New Delhi: B. Prasada Rao was on Tuesday given a two-year extension as chairman and managing director of state-owned power equipment maker Bharat Heavy Electricals Ltd (Bhel).

Rao was given the extension on the day he was due to retire. Rao didn’t respond to calls; a senior government official, requesting anonymity, confirmed the development.

He gets an extension at a time when Bhel has been struggling as orders from project developers slow. Slowing growth, high borrowing costs and delays in securing regulatory approvals have hit many infrastructure projects in India, including power plants, hurting the ability of their promoters to repay creditors and vendors.

Bhel’s order inflows rose 43% to 31,528 crore in the year ended 31 March. In comparison, it had received orders worth 60,507 crore in 2010-11 and 22,096 crore in 2011-12. Bhel has a manufacturing capacity of 20,000MW per annum and orders worth 1.08 trillion on its books.

Rao’s extension was finalized by a panel comprising Pulok Chatterjee, principal secretary to Prime Minister Manmohan Singh, and cabinet secretary Ajit Seth.

Bhel had total dues outstanding of around 39,000 crore at the end of the quarter ended June, but around half of the amount will be paid to the firm only after the manufacturer meets specific milestones related to a project.

This development also comes in the backdrop of a report by a panel headed by S.K. Roongta, former head of Steel Authority of India Ltd, on reforms in central public sector enterprises.

The panel had recommended a fixed tenure of three years for chief executives of companies run by the central government in order to improve accountability, transparency and efficiency, as these firms, which employ 1.39 million people, struggle to compete with private sector rivals.

Mint reported on 9 July about the government moving a proposal for employees of a public sector enterprise to be made eligible to apply for the position of chairman and managing director even if they don’t have two years of service left.

India has around 260 companies controlled by the central government, which had invested a total of 7.3 trillion as of 31 March 2012, according to the department of public enterprises. This doesn’t include seven state-run insurance firms.

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