Amid the controversy over the coal mine allocations to private companies, fresh details are emerging on how the government’s own departments and ministries, especially the coal ministry, are delaying critical projects with assured fuel supplies from state-owned Coal India Ltd (CIL).
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Banks have told the finance ministry last week that investments worth Rs. 1,24,745 crore, mostly linked to coal mines of CIL and its sister companies, are stuck due to various regulatory, procedural and environmental hurdles.
As the government seeks to fast-track mega projects to reverse the economic slowdown, banks have reported that the number of mega projects that did not get off ground as on September 1, 2012, was 26.
The reason: The projects across power, steel and aluminium sectors did not get clearance from the coal ministry on various grounds, including delays in fuel supply agreements (FSA) and absence of power purchase agreements.
These projects, details of which are with HT, came up for discussion in the specially convened meeting on September 7 that finance minister P Chidambaram chaired to review the progress of infrastructure projects worth more than Rs. 1,000 crore.
"More than a third of the 76 projects are pending because of want of approvals from the coal ministry," said a source, who did not wish to be identified. The department of financial services told the finance minister that the projects could not secure funds without the approvals.
Non-execution of FSAs-contracts under which CIL and its subsidiaries promise to offer coal supplies from its mines —is the most dominant factor holding back the ventures that can potentially generate thousands of megawatts of power and create thousands of jobs.
"Most of these projects have not achieved financial closures — tying up of funds from various sources, such as bank loans and equities—for which the finance minister asked the department of financial services to pursue it separately with the banks," the source said.
On Saturday, Chidambaram pitched for setting up a national investment board, headed by Prime Minister Manmohan Singh, to fast-track infrastructure projects spanning across power, expressways, ports and railways sectors.