Freeze derails Rs 5L cr worth projects
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The policy deep-freeze and land acquisition woes have resulted in over 500 projects, mostly power and steel, being shelved or put on hold during 2011-12, entailing a total investment of over Rs 5,00,000 crore.
According to CMIE estimates, during the year Rs 1,70,000 crore worth of investment projects had been abandoned by project developers, and another Rs 3,30,000 crore worth were stalled on account of various procedural issues.
The core sectors, led by power and steel, bore the brunt of project cancellations during the fiscal, accounting for nearly 60 per cent of the value of the projects shelved in 2011-12. Of the total number of projects shelved, the top 20 accounted for over 68 per cent of the total cost of shelved projects, with the power sector accounting for one-third of the projects shelved and steel accounting for one-fourth.
This is the highest ever abandoning and stalling of projects recorded by the CapEx database. The worst record thus far was in 2009-10 when Rs 2,80,000 crore worth of projects were shelved.
10 of the top 20 projects have been put off because of land acquisition problems. In most of these cases, promoters seem to have chosen to walk away (or lie low) and governments seem unwilling to push the case in the face of local resistance, according to CMIE estimates.
State-owned Nuclear Power Corporation's proposed 6,000 MW Haripur plant is the largest investment to be dropped because the state government was unwilling to offer land. Delhi-based Vavasi Telegence's silicon complex in Bikaner has not taken off beyond the initial pact it signed with the Rajasthan government in 2009, largely on account of land allotment delays. Both the projects involved investments worth Rs 45,000 crore.
"NPCIL is actively engaged with the state government and the local population to build consensus," an NPCIL official said. In West Bengal, apart from Haripur, the proposed Rs 5,600 crore West Bengal Petrochemical PCPIR project is another such large project that has been put-off on account of problems in land availability.