Pvt entry into nuclear power, coal mining

Survey says finance is only one of the problems holding back PPPs in infra.

The Economic Survey has made a pitch for greater private participation in the infrastructure sector,including the sensitive sectors of nuclear power generation and coal mining. It has called for allowing up to 49 per cent foreign direct investment in nuclear power and amending the Atomic Energy Act to allow private companies in the sector.

In coal, its prescription includes permitting private entry into mining under a well regulated and competitive regime, to reverse the substitution of domestic coal by imported oil and coal. It says : “As long as the coal sector remains a public sector monopoly (the only remaining nationalised sector), it could remain a bottleneck for accelerated development of the power sector.”
 

MIXED BAG Public Private Partnership projects
	Total number

Value of
contracts
(Rs crore) Airports620,041 Ports3843,053 Railways31,007 Roads18747,755 Urban
development356,218 Energy3117,802 Total3001,35,876

The survey emphasised that timely completion of infrastructure projects was critical to ensuring their financial viability and for reaping the economic benefits.

Pointing that a third of Rs 20,01,776-crore funding required for infrastructure development during the eleventh plan period is expected to be met from the private sector, the survey identifies six constraints in the public private partnership approach. These include policy and regulatory gaps, inadequate availability of finance for 10-year-plus tenure, inadequate capacity of officials to handle PPP projects, lack of manpower in the private sector, lack of enough bankable projects and lack of acceptance of PPP projects among stakeholders.

The survey said availability of finance was only a necessary condition for investment. “Once a project is financially closed, it is faced with issues like disputes in land acquisition, rehabilitation, contractual issues, shortage of raw materials, capital goods and fuel, environmental disputes and inadequate availability of skilled manpower,” said the survey. Another important point highlighted was the lack of generation of timely information, primarily due to multiplicity of implementing agencies.

As the economy slumped in activity, consequent to the commodity price and oil price shocks and then the global economic crisis, most infrastructure sectors witnessed subdued growth during 2008-09. Ports and air cargo slowed considerably, reflecting the sluggishness in import and export growth in the second half of 2008-09.

Rail freight growth slowed but to a lesser degree, due to demand from coal sector. It was only the telecom sector that recorded an exceptional growth, of about 45 per cent in tele-connectivity.

Within infrastructure, the survey said the increasing pressure of population on urban infrastructure makes it necessary to improve urban civic services. In the urban transport sector, the survey notes the ability to understand the problems is yet to mature and a scheme for capacity building at local, central and state level has been proposed.