More than half of central projects face delays; Rs 1.40 lakh crore overall cost escalation

The new railway and road ministers will have their hands full, as theirs are the worst-hit sectors

As the government is trying hard to push stalled projects across various sectors, the backlog of work in central sectors is staggering. Almost half the overall projects costing at least Rs 150 crore are facing a time lag as on March 31. Of 558 projects, 272 were running late when FY13 came to an end, official data showed. As many as 59 of these projects reported delays just in March 2013 (additional delays compared to figures shown in February 2013).

In fact, mega projects costing Rs 1,000 crore or above also saw additional delays in 25 projects, data released by the Ministry of Statistics and Programme Implementation (MoSPI) revealed. The Cabinet Committee on Investments was set up to expedite clearances for mega projects in both government and private enterprises.

According to MoSPI, the reasons for delays are hurdles in land acquisition, forest clearance, equipment erection, supply of material and change in scope of work, among others. (STALLED & STRETCHED)

The worst-hit sector among all is roads and highways, in which almost 60 per cent of projects were delayed. Out of 149 projects in this sector, 89 are delayed. Of this, 17 were additionally delayed, of which two were mega projects.

In the petroleum sector, out of 67 projects, 36 were delayed. This means almost half the projects are backlogs. Of this, 10 projects were additionally delayed. Further, more than half of 101 projects in the power sector faced time overrun. In power sector, the highest number of mega projects, nine, were additionally delayed in March.

A senior official said there is a tendency to take too many projects for various reasons, including political, and then there are insufficient funds to spend. He added if there are some projects that are not economically viable, the Centre should drop these.

The cost overrun in overall central sector projects costing at least Rs 150 crore has reached whopping Rs 1.40 lakh crore as on March 2013 at Rs 9.29 lakh crore. This is 17.7 per cent more than the original cost of Rs 7.89 lakh crore. In March 2012, the cost overrun was 1.19 lakh crore, 16.5 per cent of the original cost in that month.

Interestingly, some of the data still remained under-reported, which means the cost and time overrun could head further up. "Project agencies are not reporting revised cost estimates and commissioning schedules for many projects, which suggest time/cost overrun figures are under-reported," said MoSPI.

All the 14 sectors, except fertilisers and telecom, witnessed a cost escalation as at the end of 2012-13. A major portion of this overrun is due to the railways, which is the most affected sector, accounting for 62 per cent of the overall cost escalation. The cost overrun in its 124 projects shot up 20 per cent to a whopping Rs 87,170 crore in March this year, compared to Rs 69,505 in March 2012. The originally sanctioned Rs 60,590 crore went up to Rs 147,761 crore now and accounts for 143 per cent cost overrun.

Till March this year, the railways ministry had already crossed its envisaged estimate to spend Rs 62,924 crore, which is 42.6 per cent of the revised cost estimates.

In such a case, a daunting task lies ahead for the newly inducted railway minister Mallikarjun Kharge and road and highway minister Oscar Fernandes, as these two sectors are the worst-hit. Yesterday, Fernandes had told Business Standard that land acquisition and environment clearances are holding up road projects and the ministry would "try to get it cleared".

After railways, major cost overrun of more than 100 per cent was seen in water resources where Rs 645 crore is added to its original cost. In petrochemicals, its sole central project in this segment - The Assam Gas Cracker Project, saw a cost elevation of 63 per cent, touching Rs 8,920 crore from its previous sanctioned Rs 5,460 crore.

In atomic energy, the cost was overrun by 15 percent of the original cost of Rs 40,442 crore and now reaching Rs 46,726 crore, implying a cost overrun of Rs 6,284 crore till March this year.

If one goes by the time overrun, railways is again the worst-affected with delays of up to 235 months. This means that a project which should have been commissioned almost two decades ago, is yet to be commissioned.

The huge backlog of projects could be worrisome for other sectors as well, where the time taken to commission is shooting up.

The time overrun in the petrochemicals sector has gone as high as 10 years in certain projects, followed by road transport and highways with nine years delay and the power sector around eight years.