Nearly half of central projects worth over Rs 1,000-cr delayed

Cost overruns in 37% of the 183 projects at the end of FY12

The recently set up investment-tracking system of the Prime Minister’s Office (PMO) may get some insight into the delay in the central projects costing over Rs 1,000 crore from the data by the ministry of statistics and programme implementation (MoSPI).

About 47 per cent of the 183 central projects, costing over Rs 1,000 crore, were delayed by over five years, while 37 per cent reported cost overruns by over 200 per cent as on March 31, according to the data.

Over 21 per cent of the 183 projects had both time and cost overruns, the report said. The reasons ranged from delay in award of works, land acquisition issues, delay in forest clearance and utility shifting problems to poor performance of contractors.

LAGGARD SHOW Break-up of 86 delayed projects in all sectors as on March 2012
Delay by	No. of projects
1-12 months	34
13-24 months	17
25-60 months	24
60 months & above	11
Railways: Break-up of 11 delayed projects
Delay by	No. of projects
1-12 months	2
13-24 months	1
25-60 months	3
60 months & above	5
Power: Break-up of 32 delayed projects
Delay by	No. of projects
1-12 months	9
13-24 months	8
25-60 months	11
60 months & above	4
Source: Ministry of Statistics and Programme Implementation

 

With gross domestic product growth slowing down to a nine-year low of 6.5 per cent in 2011-12, the PMO had last month approved the setting up of an investment-tracking system to monitor and fast-track the implementation of projects with individual outlay of Rs 1,000 crore.

While the National Manufacturing Competitiveness Council will track all public-sector projects with an investment of Rs 1,000 crore and above, the Department of Financial Services will monitor such projects in the private sector.

Power projects topped the list in terms of time delays, with 32 of the total 59 power projects recording time overruns ranging from four months to seven years. As many as nine of the 59 projects showed additional delays in March compared to the previous month. For example, Transmission System of Vindhyachal-IV and Rihand-1, PGCIL has reported additional delay of seven months due to delay in land acquisition.

Of the 33 petroleum projects, 19 are delayed by 10 years and six projects reported additional delays in March. For example, Additional Development of D-1 Field, Oil and Natural Gas Corporation, has reported additional delay of six months in March due to slow fabrication and installation work by contractors.

The railways had 11 projects, of the total 33, running late by 16 years. Time overruns, apart from upsetting the plan targets, led to cost overrun on account of inflationary increase, exchange rate variation and higher interest and administrative cost.

The cost of these 183 projects has exceeded by Rs 93 lakh crore over the original cost estimate of Rs 5.86 lakh crore, which stood at Rs 6.8 lakh crore as on March 31, 2012, with the maximum cost overruns seen in the railways.

Of the 33 railways projects, 27 had cost overruns, with cost exceeding beyond 218 per cent in some cases. These 27 projects were initially estimated to cost Rs 21,249 crore, which went up to Rs 67,633 crore.

For example, Khurda Road-Bolangir line in Odisha got approval in April 1994, with an original cost of Rs 355 crore. The project is now anticipated to cost Rs 1,100 crore, of which Rs 206 crore has been spent so far. The Udhampur-Srinagar-Baramulla line was approved in March 1995 with an original cost of Rs 2,500 crore, which is now estimated at Rs 20,000 crore. The project is anticipated to be completed by 2017. The delay was due to geological factors, land acquisition and forest clearance problems among others.

Power projects, however, were not too high on cost overruns, with just 14 of the 59 projects having higher cost than the original estimates at 35.2 per cent.

Roads and highway projects seemed well on track, with just one project of the 21 reporting a cost overrun at 106 per cent of the original cost and just five reporting a time overrun ranging from 7-16 months.

Projects involving more than one state (multi-state projects) had 16 of the total 36 projects being delayed by up to six years in a few cases. This pointed towards the hurdle of getting multi-layer clearances from different states. Maharashtra had a whopping 12 of the 23 projects with delays by as much as four years.

Punjab showed cost overruns of 344 per cent, in one of its three ongoing projects.

Another issue that makes monitoring projects complex is the lack of date of commissioning. Of the 183 projects, 18 projects did not have a fixed date of commissioning, and five projects were sanctioned without any commissioning schedule. Most of these are railways’ projects.

Of the total 33 railways’ projects, 10 did not have a fixed date of commissioning, while four were sanctioned without a commissioning date. “There are a lot of unviable projects that fritter the resources from commercially viable projects,” said an expert. “The money is spread so thinly that the railways itself does not have an idea when they can be commissioned.”

The ministry monitors the projects through the mechanism of online computerised monitoring system.