The discom restructuring dilemma: The bailout plan aimed at turning around the power distribution sector has not delivered. Every year the government continues to lose about Rs 70,000 crore adding to the losses of more than Rs 3 trillion that it has inherited.
Tweet: Discoms: With Rs 10,000 cr Montek Bonds Bailout in 2002 + Rs 2 lac cr FRP bailout in 2011, nobody still has a clue how to set things right.
Coming to the aid of distressed infra projects: The RBI move to allow banks to convert troubled loans to around 10% equity will go a long way in bailing out infrastructure projects facing severe financial crunch. However, conversion of debt into equity has not been a happy experience for banks in the recent past.
Tweet: RBI Guv appears to be in favour of converting part of stressed bank loans to equity in troubled infra projects. Trifle adventurous?
Way forward for infrastructure sector revival: There is a general consensus that infrastructure revival is expected to pump-prime investment-led growth. Well articulated short and medium term strategies to make this happen are the clear priorities of the day.
Tweet: 3 pronged agenda to get infra moving: (1) Step up public-funded projects in short term (2) reformat PPP (3) push Rs 18 lac cr stalled projects.
Changing the rules of the game: Projects with a minimum built up area of 20,000 sq metres are now eligible for foreign investment. Minimum capital investment requirement too has been halved to $5 million. While the policy change is expected to boost the construction sector, many contentious issues are yet to be resolved.
Tweet: Govt easing FDI rules for Constructn Sector has been well recd. However, no clarity yet on treatment of projects undertaken under old policy.
Steep rise in railway freight charges: Rail haulage charges are set to increase sharply by 25-41%. Additionally, a congestion charge of 10% on cargo imports (including containers) has also come into effect. Seems like road transport just got far more competitive.
Tweet: With diesel prices going down & railways losing freight to road tpt—whopping 25% ^ in haulage charges for pvt container trains appears ?!
Air India: a new committee to the rescue?: The committee expected to comprise of high profile bankers, aviation experts and technocrats will have to come up with turnaround strategies for the loss-making airline within a three-month period.
Tweet: Crying wolf? Hope not again…..as Govt mulls high-powered panel to decide fate of Air India. Requires approx R6,000 cr support each year.
Doing away with the ports regulator: It has long been considered that tariff authority for major ports has outlived its utility and is seen more as a hindrance to the functioning of government-owned ports than a facilitator. Henceforth, government-owned ports will be free to determine their own pricing, hopefully making them more profitable.
Tweet: Govt mulling shutting TAMP (Tariff Auth for MajorPorts.) Good! But not having an ‘independent’ Ports Regulator also dysfunctional for sector.
Renewable energy gets a push: The government plans to amend the Electricity Act to enable imposing stricter penalties for not meeting RPO obligations. Besides, it will make it mandatory for thermal producers to also generate power through renewables of 10% of fresh capacity to be set up.
Tweet: Now RGO. ‘Renewable Generation Obligation.’ Govt feels introducing this along with stricter implementation of RPO (Renewable Purchase Oblige) will rock.
– Vinayak Chatterjee is Chairman of Feedback Infra. Twitter: @Infra_VinayakCh A weekly selection of the author’s tweets— with a brief backgrounder—in the infra space, by Adite Banerjie