Almost one fourth of the PPP mode infrastructure projects stalled

Ahmedabad

Nearly one-fourth of all major infrastructure projects in the country in the public-private-partnership stand stalled due to unfavourable market conditions, lack of interest among promoters and for want of infusion of funds.

This was the concern expressed on the first day of the two-day conference on financing infrastructure jointly organized here by the Confederation of Indian Industries (CII) and the Gujarat government being attended by top executives of leading finance institutions.

Long gestation periods, high level of risk at the initial stages and non-availability of bridge loan were the main reasons why a large number of private infrastructure companies found it difficult to implement the projects they had been contracted following highly competitive bidding.

Gujarat government’s additional chief secretary, finance, J N Singh pointed out that investment in infrastructure projects were experiencing a shortfall of 30 per cent from the target resulting in stalling of projects. He said India’s investment on infrastructure was a little over 4 per cent of country’s Gross Domestic Product (GDP) compared to China’s over 8 per cent. “We need to invest at least 9 per cent of the GDP on infrastructure if we want to meet our planned target,” he added.

Mr. Singh said of the 583 private projects of constructing roads in the country, as many as 161 have been stalled. Similarly, in power generation the country was 25,000 MW short.

He pointed out the nearly 70 per cent of the road projects in the country are being executed by 30-40 private companies. “Because of their inability to repay loans to the banks, and inability to raise further capital from the market, they abandoned the projects unfinished,” he said adding, “PPP in road is virtually non-existent today and may not come in the next couple of years.”

He hoped that the Rs. 20,000 crore inflow in the National Investment and Infrastructure fund envisaged every year in the last budget would help in improving the situation to some extent.

Noting that India ranked as low as 85 in the World Economic Forum’s ranking in infrastructure, Gujarat Infrastructure Development Board chief executive officer Ajay Bhadoo said the country needed investment of at least 200 billion dollars every year to keep pace with its target.

He said floating of infrastructure bonds by the government and private players could be a way to raise funds as also utilizing pension and insurance funds. “As much as 70 per cent of the required funds for investment in infrastructure projects would have to come from public,” he added.

India Infrastructure Finance Company Limited’s Chief General Manager Sanjeev Ghai said the public sector company was incorporated in 2006 had so far invested in over 300 projects which include in roads and power generation, transmission and distribution projects.

He said the IIFCL, through an overseas subsidiary in the United Kingdom, facilitated investment by private companies in foreign exchange.

Managing Director of Export-Import Bank (EXIM) Yaduvendra Mathur, sounding a note of warning, said failure of markets in raising capital for infrastructure projects can be more disastrous than the failure of the government to meet its obligations.

He underlined the need for the government to take up a more pro-active role with regard to infrastructure projects. He suggested that Indian infrastructure companies should be allowed to take up projects abroad, especially in the neighbouring countries.

– DeshGujarat