PSUs dump Rs 10,000 cr projects

NEW DELHI: After having rushed into 32 projects, the government is now playing the wary angel. After having spent close to Rs 1,000 crore on them, various public sector undertakings have decided to dump projects worth nearly Rs 10,000 crore, according to statistics ministry data as on March 31.
The projects span cross-section of sectors including coal, petroleum, cement, telecom and urban development. The key laggard sector is petroleum where projects worth Rs 6,500 crore have been frozen due to demand constraints or cheaper alternatives.
One specific project of IOC’s Gujarat refinery residue upgradation is worth Rs 4,392 crore.
The original approved cost of these projects came to Rs 8,800 crore and the anticipated cost on completion is Rs 9,868 crore, as per the data. The saving grace is that some of the projects have been dropped for valid reasons.
In eight cases, the government has abandoned the projects because of privatisation. In six telecom projects, the target was achieved through leasing rather than through acquisition. But in the rest, the reasons cited for dumping the project range from ‘change in planning’ and ‘frozen due to demand constraint’ to ‘alternative available at cheaper cost’.
This reflects very poorly on the project planning and approval procedures which are very elaborate, time-consuming and involve five to seven levels of clearance ranging from the administrative ministry, the Planning Commission, the Public Investment Board, pre-PIB, sometimes cabinet committees.
There is a cost attached to government’s decision to abandon these projects after giving them clearances. As per the data, government spent nearly Rs 1,000 crore on these projects before deciding to dump them.
Of the 32 frozen projects, three belong to coal, seven to petroleum, one each to petrochem and power, two to heavy industry, two to ports, 14 to telecom and two to urban development. These projects are part of plans of blue-chip PSUs like IOC, BPCL, ONGC, VSNL, DoT, Powergrid, Cement Corporation and Hindustan Zinc. The projects were approved in recent years and have an average date of commissioning in the next couple of years.
Worried over tardy pace, the government has put all mega public sector works on a periodical watch and is in process of resolving all issues that are adding to time and cost over-runs.