For May 2018, Gujarat was power deficit, a downgrade from its power self-sufficient status a year back. The slip in energy sufficiency may be attributable to certain developments but industry experts and industry officials say the state may be losing its sheen in energy and infrastructure sectors. Some early indicators, they suggest, are project delays, cost-overruns, unfriendly toll policies and lack of significant new project opportunities.
Gujarat had 7% of its peak power demand unmet in May compared to the all India figure for peak power deficit of 1.4%, indicating that Gujarat is looking at a higher side of insufficiency. According to Central Electricity Authority (CEA) data, out of Gujarat’s peak demand of 17,016 megawatt (MW), 1,198 MW was unmet in May.
There is more data to suggest not all may be well with the state. Data sourced from CARE Ratings, suggests out of the 48 projects which were under implementation as of March in the state, 10 are facing cost overrun, six-time overrun and one project has both time and cost overrun. “Twenty out of the 48 projects are legacy or pre-2014 projects. Three mega projects are facing cost overrun and 1 project is facing time overrun,” CARE said in an email response.
Some point out there is a slowdown in terms of new projects. “We do not see much activity on state roads happening now. Work on GIFT city is on, but this was conceived earlier,” said an industry expert who did not wish to be identified.
Under the state’s tolling policy for roads, passenger cars have been exempted from the levy since August 2016. “This has impacted developer interest in the road sector. The exemption was to be compensated, but that is coming with a lag and the amount is given on an ad-hoc basis,” he added.
A top official from an infrastructure construction company was of the view that the state is not significantly lacking, but the speed has slowed down. “What was earlier moving at 120 km per hour is now may 100 kmph. The change in leadership is showing,” he said on the condition of anonymity.
Gujarat’s power troubles may not be its own doing. “The power deficit I would believe is attributable to the shutdown of capacities at Mundra owing to compensatory issues. In addition, with the rise in gas prices, Gujarat’s gas-based power capacity is also struggling,” said an energy consultant who did not want to be quoted. According to CEA data, Gujarat had an installed capacity of 30794.32 MW, of which 6561.82 MW was gas based as of May 2018.
Nevertheless, the consultant says the overall feedback is that the state is not as robust as it used to be. “The current leadership maybe struggling to fill in the large shoes that prime minister Narendra Modi has left to fill,” he said. Modi was Gujarat chief minister for 12.5 years from 2001.
However, not everyone is skeptical of the state. “Our current central projects in the state are moving well, with minor issues not anything significant to share as a concern,” said Vasistha Patel, executive director for Sadbhav Engineering. The company has no exposure to state-funded projects in the state.
Some point out the state continues to enjoy importance in discussions at the central level. “Whenever project reviews are discussed, we have seen officials from various central agencies take a keen interest in the implementation of Gujarat projects,” said a top official from another infrastructure construction company.
