Mixed Experiences: Recently completed projects

Recently completed projects

The past two years have seen the completion of some long-delayed big-ticket infrastructure projects. India Infrastructure Research tracked 111 infrastructure projects worth at least Rs 4 trillion that were commissioned during the period between January 2014 and January 2016. The power sector alone accounted for around 87 per cent of the total investments in completed projects, followed by roads at 5 per cent, and the water and sewerage sector at 4 per cent.

In terms of the mode of implementation, the private sector continues to play a dominant role in infrastructure project execution, except in the water and sewerage and railway sectors. Around 25 projects worth Rs 450 billion were undertaken on a public-private partnership (PPP) basis across the power, road, urban transport, port and airport sectors. Moreover, Rs 1.6 trillion worth of projects in the power sector were private. The airport sector also saw the commissioning of India’s first private greenfield airport at Durgapur.

The experience in completed projects has been mixed. While a few projects were completed on schedule, some were delayed. Issues in land acquisition and delays in obtaining clearances were some of the key obstacles in project execution.

cover (Page 1)

In terms of investment, Reliance Power’s Sasan ultra mega power project (UMPP), with a capacity of 3,960 MW, was the biggest project to be completed. The power plant was commissioned in March 2015, almost a year ahead of the scheduled commissioning as per the power purchase agreement (PPA). Located about 250 km from Varanasi airport in Singrauli district of Madhya Pradesh, the Rs 270 billion coal mine-cum-power project is credited to be the largest project located at a single location in the world. The project comprises six supercritical units of 660 MW each, with the last one being commissioned in March 2015, against the scheduled commissioning of June 2016. The UMPP had achieved financial closure in April 2009, at an estimated cost of Rs 194 billion, in a debt-equity ratio of 70:30, in the largest ever debt financing deal.

The biggest port project to be completed on schedule was the Rs 10 billion dry bulk terminal at Tuna Tekra, Kandla, in February 2015. Adani Kandla Bulk Terminal Private Limited had signed the concession agreement with the Kandla Port Trust for the project in July 2012.

cover (Page 1)

However, a significant number of projects failed to keep to their original schedules. The biggest water project to be completed, the Rs 37 billion Godavari Drinking Water Supply Project (Phase I) in Telangana was another project that faced significant delays. The project, comprising a capacity addition of 735 million litres per day (mld), was commissioned in November 2015, against the originally scheduled deadline of 2011. The project missed several deadlines on account of financial and land acquisition issues. The project failed to secure funds under the Jawaharlal Nehru National Urban Renewal Mission and the Greater Hyderabad Municipal Corporation also refused to allocate any funds for the project. Further, the project was mired in land acquisition issues for almost four years.

Another major project to commence operations after significant delays was Mumbai Metro Line 1 (Versova-Andheri-Ghatkopar corridor). Eight years after it was awarded, commercial operations began on Line 1 in June 2014. Line 1 of the metro was initially scheduled for completion by 2011, but missed several deadlines. The cost of the project, earlier estimated to be Rs 23.56 billion, escalated to over Rs 40 billion due to project delays and issues relating to land acquisition, right of way, delays in grant of approvals and clearances, etc.

The first private greenfield airport at Durgapur involving an investment of Rs 6 billion commenced operations in May 2015. The project encountered delays in securing environmental clearances, mainly because the land on which the project was to be located was believed to have proven coal reserves. Though the project was declared ready for commercial operations in April 2013, delays on the part of the state electricity distribution utility in removing high tension transmission lines running across the airstrip delayed the flight operations. On April 27, 2015, the Director ate General of Civil Aviation granted the aerodrome licence. The airport commenced commercial operations on May 18, 2015 with an Air India flight from Durgapur to Kolkata.

The Rs 56 billion Koldam hydroelectric project (HEP), which started construction as early as 2003, was finally commissioned in 2015. Located on the Satluj river in Bilaspur district of Himachal Pradesh, the 800 MW HEP marks a significant step forward in NTPC Limited’s plan to diversify its fuel mix with increased focus on green power. The project faced several challenges during its construction due to geological surprises and environmental issues, which led to a delay of almost five years in execution.