India to build five ultra mega power projects, economists sceptic

Finance Minister Arun Jaitley Saturday said his government plans to build five new ultra mega power projects totalling 20,000 MW which will unlock investment of up to Rs.1 lakh crore. Economists, however, seemed sceptic.

The step has been planned with the aim of electrification of the remaining 20,000 villages in the country by 2020.

"The government proposes to set up five new ultra mega power projects, each of 4,000 MWs in the plug-and-play mode.

"All clearances and linkages will be in place before the project is awarded by a transparent auction system. This should unlock investments to the extent of Rs.1 lakh crore," Jaitley told the Lok Sabha while presenting the budget for 2015-16.

He said his government will also consider similar plug-and-play projects in other infrastructure projects such as roads, ports, railway lines, airports and other sectors.

The minister said the second unit of the Kudankulam Nuclear Power Plant will be commissioned in 2015-16.

Even as the government was moving towards enhancing the national power capacity, economists seemed sceptic.

"Prima facie, we have not seen any concrete measures in the budget for renewable energy. Unlike rail and roads, tax free bonds have not been specifically proposed for renewable energy," said Anish De from market researcher firm KPMG.

He said the general emphasis on renewable energy and re-stating of the MNRE target to 175 GW by 2022 comprising 100 GW of solar, 60 GW of wind and 15 GW of other technologies was not adequate to make capacity creation happen in reality.

Economist Abhirup Sarkar also echoed a similar feeling.

"There hasn't been considerable progress on the public-private partnership model. There are concerns from private investors in infrastructural projects as the price chargeable to the consumer is regulated by the authorities," Sarkar, a professor of the Indian Statistical Institute, told IANS.

He said the gestation period in the power sector may go up to 20 years and investors might not be keen about making any large investments in the segment.

"In a PPP model, the only government equity is land and the rest is from the investor or developer. With such high gestation period and a controlled situation from the government, I don't think investors will be keen," he said.