With electricity generation assuming critical role for any kind of sustained economic growth revival that the government is looking for, the authorities will set the ball rolling on 28 stalled mega power projects involving investment of whopping Rs 1,72,000 crore.These projects are slated to come up for discussion in the Cabinet Committee on Investments (CCI) on Monday and likely to be cleared.
Though the real impact of these decisions on growth come only after a few years, it would help revive the sentiments and allay fear over the government's lackadaisical approach towards big projects.
The projects include 18 power plants worth around Rs 82,000 crore which are stuck owing to lack of Fuel Supply Agreements (FSAs). The CCI is likely to ask for an undertaking from the coal ministry that these FSAs will be signed by 31 August, according to officials.
"The coal ministry has shown its willingness regarding the same," an official said. The remaining 10 power projects, in which investments worth Rs 92,000 crore has been struck for various reasons including environment
clearance, are also likely to be will approved for expeditious clearance.
Through a Presidential Directive issued to Coal India Ltd (CIL) last month, the government had asked the state-owned miner to sign FSAs for 78,000 Mw capacity projects which are to be commissioned by March 2015.
CIL has agreed signing of FSAs for a capacity of 78,000 Mw instead of earlier capacity of 60,678 MW. This includes around 16,000 Mw projects which have not signed Power Purchase Agreements (PPAs) with procurers. CIL
will sign FSA with these stations but actual supply will begin only after PPAs are signed.
CIL has already signed agreements with 92 power stations with a cumulative capacity of 42,000 Mw. As on 20 July, new FSAs were to be signed to cover the remaining 18-20 projects with a capacity of 38,000 Mw. This includes 27,000 Mw capacity awaiting long-term linkage and 11,000 Mw relates to tapering linkage, short-term coal supply meant for consumers with delayed production of captive coal mines.
The CCI meeting comes a few days after Finance Minister P Chidambaram assured representatives of foreign institutions and banks that the government of expediting clearances of large projects.
After allaying investors concerns on quantitative easing, current account deficit, fiscal deficit, the government is laying focus on fast tracking infrastructure projects. Financial services secretary Rajiv Takru had said nine projects are coming for final decision before the cabinet within the next week.
Power has been often cited as one of the major hindrances in picking up economic growth in India. In July, India's manufacturing purchasing managers' index (PMI) was down to 50.1 points, close to a contraction
point, from 50.3 points in June. One of the reasons cited for low manufacturing was outage.
The markit economics, a financial information firm which compiles the PMI data, said in a statement that backlogs of work were accumulated further in July in line with scarce raw materials and power cuts. In the previous months as well, markit economics statements cited outages as one of the major factors for increasing backlogs.
In May, when the PMI fell to a 50-month low mark of 50.1 points from an already 17-month low of 51 points in the previous month, the statement said,"power outages hampered output and led to a jump in backlogs of work
as businesses struggled to meet orders."
In the month of June, electricity generation remained flat, growing by zero% in the Index of Industrial Production. In the first quarter of the current financial year, electricity generation rose 3.5% against 6.4% in the corresponding period of 2012-13.
In XIth plan (2007-08 to 2011-12), the government had targeted to add power capacity of 78,700 mw from all sources. However, the addition was just 54,964 mw, almost 70% of the target. The target for the XIIth plan (2012-13 to 2016-17) is to add around 80,000 mw of power capacity.
Source- Business standard