PMO Proposes Special Agencies To Speed Up Infra Projects

NEW DELHI: The Prime Ministers’ Office (PMO) has asked ministries to examine a proposal to set up special agencies that would acquire all the necessary licences and approvals for a project before bids are invited from investors. The proposed special purpose vehicle (SPV) under each ministry will ensure that a project being auctioned would be ready to be constructed as soon as the bid is awarded to the company.
The government is exploring setting up of such a mechanism to expedite clearances and help in speedy implementation of infrastructure projects. A meeting to discuss the working and mechanism for such SPVs was taken by Pulok Chatterji, principal secretary to the prime minister on May 10.
The proposed SPV will identify projects, firm up the contours of the project, secure all necessary clearances and assist the bidding process. “In a way, the SPV would be hand-holding project proposals, bringing them to a certain level of maturity and then pushing them into bidding pipeline. So would be the case with licences for exploring/extracting petroleum and natural gas or other mineral resources,” an internal note circulated by the PMO states.
Worried over delays in getting approvals, particularly in crucial infrastructure sectors like power, petroleum or coal, the PMO has directed these ministries to look into the specific cases and help in speeding clearances that have held up investments.
Citing the example of the road sector, where 7,000 km of road projects were bid out in the public-private partnership mode, the PMO has said that these projects were taken up easily as developers did not have to run from pillar to post to get approvals.
The projects that were bid out had been cleared and approved by all necessary agencies and the bidder could begin construction from day one. Sharing an example of how tedious and multi-layered the clearance process is, officials cited the 58 clearances a company requires to set up a power project inIndia, although this is a decontrolled sector, which does not require licences. A company has to seek these clearances from several agencies at the centre, state and panchayat level, cutting across various government departments.
A similar attempt was made when the government decided to invite bids for ultra-mega power projects (UMPP). The SPV, in this case, government-owned Power Finance Corporation, was to acquire all the licences and approvals and transfer the semi-ready project to a shell company from whom the winning bidder would take over. Although, this was the policy adopted, several companies developing UMPPs had a different story on the ground level, some even now waiting for environment or forest clearance to take up the project. The power ministry had then wanted to showcase these projects as one where investments were not held up because of government approval or clearances. The note said that there are several supply constraints that has slowed down the economic growth in the country to below 7%. “…There is an urgent need to boost the investment rate, which would translate into both higher output and better growth rate.” While issues relating to availability of funds for investments need to be tackled, there is also a need to address some of the concerns relating to the actual grounding of investments into concrete projects,” the note said.