Power Projects on the Fast Track, Moving Very Slowly
In an effort to short-circuit bureaucratic delays slowing down infrastructure development in the power industry in India, the Indian government had sanctioned eight major power projects under a "fast track" policy. Not one of these projects has progressed enough to generate a single watt of electricity so far...
Realizing that India faces a fatal electricity crisis in the very near future if privatization of the power sector were to move at the usual slow pace that is the norm for large projects, the previous government took major steps to expedite the operations for this sector.
Eight multi-million dollar "fast track" power projects were given negotiated deals, rather than put them up for tender, to speed up the process. But thanks to bureaucratic delays and politics, not a single megawatt of electricity has been generated by any of these projects.
In most cases the projects are still on paper awaiting approvals and clearances from myriad state and central government departments.
The only project showing any sign of progress is the 2.5 billion dollar Enron-led Dabhol power project. In August 1995, things looked bleak for Enron when the project was canceled when a right-wing government came to power in the state of Maharashtra. Later the deal was renegotiated with minimal changes.
But the outlook is far from rosy. The fast-track projects were meant to bridge India's current 20 percent electricity shortage. The Planning Commission estimates, rather optimistically, that 48,000 megawatts can be generated by the end of the Eighth Plan. In fact, actual generation is unlikely to exceed 18,000 MW, short by 30,000 MW. Against the target of 1234.25 MW set for April-December 1995-1996, only 510.25 MW has been added so far.
Between 1980 and 1993 the GDP increased by one percent, while the elasticity of electricity generation and consumption increased by 1.65 and 1.61 percent, respectively. The elasticity has declined from over 3 percent in the first and second five-year plans to nearly 1.5 percent in the Seventh Plan.
This rather dark scenario in one of the major problems the new United Front government must tackle very quickly and effectively, if it is to have any success in enhancing India's economic prospects as a sucessful industrial power in Asia and globally. All eyes are on the coalition government, both within Indian industry and among foreign investors.