Prime Minister Manmohan Singh has assumed the task of streamlining and fast-tracking infrastructure creation, sending out strong directions on the dedicated freight corridor project (DFC), national highways, and coal supply to power plants.
Through a series of announcements this month, Singh has directed Coal India to meet the shortfall in domestic supply, states to extend cooperation in land acquisition for the DFC project and road ministry to expedite the award of national highway projects.
The selection of these areas of infrastructure shows the government?s priorities and experts believe the act was logical as the three initiatives can induce investments across the economy.
But what has prodded the PM to take things in his hand? The answer lies in the current scenario where power plants are going dry of coal as Coal India Ltd (CIL) has failed to increase production at the required speed when imported coal has become expensive; ministries and cabinet delay decisions on awarding national highway projects; and the pace of work on setting up two special corridors for freight movement in the country has turned slow. While all this stagnation is happening, individual ministries and states are unable to take decisions that require an inter-play between them.
Feedback Infrastructure Services chairman Vinayak Chatterjee said the recent announcements reflect on a long-pending demand from industry to set up a special cell in the Prime Minister?s Office to review infrastructure projects. ?The measures announced by the PM and his team are in the right directions. The power sector has seen an improvement in investors? confidence that fuel supply will become a non-issue. Similarly, measures on DFCC (Dedicated Freight Corridor Corporation) and NH are likely to help the sectors,? he added.
In order to ensure sufficient coal supply to power plants, the Prime Minister ordered CIL to meet minimum 80% coal requirements of power plants with a total capacity of 50,000 megawatt (MW) or face penalty. This means that CIL, which has revised production target downward, would have to import a significant quantity of coal. But imports would have attached consequences as coal prices for end-users would increase.
Industry experts feel the directive will also force CIL to step up measures to enhance production. The company has struggled with its production targets and revised it to 440 million tonne from 452 mt as estimated earlier. For 2012-13, it has set a target of 464 mt.
During 2011-12, CIL is expected to supply about 306 mt coal to the power firms as against 296 mt in 2008-09. The coal shortfall for 2011-12 was estimated to be 104 mt which was to be met by importing 84 mt.
India produced 492.76 mt coal in 2008-09 and 526.16 mt during 2009-10, and imported 59 mt in 2008-09 and 73.25 mt in 2009-10 to meet the shortfall. CIL accounts for roughly 80% of coal production in the country. About 50% power generation in India is based on coal. The government has already announced its plans to add 76,000 MW during 2012-17, 85% of which would be generated from coal.
According to NC Jha, former chairman of CIL, coal production can be increased only through faster environment clearance for coal blocks. ?Unless, that is ensured, there is no way the company can improve production,” he said.
The PM has also asked the road ministry to speed up project award to meet the target of 7,999 km in 2011-12. On his directions, the ministry has promised that 15 major projects of 1,547 km will be awarded within this financial year. Another 11 projects for 1,731 km will be considered by the Public-Private Partnership Approval Committee this week for speedy approval. Till now, the ministry has awarded only projects for over 5,000 km.
The cabinet committee on infrastructure is also pegged to consider the proposal for a R3,000-crore Eastern Peripheral Expressway this week. The expressway will help decongest the National Capital Region on the Uttar Pradesh and Haryana sides together with the Western Peripheral Expressway that is nearing completion. The ministry would also indicate its targets for the next year within this month.
Singh instructed all central ministries and states to support the DFC project, which encompass scattered investment of R1 lakh crore in two corridors?one traversing from West Bengal to Punjab and another from Uttar Pradesh to Mumbai. Following the direction, state governments have decided to set up monitoring committees to resolve related issues, especially land-acquisition, expeditiously. DFCC has completed 67% land-acquisition through the Railway Amendment Act 2008. The project is to complete by March 2017 but officials in railway ministry are sceptical of meeting the deadline.
