One has to look back a few years for proper perspective. Once power generation was de-licensed after The Electricity Act 2003, there was a boom in the sector. People started coming into power generation in a big way, both coal-based and coastal.
The Finance Minister has taken a very pragmatic approach and crafted a Budget in a manner which can provide a boost to both infrastructure and manufacturing which will create employment and also augment IndiaÂ´s competitiveness vis-a-vis its peers and at the same time adhered to the Prime MinisterÂ´s Â´Make in IndiaÂ´ vision
The power sector had been facing serious challenges over the past few years. The key issues pertain to shortfall in supply of coal and gas, delay in clearances for projects and the declining financial health of electricity distribution utilities.
The Power Ministry has scrapped the bidding process for two ultra-mega power projects of 4,000 MW each proposed to be built in Odisha and Tamil Nadu after all private players walked out, leaving State-run NTPC and NHPC as the sole contender for each project.
We must understand project finance in the traditional sense. Project finance works only when all material approvals for a particular project are in place and the same is then handed over to a successful bidder like the bidding for UMPP was done in India. The bidder can then straightaway proceed for financial closure. This will ensure there are no time and cost over-runs on account of delay in approvals.