Govt formulates plan to strengthen power sector

UR Associates has come out with its report on infrastructure sector. According to the research firm, the Insurance Regulatory and Development Authority (IRDA) carried out a detailed review of the existing investment regulation including the requirement to facilitate a higher flow of insurance funds to infrastructure sector.

Government on course; PM reviews transport sector projects

The Government won the recent round of the ongoing tussle with the Opposition by getting ample votes to clear the Retail FDI Bill in both Lok Sabha and Rajya Sabha. Irrespective of what the opposition feels, the capital market has welcomed this outcome and has become more optimistic of further government action. The Government’s focus on the infrastructure sector has sharpened, if we go by its intent since last few months. For speedy implementation of the projects in the transport sector, the Prime Minister reviewed the performance of the transport sector in a series of meetings recently. The decisions taken at the meetings are as follows:

Railways

Elevated Rail Corridor, Mumbai: The State Support Agreement should be signed with the Government of Maharashtra in the next 15 days. The Ministry will finalize important milestones with timelines by 31 December, 2012 and bids for the project will be invited before the Rail Budget in 2013.

Madhepura/Marhowra PPP Loco Factories: The bids for the Madhepura Project will be called by 31 December 2012 and the project will be awarded before the Railway Budget. The IMG set up under the CCEA approval will consider and approve any necessary changes to documents. Timelines for the Marhowra Project will be announced by December 15.

Setting up a Rail Tariff Authority: The IMG under CRB will finalize and submit its recommendations on the Rail Tariff Authority by 31 December, 2012. A Cabinet Note will be brought latest by 15 January 2013.

Dedicated Freight Corridor: This project is believed to be moving ahead much better than other large projects because of the dedicated project structure. The Ministry will submit revised estimates with details on source of funding for Dedicated Freight Corridor project by 15 December, 2012. The Ministry will also provide milestones with timelines for Sonnagar-Dankuni Project and adhere to them.

Road Transport & Highways

Target for awarding projects: (i) The Ministry will target to award road projects as per the original targets for FY 12-13 and will aim to cross 8,000 kms of awards this year by March, 2013. (ii) Road projects of at least 3,000 kms length will be awarded under OMT by March, 2013.

RBI Treatment of Loans: Secretary (RTH) will send a note to Chairman, PM`s EAC on the issue of RBI’s treatment of loans to the roads sector as unsecured loans.

Shipping

Berths & additional capacity: The Ministry will aim to achieve the FY 12-13 target of awarding port projects with a capacity of 245 MMTPA by March 2013. Issues relating to security clearances and land transfer, if any, will be taken up with Cabinet Secretary and Ministries concerned and resolved.

New Ports: A Cabinet note for new Major Ports in Andhra Pradesh and West Bengal will be brought within a week. The projects will be awarded by March, 2013.

Insurance Funds to Infrastructure Sector
The Insurance Regulatory and Development Authority (IRDA) carried out a detailed review of the existing investment regulation including the requirement to facilitate a higher flow of insurance funds to infrastructure sector. In existing regulation, exposure of any insurer to an infrastructure company has been increased to 20% as against the present ceiling of 10% as referred in Reg. 5 of the IRDA (Investment) Regulations, 2000. The limit can further be increased by another 5% in case of Debt with the prior approval of the Board. IRDA has further informed that both equity and debt instruments are considered for classification under Infrastructure for mandatory minimum obligation of 15% as against only debt instruments earlier.

Government formulates plan to strengthen power sector in 12th Five Year Plan
The Government has formulated a plan to strengthen the power sector in the Twelfth Five Year Plan. Planning Commission has recommended, inter alia, capacity addition in the generation and transmission. It has recommended reforms in distribution sector and measures for enhancing the viability of DISCOMs. Capacity addition of 88,537 MW and inter-regional transmission capacity of about 38,400 MW are planned to be added during the 12th Plan. Reforms in the distribution sector to enhance the viability of DISCOMs are also planned during the 12th Plan. Further, Restructured Accelerated Power Development and Reforms Programme (R-APDRP) to reduce the AT&C losses and Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) to provide electricity to rural household would be continued during the 12th Plan period.

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click on the attachment

Read More