BackRailways, water, highways to see least private investment
Railways, water, highways to see least private investment
PremiumRoadblocks: NH202 in Andhra Pradesh. The private sector is now expected to put in only 16% of total targeted investment in highways. Harikrishna Katragadda/Mint
New Delhi: Even as the Planning Commission, India’s apex planning body, says it wants to see greater private investment in infrastructure projects during the 12th Five-Year Plan, which gets under way in 2012, it has scaled down private investment targets in a number of sectors for the ongoing 11th Plan.
Railways, water and highways will now see the least private investment among all infrastructure sectors as a percentage of total investment until 2012, according to revised estimates released by the commission last week at a conference on challenges and opportunities in infrastructure development. Industry investment will also come down in sectors like airport development and sanitation.
The private sector is now expected to contribute only around 16% of the Rs2.8 trillion overall targeted investment in highways. Earlier, private money was expected to form 34% of total investment.
The Union government’s projected investment in the sector is also expectedly to decline slightly—from Rs1.07 trillion to Rs90,916 crore.
But in telecom, private industry is now expected to invest 82% of the projected overall investment of Rs3.45 trillion by 2012, up from 62%. In ports, the industry is likely to invest four-fifths of the total Rs40,647 crore, when it was earlier anticipated to put in 69%.
Private investment will also rise in electricity and oil and gas sectors, the commission estimates.
Investment in roads was affected as confusion over the method of execution led to delays in awarding of projects, and the National Highways Authority of India ended up awarding fewer projects, said a Planning Commission official who did not want to be named.
The government lost nearly two years in ironing out issues relating to the terms of the contracts of highway projects, among other things, said analysts. “In the first six to eight months, there was some confusion on how much (is) to be done through EPC (engineering, procurement and construction method), and how much through PPP (public-private partnership)," said Amrit Pandurangi, who heads the transport practice for consulting firm PricewaterhouseCoopers Llp. “There was not so much of a push for PPP. Then we lost almost 18 months (due to issues relating to bid documents)." But he expected the sector to do better in the next two-and-a-half years.
Pandurangi said sectors such as ports had seen steady growth and higher rates of private investment because the government did not constantly change the bid criteria.
In railways, long gestation periods led to projects not taking off at all, and ended up reducing private investment, the Planning Commission official quoted above said.
“PPP in railways is not likely to take off," said Siddhartha Das, infrastructure analyst with audit and consulting firm Ernst and Young Pvt. Ltd.
rahul.c@livemint.com
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