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Experts suggest ways to improve India's infrastructure

Some of the richest states in the country today face bankruptcy and are unable to focus on other pressing development needs due to their indulgence in the power sector, said World Bank's country director, Edward Lim.

Without naming the states, Lim said there is a massive drain of wealth over the power sector in some of the country's prosperous regions. ''The development expenditures of these states are declining despite the reforms started in 1991,'' Lim said.

There is a need for drastic restructuring in the power sector. Many of the state utilities like the National Thermal Power Corporation lose their efficiency as their energies are wasted through collecting dues from state electricity boards or SEBs.

Focus initially was on generation side which itself was very slow. Lim was referring to the privatisation process that started with generation rather than distribution. However, he complemented the move and said India has been doing well. The world over, privatisation process began with disitribution, Lim pointed out.

''Revenue comes from distribution but in India it is riddled with inefficiency and power thefts.''

Changes in mega power policy likely

In a bid to hasten reforms in the power sector, the government today outlined a slew of drastic measures including changes in the mega power policy.

The government had earlier announced plans to develop a megapower policy using the Power Trading Corporation. Of the proposed methods of supporting the corporation, only central plan allocations would provide fresh credit enhancement.

The extent to which these allocations will be able to support substantial amounts of capacity is still unclear. Keeping this in mind, Power Secretary V K Pandit today hinted at reforms in the mega power policy which was getting flak from private producers after it was introduced.

Further support from the central government, including support through a company such as the PTC, would recquire states that benefitted to undertake major power sector reforms. These would include establishing a regulatory agency with sufficient powers and introducing private management and ownership into the sector, especially in distribution.

Conceding a policy error , Pandit said, ''We should have started privatisation from distribution and not generation end as was the case''. The ministry is pushing for privatisation in distribution in Uttar Pradesh and Delhi.

He was speaking at a conference on "Private Sector Participation in Indian Infrastructure", organised by India's Infrastructure Development Finance Corporation and World Bank. Pandit said, ''Some of the transmission lines could be hived out to create more transmission stations.''

He said the railways, mining and coal companies have expressed their desire to buy power from bulk producers instead of the usual practice from SEBs. ''A decision will be taken in this matter soon and the main generator NTPC would be happy to do it.''

Pandit said trading or pooling of power will soon take place finally setting up of a national grid by 2012. The east has a surplus of 3000 mega-watt but only a fraction of it goes out.

The cyclone in Orissa has thrown up a major problem where transmission in rural and urban areas was clubbed together which resulted in a complete blackout. ''The central government, the state government and the private distributors all have to come together now to restore the massive power break down,'' Pandit said.

'Govt, pvt sector should provide infrastructure'

Minister of State for Urban Affairs Bandaru Dattratreya today called for fresh public and private partnership to provide world class infrastructure in India. He said it was a challenge to provide safe drinking water and basic sanitation facilities at prices the common man can afford.

''This is a challenging task and this has to be done,'' Dattratreya said at the conference.

Planning Commission member Montek Singh Ahluwalia, World Bank vice-president (South Asia) Mieko Nishimzu, IDFC chairman Deepak Parekh also spoke.

Dattatreya said in all the sectors -- power, roads and urban services --- states take most of the key decisions. The states have to be involved and engaged in the process. It is now clear that the private sector can play a substantial role in meeting infrastructure needs at the state level, the minister said.

Private participation is needed not only to bring investments into areas for which the government does not have sufficient resources but to improve operational and investment efficiency, he added.

Private investments in power, infrastructure remain low

Ahluwalia said India has not been able to achieve the investment volumes that it had expected in the private sector. In the power sector, 4,760 MW capacity has been installed and 4,500 MW of capacity is under consideration. This is much less than the expected figure.

In the areas of telecommunications, investments worth Rs 42 billion have flowed in while the total volume expected was Rs 129 billion in the private sector.

In the case of ports, however, investment is more than expected. The target of 76 million tonnes cargo has been exceeded in the Ninth Plan. The original push for the private sector was not an ideal one as private capital funds were enough just to fill public sector shortfall of funds. Private sector investment is also needed to introduce competition to improve the quality of infrastructure services. He said competition was necessary for transpraency in investments.

Ahluwalia said it is important to have independent regulatory authorities to attract private funds.

Good governance, polices, institutions needed: WB official

Nsihmizu said private participation demands good goverance, policies and institutions. It also demands such behaviour from private corporations which goes beyond a mere pursuit of profits.

She said it demands prudent fiscal policy and responsible fiscal management that are sustained credibly over time. It also requires governments to focus on lowering business risks.

She said private sector participation in infrastrture can be a powerful instrument for development startegies.

Infrastructure boom imminent: Deepak Parekh

Deepak Parekh said the much-awaited boom in infrastructure is imminent. He said there were enormous opportunities for both foreign and domestic investors.

''But these reforms are still like scattered pices of a national jigsaw puzzle,'' Parekh said.

The earlier assessment of private investors of the potential for remunerative investment in the sector has weaned rapidly, he said.

Goa sets up Infrastructure Development Corporation

The Goa government has decided to set up an Infrastructure Development Corporation with Chief Minister Luisinho Faleiro as its chairman.

Similarly, the government has also announced its decision to set up a food processing plant at Bhutnath- Keri in Ponda Taluka.

The Goa Industrial Development Corporation would be the main coordinating agency, it was stated.

UNI

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