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Norms for highway projects pact changed
The threshold limit in the conflict of interest clause in the model concession agreement (MCA) for highway projects has been increased from 5 percent to 25 percent.
Our view is that UPA II will have to work hard in order to put the national highway development programme (NHDP) back on track. Some of the problems were institutional with the National Highway Authority of India (NHAI) not acting autonomously but most of the problems lay with the MCA. The Cabinet Committee on Infrastructure is changing many clauses of the MCA, which were the main cause of investor apathy. In fact the conflict of interest clause was a major stumbling block in the NHDP progress. In the last five years, NHAI completed only 7759 km of highways, about 4 km/day. The target for building 7300 Km. per annum with a four fold increase in the contracts awarded will require a massive change in policy and institutional arrangement governing the highway programme.
CBI searches department of telecom offices
The CBI searched offices of the Department of Telecom in connection with alleged irregularities in allocation of 2G spectrum.
The Minister of Communications Mr. A. Raja committed a major policy blunder in not auctioning the cellular licences awarded in January 2008 and in bundling 4.4+4.4 MHz of start up spectrum with the licence. Never in the history of India’s policymaking has the exact cost that a government policy has imposed on the society been this clear. World over spectrum sale is a major source of revenue for governments to carry out their social programmes. The minister denied the country of huge amount of resources of around 60,000 crores. Scam or no scam such a grave error of judgment should not go unpaid for. Without getting into the criminality of the issue accountability asks for Mr. A. Raja to lose his job, but will it ever happen in our country?
OIL & GAS
EGoM on gas to keep off pricing issue
A new empowered group of ministers will focus on the allocation of additional gas from the Krishna-Godavari basin operated by RIL and steer clear of fixing the prices.
As we have been commenting through these columns, government will have to establish market based mechanisms with a few checks and balances for the discovery of gas prices. Our view is that the current gas allocation policy is predicated on a completely faulty price-fixation policy. An open bidding process, a cost-plus method or an indexation to oil prices would have been a better way for price discovery in this crucial sector. So while some part of the allocation can be at a pre-determined price a large part of the allocation should be based on a bidding process that should be transparent and unrestricted, unlike the quasi-tender that Reliance used to persuade the GoM to fix its gas price at $4.20 per million British thermal units. The Prime Minister’s Economic Advisory Council examining the bid said it was opaque; it suggested that new bids be invited “in a transparent and well-publicised manner from all parties so as to discover the true arm’s-length competitive price for gas”.
Eight new ultra supercritical power plants on anvil
After deciding to set up ultra mega power projects (UMPPs) to improve power supply across the country, the government’s next big step would be to set up eight ultra supercritical power plants (USCPPs).
It is well accepted that power generation is the primary contributor to greenhouse gas (GHG) emissions in India. This however, does not mean that in meeting our electricity needs we have to be environmentally insensitive. A viable and sustainable solution lies in encouraging generation from “clean” coal. It is important that India moves away from subcritical pulverized coal or “dirty” coal to commercial supercritical combustion technology. The supercritical coal based units have faster starting time & load changes and are more suitable for daily