‘We don’t want to build ghost towns in In­dia’

Business Standard - - ECONOMY & FINANCE - ALKESH SHARMA

Billed as the most am­bi­tious project in post-In­de­pen­dence In­dia, the $100-bil­lion Delhi-Mum­bai In­dus­trial Cor­ri­dor (DMIC) has been plagued by project aban­don­ments, land ac­qui­si­tion is­sues, and de­lays. With things start­ing to pick up pace over the past cou­ple of years, DMIC Chief Ex­ec­u­tive Of­fi­cer ALKESH SHARMA talks to Sai Man­ish about the ra­tio­nale be­hind aban­don­ing some projects and in­no­va­tive ap­proaches the DMIC is adopt­ing. Edited ex­cerpts: Why are the big gas-based power plants en­vis­aged in the DMIC aban­doned? Plan­ning on the DMIC started in Septem­ber 2011, when a de­ci­sion was taken to set up the DMIC In­vest­ment Trust. The plan­ning of power plants started when the coun­try was fac­ing power deficits. We thought there would be a huge de­mand. That is how four power com­pa­nies were set up. We got land for three projects. Land for the fourth one did not come. All en­vi­ron­men­tal clear­ances were ob­tained. GAIL was ne­go­ti­at­ing with an Aus­tralian com­pany for gas, but the price was work­ing out to be $14/Btu. At this price point, the cost of power came to ~8.5 per unit, which was too ex­pen­sive. At that time, there were ne­go­ti­a­tions with the Min­istry of Pe­tro­leum, which told us the projects would get do­mes­tic gas. But by the time we reached an ad­vanced stage of ne­go­ti­a­tions, the govern­ment took the de­ci­sion that do­mes­tic gas would be used for fer­tilis­ers. The govern­ment po­litely asked us to look for gas from the Turk­menistanAfghanistan-Pak­istan-In­dia (TAPI) gas pipe­line project. But the TAPI ne­go­ti­a­tions started some­time in 2013. What about the states that were sup­posed to ben­e­fit from th­ese power plants? States, which we thought were pow­erd­e­fi­cient and would re­quire power from th­ese plants, have boosted their power ca­pac­ity. For in­stance, Mad­hya Pradesh had only 3,000 megawatt (Mw) of in­stalled power when we planned th­ese power plants. In 2016, MP had 15,000 Mw. A sim­i­lar sce­nario un­folded in Gu­jarat and Ma­ha­rash­tra, where there is hardly any power deficit now. In Haryana, too, there has been an im­prove­ment in the ef­fi­ciency of power plants. In fact, we had to aban­don cer­tain small power plants that were to be built by Toshiba be­cause the price at which they had en­vis­aged sell­ing power was around ~8 per unit. There were no tak­ers for power at this price be­cause the power sit­u­a­tion had im­proved dras­ti­cally in Haryana. When I joined the DMIC board in 2016, I looked at th­ese projects and found the land ac­quired for the power plants be­longed to in­dus­trial es­tates, which wanted the land back in case it wasn’t to be used for power plants. We thought that power gen­er­a­tion was not our core com­pe­tency and we should re­turn the land since the projects were un­vi­able. Even if we had set up th­ese plants, we would have given their op­er­a­tion to a power dis­tri­bu­tion com­pany. How is the de­vel­op­ment of smart cities in the DMIC com­ing up? Look at some of the planned cities in In­dia, Chandi­garh and Gand­hi­na­gar, for ex­am­ple. Gand­hi­na­gar was de­clared Gu­jarat’s cap­i­tal in 1969. Even to­day if you go to the city, you will see that not many an­cil­lary fa­cil­i­ties have de­vel­oped. De­vel­op­ing a city is al­ways an or­ganic process. In­ter­na­tion­ally, take the ex­am­ple of Chengdu in China, which is spread over 54 square km (sq km) and was started in 1992 as a smart city, and Mil­ton Keynes in the UK, started in the 1960s. Mil­ton Keynes was run by a spe­cial pur­pose ve­hi­cle (SPV) till the 1990s, when it was trans­ferred to the mu­nic­i­pal­ity. I vis­ited Chengdu in 2016 and they had com­pleted only 23 sq km. Now com­pare th­ese to smart cities en­vis­aged in the DMIC. Af­ter the master plans were drawn up in 2011, the ground­break­ing cer­e­mony for four smart cities un­der the project was done in 2016. We have ac­ti­vated 22 sq km in th­ese cities and plan­ning has been done for more than 150 sq km. One of the crit­i­cisms of the Chi­nese model of smart cities is they have spent a lot of money on build­ing them but there are hardly any oc­cu­pants.

Th­ese have be­come ghost towns and util­i­ties built there have started rust­ing. We wanted to avoid th­ese kinds of mis­takes. Build­ing a city takes a lot of care­ful plan­ning. In­vestors will not come un­til they see some­thing com­ing up on the ground. So, we have started work on the 22 sq km, where we have got land from re­spec­tive state gov­ern­ments. For the re­main­ing area, which has been planned, we are ready to give con­tracts.

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