WB against power cover

NEW DELHI, December 9: The World Bank is not in favour of the government providing guarantees to infrastructure projects, it should only be...

NEW DELHI, December 9: The World Bank is not in favour of the government providing guarantees to infrastructure projects, it should only be used as a short-term policy till a complete regulatory framework is in place.

Speaking to The Indian Express, Harinder Kohli, senior adviser, World Bank who has participated in several infrastructure projects in East and South Asia said,“I am against providing government guarantees to projects provided there is an effective regulatory framework to ensure a level playing field.”

“It is not at all necessary to provide guarantees to power projects just because SEBs cannot pay. The power company can sell to the private distributors or sell directly to industrial units who can take a direct transmission line,” he underscored.

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Only in rare cases should guarantees be provided to ensure payment of debt, supply of raw stock and payment by the utility company but this cannot be a long-term strategy. In India there is a problem with the paying capacity of the state electricity boards (SEBs) the solution to this is to reform these organisations and corporatise them, he said.

Till a few years ago governments had complete monopoly in the construction of infrastructure projects, now world-wide the private sector is being called upon to assume a greater role. Three-fourths of all infrastructure projects will have to be built by the private sector, he said.

The private sector can be attracted to participate in projects only when these projects are “bankable”. This is possible when three criteria are fulfilled, namely, when the financing is profitable, he said.