South-Indian state, Karnataka, is the nation's IT hub and one of the major investment
destinations for industrial and infrastructure projects. It is also amongst India’s top five
states in terms of new project investment.
D. V. Sadananda Gowda, Chief Minister,
Karnataka, in an exclusive interaction with
Sandeep Menezes, dwells on the state's focus
in harnessing the efficiency of private sector in infrastructure services.
What are the measures initiated
by the Government of Karnataka
to give a new life to the public-
private partnership format
in the infrastructure space?
The Karnataka government is
according high priority to invite
private capital and efficiency in
the infrastructure sector. With an
intention to encourage private
investors to partner with government
to deliver public services,
the Government is introducing
the Karnataka Infrastructure
Development and Regulation
Bill in the ensuing session of the
State Legislature. This is a comprehensive
and an overarching
legislation to provide statutory
support for development of infrastructure
and encourage investments
in the State.
The law intends to streamline
the process of identifying,
structuring, procurement,
awarding and implementing
infrastructure projects. It also
enables setting up of a separate
institutional framework
known as "the Karnataka
Infrastructure Authority" with
the Chief Secretary as its
Chairperson. The Authority
will review and approve infrastructure
projects taken up
under PPP frameworks on
public need basis and value for
money principles. It is important
that proper project development
activities are carried
out before private participation
is sought. The proposed
law sets out clear provisions in
this regard. It also envisages
setting up of a fund known as
"the Karnataka Viability Gap
Fund" to meet the funding
requirements of projects
approved by the Authority.
Government will contribute an
initial amount of
500 crore to
this fund.
The mode of implementation of
projects in Karnataka is gradually
shifting from government sponsored
to public-private
partnership.
How many projects are
under PPP?
Across Karnataka, around 105
infrastructure projects worth
80,946 crore are being undertaken
through PPP mode and
are at various stages of development.
We do foresee a gradual
shift from government-sponsored
projects towards PPP.
However, certain projects will
require budgetary support. The
state also intends to invite private
capital to fund infrastructure
projects. The state is also looking at utilising the efficiency
of private sector in providing
infrastructure services
It is estimated that Karnataka is
reeling under power shortage
of around 27 per cent. Does the
State Government have a road
map to improve the situation?
Karnataka's present restricted
peak demand is about 8,800 mw.
The power availability from all
internal sources and CGS units
during peak period is about
6,400 mw. To mitigate the shortage,
the state is procuring about
1,200 mw on a daily basis from
outside sources. The net daily
power availability is about 7,600
mw. Hence, the shortage is
about 13.64 per cent.
To mitigate the shortage, the
government has undertaken
several initiatives which include
short term, medium term and
long term measures, viz.,
- Procurement of about 1,300
mw power on a daily basis
from outside sources.
- Taken initiative to commission
BTPS-II and UPCL-II units of
500 mw and 600 mw at the earliest.
UPCL-II is awaiting
environmental clearance.
- By March 2012, 500 mw of
renewable energy power will
be commissioned.
- Action has been initiated for
obtaining coal linkages for
Yeramarus and Yedlapura
projects of 1,600 mw and 800
mw respectively from Central
Government.
- The State will avail 2,000 mw
of power from NTPC's 4,000
mw UMPP at Kudgi in Bijapur
district to be commissioned by
2015-16.
- Coal linkage to 1,600-mw
Chattisgarh pit head project
by KPCL is awaited from Centre.
MOEF clearance follows
coal allocation.
- A 1,320mw thermal project at
Gulbarga will be commissioned
by private investors.
The land is being procured for
the project. The project is
expected by 2015-16.
- 700mw Bidadi combined
cycle gas project is expected
by 2014-15, subject to gas allocation
by the Centre.
How is your government
ensuring normalcy in State
Mining Policy as the state
expected a shortfall of around
2,500 crore in non-tax revenue
receipts in 2011-12 on account
of dip in mineral royalty following
ban on iron ore?
Earlier royalty on iron-ore was
being collected at rates specified
in schedule-II of MMRD Act
1957 under section 9 (3) of the
Act which was very meagre.
Government of India in exercise
of powers conferred under the
said section has revised the rates
of royalty on Iron ore at the rate
10 per cent of sale price on ad
valorem vide order No: GSR.574
(E) dated: 13.08.2009. Accordingly
royalty on Iron ore being
levied and collected as per the
guidelines issued under rule 64
D of MCR 1960.
Government of Karnataka
imposed ban on export of iron
ore from 28.07.2010. At present
"illegal mining in the State of
Karnataka" the issue is before
the Supreme Court as challenged
in WP no 562/2009
wherein Supreme Court
imposed ban both on iron ore
mining and transportation with
effect from 29.07.2011. Revenue
realized in the year 2011-12 up
to the end of November 2011 is
382 crore as against the target
of
464 crore (82.37 per cent).
However as per the directions
of the Supreme Court 25 million
tons of already
mined/stored iron ore is being
disbursed through e-auction.
A quantity of 103.52 lakh tons
of iron ore is auctioned up to
the end December 2011 and a
total
255.146 crore of royalty
was realized at the rate of 10
per cent of e-proceedings
thereby causing no direct loss
to the State exchequer or no
hindrance/impediment in
achieving the revenue target
set for the year.
All the issues related to mining
sector are before Supreme Court
further action to frame any policy
if required will be framed in
accordance with the directions
on final adjudication by the
Supreme Court.
Karnataka aims to hike spending
on infrastructure from 3.2
per cent of Gross State Domestic
Product to 8-9 per cent during
the XII Plan. Comment.
Karnataka wants to spend more
money on infrastructure. Vision
Document 2020 has identified
infrastructure gaps in the form
of indices. For example, in case
of road projects, the density of
1.05 km. needs to be improved to
1.5 km by 2020. Similarly, in
case of Railways, the rail density
of 16.9 km per 1000 km needs to
be improved to 41 km. Infrastructure
requires investment of
more than
30,000 crore per year
for the next 10 years. Therefore,
spending has to be increased
from the present level to 9 per
cent of state GDP.
What is your long term vision
for economic, industrial and
infrastructure development in
Karnataka?
I have the vision of bringing in
economic prosperity to the poorest
of the poor. I intend to create
sufficient number of jobs for youth
by skill upgradation and creation
of jobs in industrial sector. In the
Infrastructure sector, we aim to
achieve high growth with equity
so that infrastructure facilities
could be provided or made accessible
and affordable to all. We will
achieve this vision by an inclusive
approach and providing investor
friendly atmosphere.