The power transmission sector in India is the most attractive to invest in currently, followed by roads and highways, and renewable energy, according to the Infrastructure Investability Index, prepared by rating agency CRISIL.
In its first such report, which tracks, measures, and assesses the development, maturity, and investment attractiveness of infrastructure, CRISIL said India would see an investment of close to Rs 3,000 crore per day in the infrastructure sector, and 56 per cent more than the Rs 37 lakh crore projected spend between FY13 and FY17.
“Spending such a magnitude requires an expeditious resolution of the problem of stressed assets in banking, front-ending of bankable projects, comprehensive retooling of public-private partnership frameworks, and deepening of the infrastructure financing ecosystem, which is of tremendous importance,” said Ashu Suyash, managing director and chief executive officer, CRISIL.
The report said thermal power generation, power distribution, and the railways needed a lot of facilitation before they could draw in big money. The urban sector, which is the least attractive right now, also needed a lot of attention, it said.
For the power sector, the report expressed concern over the increasing stressed assets. “There is 51 gigawatt (Gw) of stressed assets (thermal and gas) because of non-availability of coal/lack of power purchase agreement and another 23 Gw of under-construction projects. Thereby, Rs 4 lakh crore of debt is likely to become non-performing asset if prevailing issues are not resolved,” said the report.
It also said slippages in the UDAY (Ujwal Discom Assurance Yojana) target would result in significant cash losses for discoms.
Apart from reviving hydropower and gas-based power, the report suggested further reforms in power distribution with private franchisees, separating the content and carriage businesses, and tariff hikes based on inflation.
Regarding power transmission, the report said that investing $3.5 billion in the green energy corridor by FY22 and the proposed implementation of general network access would boost the prospects of the sector. It, however, expressed concern that slow state-level planning and right-of-way issues could drag down growth.
