REC’s Sunil Gupta bullish on better ties with private promoters

KOLKATA: The next administration will need to build a more trusting relationship with private power promoters to improve the predicament that projects find themselves in, said Sunil Gupta, the government-nominated director on the board of state-run Rural Electrification Corporation (REC).

Some 20,000 mw of power projects are under stress due to lack of coal availability. However, this is not likely to affect REC directly since its norms for accounting non-performing assets are different from that of banks.

"Nevertheless, the government’s outlook towards private promoters needs to be corrected. In today’s market-driven economy, our idea of private promoters should be more holistic and the government should facilitate them and work hand-in-hand for overall development of the country. In this era of globalisation, the government has to play a more proactive role as a strategic planner partnering with private promoters for the overall development of the society and the country," said Gupta, who is also a director on the boards of General Insurance Corporation and Punjab National Bank.

India’s power sector has been hit by delays due to projects being unable to get environmental clearance apart from a squeeze on coal supplies. Gupta feels the availability of fuel isn’t adequately factored in at the planning stage of thermal power projects. "Power projects rely on the availability of coal. However, scarce extraction and lack of resources for transportation of extracted coal have created a wide gap," he said.

"Projects promising high capacity in terms of power production would rarely be capable of accomplishing the goal. There needs to be a structured model from the initial stage to ensure that power plants do not face scarcity of coal." There is an urgent need for a level playing field to encourage private enterprise instead of managing the field or distrusting private players.

"The government should understand that private promoters are investing money not only to make profit, but they are also part of the country’s overall economic development. They are partner in the overall growth of the country. Hence, a strong bridge of trust needs to be built between the government and private promoters." Delays in implementation put pressure on lenders as well and corrective action needs to be taken, he said.

"Changes at the environment ministry’s pace for clearances are necessary for the imbalance to be corrected. However, I would not advocate any drastic changes. Environmental clearance should be rendered with requisite pace so as to match steps with the industrial outlook," he said.