maker BHEL has a cash reserve of R5,000 crore and an order book of R1.35 lakh crore but is facing trouble in getting clearances for some of the power projects it is getting into.
Policymakers have envisaged an investment of $1 trillion in the infrastructure sector for the next five years and the economy is craving for investments while companies with cash reserves nearly double that amount are waiting endlessly for not only approvals but also fuel linkage to produce power, fertilisers and steel.
“We are setting up four power plants in partnership with utilities in states such as Madhya Pradesh, Maharashtra and Karnataka. These projects with an estimated cost of Rs 30,000 crore are held up due to non-availability of environmental clearances or lack of fuel linkage,? BHEL chairman B Prasada Rao told FE. He said the company has sought the finance minister’s assistance in getting clearances for those projects.
NTPC, which plans to invest over Rs 20,000 crore this fiscal and Rs 2 lakh crore over the next five years, is also facing hurdles in land acquisition. ?Investment plans totalling to Rs 23,000 crore are held up due to delay in acquisition of land for the Nabinagar, Gajmara and Darlipalli projects,? said a senior company official.
Currently, the government steps in to assist in land acquisition after the business house acquires 70% of the required land.
(With inputs from Gireesh Chandra Prasad)
