Government Set To Clear 23 Power Projects

The government, in its quest to improve the business sentiment in the country, is set to put 23 mega power projects on a fast-track clearance process. The infrastructure sector has seen a host of negative events in the recent past - cancellation of road contracts, lower order inflow etc. Power is the worst hit sector due to the issues related to fuel and tariffs.

The 23 projects together make for a capacity of 23,000 MW. Besides, the government is also set to clear 1600 KM of transmission lines.

Earlier in April 2013, the Cabinet Committee on Investments (CCI) had cleared total investments worth Rs 58,000 crore that included Rs 33,000 of investments in 13 power projects. It had also cleared 25 oil and gas exploration and production blocks.

While the government now envisages faster clearance of power projects, power remains the worst-hit sector. The companies in this sector are inconsistent in their performance and profitability has been impacted badly. The new gas pricing norms may hit the power companies further if the government does not clear the air surrounding this. Also, the case pertaining to Adani Power and Tata Power is still pending with the CERC as a final notification is yet to be received. The sourcing of fuel for these power projects is another big question.

Though the faster clearance may sound good to project developers, the recent history of companies in the power sector should be considered. Faster clearance may not be the solution for the problems in the sector. Rather, the optimal performance of the current projects is something that the government must work on.