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Cover Story | October 2013

Developers Need more Flexibility in Project Identification

Government's framing of policies that leave little room for developers to have a proper say in some critical issues of projects rendering them unacceptable to the developer community, says Manik M Jolly, Consultant, South Asia Sustainable Development Energy, World Bank, in an interaction with Pradeep Pandey.

The need for a fixed policy for the power sector is being discussed. In the recent past the government is proactively seeking options to debottleneck the growth of the industry. According to you, further what solutions should be implemented immediately to see a turnaround in the industry?
The problem is that we have policies in place but there are no takers. So it cannot be dumped on government that they are not taking enough initiatives. There are lots of initiatives and policies in place to support, but the way government has framed is not suitable or acceptable to the developer community. It is also because these things bind them under rules and regulation, which are not always favourable as to how they want to do business. Also, it can never be that whatever developer wants to do government will let them go free. So, rather than framing a stringent policy, the policy has to be mix of certain issues that are fixed and flexible. However, it should be flexible in that given space for entrepreneurs to explore around and play the game in which success is possible.

Can you give us one example that this kind policy reform that you think it should be fixed in a way?
Let me take as example a critical factor such as geography selection: Why not leave it to the developers to decide? What government does is empanel certain consulting companies who do a DPR on which tenders are based and on which companies bid to do the projects. In that case it often turns out that there are no takers or very few takers. Big players can still elude projects, if the geography doesn't match their requirement. The government may feel the need to develop 100 villages in a certain region. If private developers are inclined to work on 100 villages elsewhere, the net result may be the same.

As compared to other countries, what kind of differences you find in working environment and policies?
Nepal works a lot on micro hydro projects and they have very efficiently created that model. They are doing phenomenally well in creating and running micro hydro projects. Bangladesh did a lot of good work in home lighting systems. India, on the other hand, has neither been able to do well in micro bids nor with home lighting system except for some examples here and there at a national level. The level of success where you could actually say we have electrified reasonable percentage of population is still elusive. We are way behind, even though our policies are much better, we are a richer nation, the outlook is very progressive. So we should have been able to do much better, but somehow the gap between what the government wants to be done and what developers want to do is creating issues.

Many overseas players are entering the Indian marketplace. What is the sense and reaction do you obtain after meeting them?
They are all waiting for a solution that they can quickly replicate in the EPC model. While they are happy to sell a product, do EPC projects, and develop a power plant, but that is the limit to which I want to extend their partnership to run the plants, to own the plants, to collect the revenue, to create the business model. This is the biggest gap.

What are the future prospects for renewable energy?
It is one of the brightest looking industries as of now with so much backing of financial organisation; innovation coming in to space and the energy crisis, which is permanently looming everywhere.

Do you think the government can come up with some viable solution to boost investment in power sector soon?
It is my personal feeling that the government should come up with some kind of solution before elections. Regardless of who comes to power, the government has to resolve the energy crisis. The deficit could be resolved, the subsidy share could be increased, if viable policy comes in overall it's election time, things can match up actually for this to happen. Otherwise, there is no possibility of reaching the set targets for the 12th Plan.

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