Tuesday, 12 May 2015

Surplus land of state-run companies may be used for infra projects

Amid the political standoff over the Land Acquisition Bill, the government is considering to use the vast land tracts available with the state run companies for infrastructure and industrial projects, including those under the plug and play mode.

In this proposed mode, the government will ensure that all clearances and linkages are in place before the project is awarded through a transparent auction system. A senior government official told ET that deliberations are being carried out on the availability and use of surplus land available with central public sector enterprises (CPSEs) and mostly sick units.

"There have been some discussions. The first stage is to identify the freehold land available and if that can be put to use. In the next stage, we will work out a mechanism as to how this can be made available for specific projects," said the official, requesting not to be named.

Finance Minister Arun Jaitley had in his budget for 2015-16 announced five new Ultra Mega Power Projects (UMPPs), each of 4,000 mw in the plug-and-play mode. The government expects UMPPs to help unlock investments to the extent of Rs 1 lakh crore. Jaitley had said in his budget speech that the government would also consider similar plug and play projects in other infrastructure segments such as roads, ports, rail lines and airports.

The ministry of heavy industries and public enterprises had earlier this year sought details of land available with CPSEs, a senior ministry official said.

"The details were sought with regard to the India-Japan investment promotion partnership and whether some projects can be quickly sanctioned based on land availability," he said, adding that about 2.5 lakh acres of land is available with the sick CPSEs. Experts say that the idea is novel but it may present its own challenges. "You will have to zero in on a land tract which not only matches the requirement of a project but also is of the right size and at the right location," said Amit Jain, partner with BMR Associates.

A senior official with a sick CPSE said that it may be difficult to put the land immediately to use. "Some of the land that we have is leased from the respective state government. Until the government decides to wind up all sick companies it will be not possible to put that land to some other use," he said, adding that some of the land available with CPSEs has been encroached upon. In a recent report, the Comptroller & Auditor General of India had pointed out that about 425 acres of land available with Sambhar Salts, a subsidiary of Hindustan Salts, is under encroachment.

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