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Govt gives a major push to infrastructure development

A Tariff Regulatory Commission to determine power tariff and an amendment of the Urban Land Ceiling Act are among the initiatives planned to boost investment in infrastructure, Prime Minister I K Gujral announced on Tuesday.

Addressing a meeting of industrialists on infrastructure, he said the surface transport ministry would soon issue a policy on the corporatisation of major ports.

The prime minister said the necessary legislation for setting up the TRC for central and state power projects was expected to be introduced in the monsoon session of Parliament beginning on Wednesday.

Gujral also assured industry that the Cabinet will take up a detailed renovation and modernisation proposal of 70 power plants within 10 days to meet India's immediate power needs.

He said he has already asked the urban development ministry to invite public opinion on the proposed amendments of the ULCA.

Finance Minister Palaniappan Chidambaram said funds would not be a constraint for new power projects. He said his offer was an open-ended one and the only limit would be the absorption capacity of the sector.

Chidambaram said an amount of Rs 9 billion had been made available for power projects during 1997-98, including Rs 2 billion for the Power Finance Corporation.

All central clearance necessary for projects for which MoUs had been signed will be given before the year-end. The power ministry will also clear certain projects to create additional generation capacity of 3,000 to 5,000 mw.

It was also announced that the railway ministry will hold a meeting next week with independent power producers who have signed MoUs with the Haryana government for delivery of coal to the Panipat project.

It was decided that the petroleum ministry would quickly work out a policy for enabling companies importing liquid fuel to utilise the excess capacity of the oil companies. It was also agreed that the oil companies would look at the feasibility of using private ports for unloading of liquid fuel and also project their requirements to private investors in new port projects.

The finance minister agreed that public sector undertakings like the National Thermal Power Corporation should be allowed to expand their equity so that they could borrow from the domestic and foreign markets. He said he was making an openhanded offer that funds would be available under revenue expenditure and capital expenditure for new power projects.

A consortium of public sector companies has been formed to develop facilities on the east and west coast for handling liquefied natural gas. The government has also agreed that in the event of any party unable to make use of the natural gas allocations, these would be allocated on fall back basis to other users.

Regarding environment clearance for projects, the surface transport ministry has been authorised to process and clear applications regarding such projects, including those in the coastal regulating zones. This would be in addition to the national appellate authority set up in April.

The meeting was told that about 30 projects were likely to be cleared by the surface transport ministry, which had been given powers to give environmental clearance in 15 days.

Some industrialists suggested that documents relating to build, operate and transfer projects for roads should be made bankable. At present, banks did not accept realisation of the project costs through tolls as adequate. Moreover, no long-term debt instrument facilities were available now, they said.

Following a meeting last week between the Cabinet secretary and financial institutions, it was decided to set up separate groups for preparing reports on financing infrastructure development projects in ports and roads.

Conceding that the concerns expressed by the private infrastructure industrialists were genuine, the prime minister said the government had already announced policies to encourage private sector investment in the road sector. He suggested that road development and township development should be taken up as a single activity.

He also directed the surface transport ministry to coordinate with the state governments once an inter-state road project was taken up. This would help in resolving problems at a central point.

Highway authorities will have 30 per cent equity participation with the private players in the road sector projects, Gujral said. The government will also subsidise up to 40 per cent of road construction costs.

The meeting was convened to find out the reasons for the lack of investment by the private sector in infrastructure areas despite several incentives offered by the government.

It was noted at the meeting that none of the 43 power projects, identified for renovation and modernisation in the Eighth Plan really underwent the exercise. It was in this light that the prime minister urged the Cabinet to take up the proposals.

The ministry of energy will within a fortnight formulate a policy for financing power projects.

Gujral assured the industrialists that up to 12,000 mw naphtha fuel linkages agreements will be honoured. Besides, all private jetties willing to import liquefied natural gas will be allowed.

UNI