New Delhi, July 20: The Prime Minister’s Office has asked the environment ministry to set fixed timelines to grant clearances to new power plants and captive coal mines. Around 3,500 projects are stuck over delays in clearances.
At a meeting held last week, the PMO also asked the ministries to get together and resolve coal supplies to power plants having a total capacity of 18,160 megawatts, which have either been already commissioned or will be by March 2015.
Besides, the PMO wants Coal India Ltd (CIL) to stick to its production target for the current financial year to prevent a supply crunch for power plants.
Officials said the power sector needed 445.4 million tonnes (mt) in the current fiscal and 524mt in 2015-16. CIL has committed to supply 408mt; it can add 32mt by diverting from e-auctions.
The PMO wants CIL to increase its output by at least 10 per cent next year so that the gap is bridged and imports are low.
Moreover, the government wants to delink environmental clearances for power projects from approvals for captive mines allotted to them.
Also, rules should be relaxed so that the chief secretaries of states, which have less than 50 per cent but more than 33 per cent forest cover, can give approvals to industries, stating that non-forest land is not available for compensatory afforestation.
A section within the government also wants a rollback of the rule that was retrospectively imposed under which the minimum flow in a river with hydel project was increased to 30 per cent from 10 per cent.
The power ministry wants all expansion proposals within existing project boundaries and expansions up to 50 per cent of the capacity outside the project boundaries to be exempted from public hearing.
Another proposal is to empower state governments to approve projects involving forest clearances up to 40 hectares. The regional committee of the Union environment ministry can be empowered to approve proposals involving forest land of 40-100 hectares, while forest land measuring 100-250 hectares may be vetted by the regional office of the ministry in consultation with forest advisory committee. Only projects involving forest land of more than 250 hectares should be taken up at the central level.
The power ministry has impressed upon the Prime Minister in a presentation made earlier, which was followed up later by internal meetings, that there is a need to fast track the change of ownership of stranded projects.
While many power projects were started with bank loans, work on such projects and the repayment of debt got stuck as either clearances took a long time or fuel supply could not be arranged.
The government wants to expedite the change of ownership, either through banking consortia who would lend money or through stressed asset fire sales by the current owners.
The ministry in a note said “allowing change of ownership of stranded assets (including land, fuel supply and power purchase agreements) with due process (that is, state cabinet approvals)” should be the proposed solution to the issue of “Rs 1 trillion of doubtful debts in the power sector”.
The presentation to the Prime Minister showed that 35 gigawatts of electricity capacity was “stranded” because of shortage of fuel.
A report released earlier this year by Fitch Group’s India Ratings & Research has cautioned that power project investments in the pipeline worth around Rs 1,75,000 crore can turn into non-performing assets unless coal and gas fuel supply glitches are resolved.