Infra projects worth Rs 7 lakh crore stuck in red tape

Discussion in 'Economy & Infrastructure' started by nrj, Mar 21, 2013.

  1. nrj

    nrj Stars and Ambassadors Stars and Ambassadors

    Nov 16, 2009
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    NEW DELHI: Projects worth over Rs 7 lakh crore — which is equivalent to almost half the government spending in the current financial year — are held up in the absence of environmental and forest clearances, land and fuel, putting strain on the creaky infrastructure in the country and becoming an obstacle for an economy striving to get into a high growth trajectory.

    According to data compiled by state-run banks for a meeting with finance minister P Chidambaram, the amount is locked up in 215 projects spread across power, roads, ports, cement and steel, each with an estimated cost of Rs 250 crore or more. Any delay will push up the overall cost of setting up the projects, bankers said. It also increases the risk for the public sector banks, which have already disbursed loans amounting to Rs 54,000 crore.

    "The delays tend to have an impact on other projects as well and it results in a vicious cycle and impacts overall sentiment," said Arvind Mahajan, head of infrastructure and government practice at consulting firm KPMG.

    Although the government is betting on the Cabinet committee on investment to remove the hurdles, experts say it is not sufficient. "What we are doing is patchwork, which will not work," said Vinayak Chatterjee, chairman of Feedback Infrastructure, a consulting firm where L&T, IDFC and HDFC are also shareholders.

    The biggest hold-up is in the power sector (Rs 5.39 lakh crore), followed by roads (Rs 1.23 crore) and steel (over Rs 32,500 crore). Even flagship projects like the ultra-mega power projects such as Sasan and Coastal Andhra are held up, although they were bid out ostensibly with all approvals in place.

    Power sector hit hard

    An analysis of data for the power projects, including a few linked to transmission, shows that they have been hit hard by the delay in environmental and forest clearances with as many as 37 projects stuck for lack of approvals. In a few cases, like in Tamil Nadu and Jharkhand, state agencies have held up the green clearances. In terms of value, the cost of these projects adds up to a staggering Rs 1.92 lakh crore.

    Chatterjee suggested that the government could prepare a map of the country with zones demarcated for activities. Besides, he said the Centre and state agencies need to stop passing the buck on green clearances.

    The other critical factor hobbling the power sector seems to be the availability of fuel — coal as well as gas. As many as 31 projects are held up with the proposed investment pegged at around Rs 1.4 lakh crore. There is, however, an element of double counting as banks have cited multiple factors for the delay of projects. For instance, the Athena power project in Chhattisgarh has been delayed due to the absence of fuel, and also due to the fact that around 90 acres of land is yet to be acquired, Allahabad Bank has told the finance ministry.

    There may be another reason for counting the same project in multiple places: different banks have given different reasons for delay in the same project. For instance, Andhra Bank has said that Sasan Power, the 4,000 mega watt ultra-mega power plant, is held up as clearance from the ministry of environment and forests for coal blocks is pending. Bank of Baroda has said there was a delay in handing over land.

    Adani Power Maharashtra's project seems to suffer from even more complications that range from land acquisition to green clearances, delay in award of coal blocks as well as equipment related issues.

    For the sector as a whole, land is the third biggest problem as lenders have cited it as the reason behind the delay in 26 projects, with investment adding up to nearly Rs 1.47 lakh crore.

    But when it comes to highways, land is the single biggest roadblock, delaying 48 projects across the country. The next biggest culprit is environmental clearances although approvals are expected to be faster after the recent rapprochement between the National Highways Authority of India and the environment and forests ministry.

    Although NHAI and the highways ministry have cited lack of bank funding to developers as a major reason for the lack of interest in new projects, lenders have told the finance ministry that it is the inability of agencies such as railways to give right of way that has put over a dozen projects in the slow lane.

    Banks would make you believe that funding is not an issue. At least that's what they have told the finance ministry.

    Infrastructure projects worth Rs 7 lakh crore stuck in red tape - The Times of India
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  3. Yusuf

    Yusuf GUARDIAN Administrator

    Mar 24, 2009
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    Environment ministry keeps holding projects. 5 lac crores is $100 billion of investment in power sector which is crucial for India. Tamil Nadu is grappling with critical shortage of electricity and lower projects are not cleared :facepalm:
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  4. sob

    sob Moderator Moderator

    May 4, 2009
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    New Delhi
    What is amazing that all these projects do not need bills to be passed in the Parliament, all these projects are under ministries run by congress minister, so no coalition compulsions can be blamed.

    All that is required is some minister to work and the PM to take decisions, but this is too much to expect from the current dispensation. The FM has time to go to UP to offer sops to the SP to retain their support but he does not have time to solve this mess.
  5. Singh

    Singh Phat Cat Administrator

    Feb 23, 2009
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    Rumourmill : Bribes are to be blamed.

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