Not all is well for central infrastructure projects, as 75 per cent of those under implementation are either delayed or do not have a definitive timeline, according to CARE Ratings research. In addition, the cost overrun on some is expected to cost the country another Rs 2.18 trillion.
The total original combined cost of the 1,304 projects under implementation stands at Rs 16.2 trillion. While not all of the delayed projects are facing legacy issues, a break-up of these projects was not shared. However, the report stated that the number of projects under implementation has grown from 727 in April 2014 to 1,304 in February 2018.
“Delayed or projects without definitive timelines of completion make up for almost 75 per cent of the total projects being implemented -- 262 projects are delayed and 721 projects have no definitive timeline for implementation," CARE said in its report. The report added that the 721 projects without a definitive timeline are unmonitored and are yet to report timelines or status of completion.
The report is based on 1,304 Central Sector Infrastructure projects, each of which costs Rs 1.50 billion and above.
Land acquisition delays, environment clearances, lack of linkages, delay in detailed engineering, change in scope, contract issues, tender delays and law and order issues were some of the reason for time overrun.
Of the 1,304 projects, 343 projects have a cost overrun and around 100 are showing both cost overruns and delay, according to the report. The expected rise in costs involved is pegged at Rs 2.18 trillion. “The original cost of implementation for 1,304 projects was pegged at Rs 16.2 trillion. These projects, after the latest evaluation, are expected to cost Rs 18.38 trillion, of which Rs 6.36 trillion or 34.6 per cent of the original cost has already been incurred,” CARE said.
Under-estimation of cost, escalation in environment safeguards, land issues, delays, change in project scope and monopolistic pricing by vendors were some of the reasons for cost escalation.
Specific for the last financial year, of the expected 343 projects to be completed, only 82 with a cumulative expenditure of Rs 1.27 trillion have been reported as completed as of February 2018 end.
Sector-wise, the railways has the largest proportion of delayed projects. “Two-hundred and three projects or 60 per cent of the 334 projects in the sector are facing cost overruns. In terms of time-overrun, 33 projects are delayed with regards to the revised schedule,” the report said.
The situation continues to look grim for the power sector as well, with 54 per cent of projects under implementation facing a time overrun. “Forty-nine projects or 54 per cent of the projects under implementation are facing time overrun with regards to the latest schedule. Forty-eight projects out of 121 being implemented are facing cost overrun,” CARE said.