CCI May Overrule Objections to Stop Stalling Mega Projects

Infrastructure Conclave 2013: Fast Tracking Stalled Projects

By Tarun Kanti Bose

The UPA Government has plans to empower the Cabinet Committee on Investment (CCI) on infrastructure front after it has been recommended by cell in CCI on fast track projects, exceeding investments of Rs1,000 crore, said Dr. Montek  Singh  Ahluwalia, Deputy Chairman at 'Infrastructure Conclave 2013: Fast Tracking Stalled Projects', organised by PHD Chamber of Commerce and Industry.

CCI needs to be empowered with an option to overrule meaningless objections on infrastructure related ministries on one pretext or the other which arise out of petty issues so that stalled projects are cleared in one go. What India needs today is neutral experts in the area of environment and forests especially and not activists, said Ahluwalia in his inaugural address.

While describing the role of private players, Dr. Ahluwalia pointed out, "Private sector has been brought in to finance infrastructure projects."  He lamented, "The Indian Government still has procedures and rules that are designed, to develop projects under closed economy to satisfy the outdated and prototype activists especially in the field of environment and forests, on account of which a vast number of projects keep awaiting approvals of highest authority despite setting up of CCI." Further he added that neutral experts equally weigh the pros and cons of mega projects and make fair recommendations while activists, especially those on environment-related fields, generally tend to insist on stalling projects that are already half way through. Delays in large infrastructure projects have occurred due to procedural delays and regulatory problems such as land acquisition and forest clearances. He called for the need for a holistic view when projects are cleared and allow a range of possibilities. 

Ahluwalia said that in the next six months Indian industry will witness faster clearances of mega projects as government is actively considering suggestions to empower CCI with over-ruling powers. 

Talking to the newspersons on the sidelines of the 'Conclave', Dr. Ahluwalia said that he is optimistic that Indian economy is on a "turnaround path" and that there will be recovery in the coming quarters. The response came after the International Monetary Fund significantly scaled down India's growth projection for the current year to 3.8% from 5.6% projected earlier.

Ahulwalia's optimism stems from the recent measures taken by the government, particularly in the infrastructure sector. "The steps taken by the government to push the infrastructure sector are showing results with improvement in the core sector production performance of steel, power, coal and cement during July and August," Reportedly, in fact infrastructure projects worth Rs 12.5 lakh crore are held up for want of various clearances.

"Besides, India is going to have a good growth in agriculture this year, which will help thrust the demand." Ahulwalia added as he sees the economy regaining health soon. "Taking all these things together, I expect to see recovery in the coming quarters. How much is difficult to predict right now. But definitely the economy is on a turnaround path," he said. Anil Swarup, Additional Secretary, Cabinet Secretariat heading a cell created to fast track clearances of stalled projects, who was Guest of Honour in the 'Conclave' said a total of 40 projects have been cleared worth investment of Rs1.6 lakh crore since he took charge four months ago.

"It is still squatting on projects involving investments of Rs12.5 lakh crore which roughly works out to be one-fifth of India’s GDP," Swarup said.  Further he added that 45 percent of problems with regard to infrastructure projects such as land acquisition, environment clearance and law and order occur at the State level and was of the view that only few things should be delegated to state governments.

Speaking in the second session titled 'Is there a need to review PPP framework? Ashok Lavasa, Additional Secretary, Ministry of Power said that power sector has witnessed a lot of investments from the private sector.

He emphasised that project preparation before bidding is of paramount importance as under the present format had certain safeguards for the power procurer. He was of the view bidding for power projects have been made much simpler and evaluation criterion has been made transparent.

While addressing the session Rohit Kumar Singh, Joint Secretary, Ministry of Road Transport & Highways said that availability of debt and equity was a problem for road projects as the economy is subdued at present. He emphasized that the MCA document should be flexible in order to accommodate changes. The present EPC model in the roads sector is too rigid. He emphasized on the need for good innovative models which were a hybrid of various BoT models in the roads sector. The mind set of the government with regard to PPP projects needs to change and the contractor should be treated as an equal partner.

Amber Dubey, partner, KPMG urged the policymakers to introduce bold visionary steps for fast tracking infrastructure projects. He added that there is need to generate long term infrastructure funding through Pension funds.

Presiding the session, Dr. M Ramachandran said that local population should be made aware about the benefits of infrastructure projects. He also emphasised on proper project planning from conception to completion stage.

In the third session titled 'Bankability and Debt restructuring of the Infrastructure projects', S. K   Chaudhary, Senior Executive Director, HUDCO said that bankability is a very important issue right from the stage of conceptualisation. He added that there needs to be a limit on funding from Banks as it’s facing a cut in interest earnings. He urged the promoters to be cautious during execution and implementation stage.

Rajiv Chandiok, General Manager - Finance, Power Finance Corporation said that that long term funding should be available through pension and insurance funds.

In the fourth session there were deliberations on 'Opportunities in Defence Infrastructure'. Speakers in this Session were Mr. Ravi Wig, Past President, PHD Chamber, Major Gen S Kaushik, Director General Works, MES, Major Gen. (Retd.) S Narasiman, Managing Director, AWHO, Major General (Retd.) R Masaldan, former Director General, MAP and Ashish Wig, Chairman, Road, Transport & Other Infrastructure Committee, PHD Chamber. Speakers in this session spoke on the challenges in upgrading the defence infrastructure due to the remotest location and also challenges of acquiring land for infrastructure projects.  Especially in housing, the quality of infrastructure is much to be desired. The risk management and administration of contractors is a major issue in defence infrastructural projects. The Issue of debt restructuring is quite pertinent in defence projects. Speakers suggested that there need to be proper selection criteria for consultants and contractors, detailed project report should be of good quality, minimum changes should be after finalisation of detailed project report, all environment clearances should be before conclusion of contracts, optimum utilization of automated plants and machineries and there should mix of medium and big Builders depending upon the size of projects.

In the last session, there was panel discussion on 'Top Executives' View on Infrastructure Development. Rajeev Mathur, Executive Director, GAIL (India), speaking in this session delineated the scenario of gas pipelines in the country. He pointed out that lot of infrastructure is needed in terms of gas pipelines in southern, eastern and north eastern parts of the country.

Sista Prasad, Executive Director, Pratibha Industries emphasised that support from all the stakeholders is required for implementation and success of infrastructure projects. The projects should be evaluated properly.

Anand Sirohi, Head Engineering, Natural Resources and Infrastructure, pointed out that there is a wide gap in addressing the infrastructure requirements and technology. Technology will better manage the complexities of infrastructure projects and also reduce risks. He advocated the use of BIM (Building Information Models) which is a three dimensional intelligent model for planning, designing, building and managing infrastructure.

Concluding the 'Conclave', Gajendra Haldea, Advisor to Deputy Chairman, Planning Commission, in his valedictory address said that many infrastructure projects are stalled because of excessive lobbying and conflicts of interests by the private sector.  He stressed on the need for a balanced rational approach in project allocation.

He opined that PPP (Public Private Partnership) framework in India is one of the best in the world as it is the largest recipient of private sector investment. Further added that renegotiation of contracts will be detrimental and counter productive for infrastructure development.