Delay in completing infrastructure projects irks RBI

MUMBAI: The Reserve Bank of India has voiced its concern over the delay in completing infrastructure projects leading to cost overruns. Nearly half of the 563 infrastructure projects implemented by the central government were reported to be delayed on November 1, 2012, the RBI said in its report on the quarterly review of the economy released on Monday. These projects were largely concentrated in five sectors - road transport and highways, power, petroleum, railways and coal - with the maximum delays in the first two sectors.

"As a result, there were significant cost overruns in many of these projects," the report said, adding the major reasons for the time overruns were delays in land acquisitions, environmental clearances, tie-up of project financing, finalising of engineering designs, lack of infra support and linkages, change in scope and other contractual issues.

Problems in the power sector are yet to be fully resolved. While power producers have started signing new fuel supply pacts with Coal India that commits supply of 65% of the assured coal quantity through domestic sources and another 15% in the form of imported coal, the key issue of price pooling remains unresolved.