Power projects on the blink despite clearances by government

In a major hurdle to the National Democratic Alliance government’s poll promise of 24×7 power for all, over 80 major projects – both generation and transmission – are facing delays. These projects have a stuck capital of Rs 3.75 lakh crore.

While land and fuel availability has been the prime reason for delay, issues relating to 20 generation projects have been resolved, according to officials. According to Project Management Group (PMG) data, the projects facing fuel issues have either got coal blocks or supply through the linkage system. The Centre and state-level clearances have also been achieved in land allocation.

But the delay in clearances has led to cost overruns, which could trigger another set of problems. “Restarting the delayed project cycle has as much to do with undoing the quagmire around clearances as recognition of cost overruns. Power projects stalled for over three to five years could now see cost overruns of up to one-and-a-half times. Moreover, these projects would find it onerous to justify viability in the context of erstwhile revenue commitments,” said Rupesh Agarwal, partner, BDO India LLP.

State-owned National Thermal Power Corporation’s (NTPC) Rs 15,000-crore north Karanapura project remained a non-starter for want of coal and land for almost a decade until last year when linkage was facilitated to it. The company was quick to award Rs 7,900-crore engineering, procurement and construction (EPC) contract for the project to Bharat Heavy Electricals Limited (BHEL). An NTPC executive said work was on full swing at the project site, but the delay has impaired their plans.

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