Cement, Energy and Environment

,, Litany of delay First, let's look at the numbers, straight from the horse's mouth. According to the August 2012 report of the Ministry of Statistics and Programme Implementation, Infrastructure and Project Monitoring Division , out of the 195 'central sector infrastructure mega projects' - costing Rs 1,000 crore and above - 84 are delayed, with respect to the latest schedule, and 30 projects have reported additional delays in the range of one to 20 months. (These figures are with respect to projects relating to coal, power, road transport and highways, petroleum, shipping and ports, and steel sectors.) (Refer to the table for Delayed. Projects on Page 83-84.) The total original cost of implementation of the 195 projects was about Rs 624,383.18 crore but their anticipated completion cost is likely to be Rs 718,709 crore, at an overall cost overrun of Rs 94,325.82 crore (15.1 0 per cent of the original cost). The newspapers are full of projects gone awry; GMR terminates the country's largest contract (Rs 7,200 crore for the Kishangarh-Udaipur- Ahmedabad highway); GVK pulls the brakes on the Shivpuri– Dewas highway; the Mumbai Metro Line II is stalled; and the Kudankulam Nuclear Power Plant loses steam... To get to the bottom of things, let's first look more closely at the key sectors of roads, railways , airports and ports. Roads and highways As the Environment & Building Technologies Practice of consulting firm Frost & Sullivan tells us, there has been a surge in highways projects in the past few years. About 4,375 km was awarded in the first nine months of FY2012, as against 4,553 km in FY2011, 3,338 km in FY201 0 and 643 km in FY2009. Indeed, under the National Highway Development Project (NHDP), NHAI plans to award about 25,000 km of highway projects over the next five years through a combination of PPPs and EPC contracts. The -- -:r report points out that though the award of new projects picked up last year, there was a slowdown in execution primarily owing to delay in land acquisition, clearance and financial closure, while projects with requisite approvals and funding reported healthy completion . Its analysis is succinct: high interest rates, funding constraints, slowdown in execution and increased competition are the key challenges. M Murali, Director General, National Highways Builders Federation, cites the same list of challenges. "The expected investment in the Indian road sector in the Twelfth Five-Year Plan is to the tune of $120 billion, of which the share of the private sector will be around $70 billion," he further underlines. "These targets can only be achieved with policy support. In the past, the lack of consistency in contract terms has been a major concern. Other key issues are the large investment requirement coupled with uncertain recovery. High costs of land acquisition, tolling equipment, maintenance and related costs place a substantial burden on early debt service capacity. Several projects have faced delays in execution mainly on account of delayed land acquisition, removal of encroachments , shifting of utilities, receipt of approvals and environment clearances. In fact, 96 road proposals are pending for forest clearance at the Central Government level and 475 proposals are awaiting clearance from state governments. Besides, actual traffic in many operational toll road projects has turned out to be lower than traffic estimates. Consequently, lenders have increased caution while funding fresh projects." The Railways Money does appear to be a major constraint, a concern echoed in the rai lways segment. According to the Ministry of Statistics report, of 38 mega projects in the railways sector, 15 are delayed. As Adhir Ranjan Chowdhury, Minister of State, Ministry of Railways, tells us, while projects worth Rs 450,000 crore are up for bidding. there are no buyers owing to paucity of funds . "At present, we have ongoing projects amounting to Rs 147,000 crore that we need to prioritise in view of viability and feasibility," he says. "We are not just a commercial enterprise; we have to look at the socioeconomic angle. Our resources are limited and so we provide the funds in a phased manner; thus the amount sanctioned for the railways is spread thin. That's why these projects are undergoing such a long gestation period."