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Monday, 16 Jun 2014
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Stalled projects - Private Sector awaits a helping hand


The NDA government has taken up reviving stalled projects as one of its priority jobs. A number of initiatives have already been proposed in this direction. The finance, environment and roadways ministries have taken several measures to set the investment cycle into motion once again. What is now required is solid action.


As per the data available with ProjectsToday, private sector projects worth a combined investment of Rs 5,34,500 crore were stalled, deferred or abandoned in the last two fiscals i.e. in 2012-13 and 2013-14. Though some of the projects were stalled for want of action from the promoters side, most of the projects could not make much progress because of policy matters or inaction from the government’s side. Delays in land acquisition, finalisation of fuel linkages and environment clearances were some of the key reasons which impeded the progress of private mega projects.




The bulk of the stalled private mega projects are in the steel, petroleum and power sectors. 168 steel projects, with a total investment of Rs 1,94,416 crore, were stuck mainly because of land and iron ore availability issues. Some of the large ticket projects halted in this sector are Arcelor-Mittal India's steel projects in Orissa; Posco India's Odisha and Karnataka projects and Jai Balaji's West Bengal project. Going by the original schedule of implementation, the first phase of the Posco project should have been completed by this time. However, due to inordinate delays, the country was denied of the much needed foreign direct investment. Together, Mittal and Posco plan to set up around 50 million tpa of steel manufacturing capacity.


To expedite the stuck steel projects, the Union steel ministry plans to set up special purpose vehicles (SPVs) that will secure the required government approvals for key steel projects on behalf of private promoters. The ministry wants to implement the SPV model in Karnataka, Odisha, Chhattisgarh and Jharkhand.

Top-5 Deferred Projects: Private Sector
Cost (Rs.crore)
Jindal Synfuels
Coal-to-Liquid Fuel (Angul)
Tata Steel
Coal-to-Liquid Fuel (Orissa)
Mittal Steel Company N.V
Steel (Keonjhar)
Posco India
Finished Steel (Gadag)
Arcelor-Mittal India
Steel (Bokaro)

In the Petroleum sector, two mega coal-to-liquid projects in Odisha -- Jindal Synfuels's Rs 60,000 crore project in Angul, and Tata Steel's Rs 45,000 crore project, have been stuck due to delays in securing prospecting licences for captive coal blocks from the Odisha government. Since the projex planned out in these two projects is huge, the Union government has to take quick decisions on these projects


The clubbing of conventional energy, non-conventional energy and coal sectors under one ministry is a welcome move. This will help the ministry in addressing the fuel linkage issues faced by some of the mega projects proposed by NTPC and private developers. Further, it is heartening to note that the Environment Ministry and the Power Ministry have set a time frame to speed the process of granting clearances to power projects awaiting environmental nods. Efforts are being stepped up to expedite three critical rail connectivity projects for coal movement in Chhattisgarh, Jharkhand and Odisha.


Thermal projects worth Rs 94,847 crore, announced in the last two years, have not made much progress for want of adequate coal linkages. Some of the private projects which failed to report any progress for this reason are the Rs 7,721 crore 1,320 MW Rahiwada project of SKS Power Generation in Madhya Pradesh, and the Rs 4,648 crore 1,050 MW by Navabharat Power in Odisha.


As mentioned earlier, in addition to rolling out right policies, the need of the hour is to implement the policies and ensure that the stuck projects are back on execution stage and the country will see the much needed capacity additions in time. The past trends in projects execution has proved that given a conducive environment, the Indian private sector is willing to execute their projects in time.


Manufacturing Sector Developments




Infrastructure Sector Developments


  • Kerala govt. has accorded approval to the proposal to widen two road projects
  • IBM has signed an agreement with Lodha Group to develop Palava city project
  • Assam Govt. has launched a rural water supply and sanitation project in seven districts
  • NHAI has shortlisted 14 firms for improvement of the Aligarh-Moradabad Section of NH-93 in Uttar Pradesh
  • Jackson Group to invest Rs 200 crore in the hospitality sector


Power Sector Developments


  • BHEL successfully commissioned 68.66 MW Unit-IV of Rampur hydroelectric power plant in Himachal Pradesh
  • Rays Power Infra has commissioned 10 MW solar power plant in Mahbubnagar, Telangana
  • NEEPCO is planning to augment its power generation capacity from 1,130 MW to around 2,000 MW
  • Tata Power has increased its renewable energy capacity to 1,170 MW
  • Tamil Nadu has passed a resolution against the implementation of the methane gas project in the Cauvery delta region


Quote of the week:


"Structural changes need to be initiated to address issues pertaining to finance, raw material and demand. We believe the government must use most of the $ 1 trillion allocation for infrastructure development under the 12th Five Year Plan. This would have a cascading effect on the core sector. Secondly, it is imperative to bring about transparency in pricing and allocation of natural resources."

Firdose Vandrevala, Executive Vice Chairman, Essar Steel


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