PMO, UMPPs and PPPs Print
Thursday, 21 June 2012 00:00
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Delivering on its infra-plan needs an assertive PMO


With 65 clearances required, between the central and the state governments, for setting up a thermal power project, the huge delays in executing infrastructure projects is hardly surprising. The clearances, Feedback Infrastructure chairman Vinayak Chatterjee says, include even approvals under the explosives Act, for the weigh bridges used, and clearances for transporting heavy machinery on roads and bridges. In the case of oil and gas fields, today’s front page story (Govt to clear govt hurdles: PMO) points out, the clearances are even more bizarre. In the case of Cairn India’s KG Basin block, it couldn’t get clearances since the area was part of the navy’s exercise zone—in which case, it’s logical to ask, why was it even bid out by the government?

In this context, the PMO’s plan to kick-start infrastructure investment is a welcome one. Under the plan which, if it works, is akin to the game-changing 1991 reforms in terms of the boost it will give to infrastructure projects, all clearances will be got by the government before a project is bid out. So, in the case of the thermal power plant, a government-owned SPV will get all 65 clearances and then bid out the project to a private firm whose job will then only be to build the plant, not run around getting permissions for it. That’s not just the theory since, in the case of the ultra-mega power projects (UMPPs), the government got many clearances (the official word is all clearances were got) before the project was bid out—this then allowed the UMPPs to get built up reasonably fast. While the PMO appears confident of extending the UMPP-plan to other PPP projects, how realistic is this?

The fact that there is a proven executed model makes it more likely, but it is by no means a done deal since it requires a very assertive PMO—the PMO has been more proactive than in the past in the case of the power firms who weren’t getting coal linkages but, as Coal India chief S Narsing Rao’s interview in today’s FE shows, the promises of getting power firms more coal are still far from being realised. Getting pre-clearances includes, for instance, acquiring land in most instances. Since this is something allies like Mamata Banerjee have opposed and even the Parliamentary Standing Committee on Rural Development has opposed government helping PPP projects acquire land, it’s an open question if the PMO would be able to push this. Similarly, getting state government bodies to pre-clear projects may impinge on state autonomy—while this is easier with ministries in the central government, the PMO has been reluctant to push even line ministries too hard. In this case more than others, the strength of the idea lies in how it is implemented.