According to people familiar with the development, greenfield projects of four companies — PowerGrid, Bhushan Energy, Torrent Power and Tata Power — that had been put on hold or had been slowed down for various issues, including tight financial position, clarity on future demand and on-land acquisition, have been resumed since January-end. Most power projects had been held up in a rs power leveling reaction to the global liquidity squeeze as companies wanted to evaluate the likely demand scenario after large banks collapsed and a recession was threatening the global economy. Even where financial closure had been achieved, work had been stopped as the promoters were unsure about the feasibility of the projects. However, over the past two months, the situation for the power sector hasn’t deteriorated, industry executives said.Suppliers of cables, an integral component in a power project, say that while monthly supplies had been stopped in the October-December period, they have resumed since January and has so far reached 1,000 tonne a month. Before the slowdown, the supplies wow gold amounted to 3,000 tonne a month. According to power ministry estimates, the current Five-Year Plan has added 12,000 mw, which is lower than what is expected from the industry. Projects that would generate over 88,000 mw are under construction through various companies. On Wednesday, electricity infrastructure company ICSA got three contracts together valued at Rs 464.17 crore. The orders were from Bihar State Electricity Board, Maharashtra State Electricity Distribution and MP Poorv Kshetra Vidyut Vitaran Co.
“In the power sector, distribution infrastructure is a huge priority area where projects are funded both by the government and by multilateral agencies,” ICSA chairman G Bala Reddy said. KEC International also said it had received orders of Rs 1,000 crore under the scheme for electrification in Maharashtra, Madhya Pradesh, Bihar and West Bengal. The government’s two most ambitious energy schemes, Rajiv Gandhi Gramin Vidyutikaran Yojana (RGGVY) for rural electrification and Accelerated Power Development and Reforms Programme, are wholesale jewelry behind schedule.The market was volatile. The market had surged at the onset of the trading session on mostly higher Asian stocks, increase in risk appetite globally, hopes of a recovery of the global economy, a strong rebound in rupee against the dollar and on buying by foreign funds. The barometer index BSE Sensex moved past the psychological 9,000 level. However, the market soon came off the day's high on lingering concerns about the slowing Indian economy and on lower US index futures. It slipped into the red later as some Asian stocks slipped into the red. While gains in the wholesale-price index (WPI) have slowed, other gauges of inflation that the central bank takes into account when deciding policy are at a decade high. The inflation rate as measured by consumer price index for industrial workers, which seeks to represent the impact of retail prices on the country's workforce, had risen to 10.45 per cent in January 2009, compared to 9.7 per cent in the previous month. The increase in global risk appetite in the past few days is a good news for Indian Inc which is facing liquidity crunch as Indian banks have become risk averse on fears of rising defaults in a slowing economy and due to the global financial sector crisis. Fund crunch for the corporate sector has, in turn, accelerated slowdown in the economy.
Risk appetite rose globally following the latest aggressive move by the US Federal Reserve. The Fed on Wednesday said it would buy $300 billion in longer-dated Treasurys over the next six months, along with another $850 billion in mortgage-related debt, in a bid to improve credit markets and pull the US economy out of its hole. On the flip side, foreign institutional investors (FIIs) are now in runescape money mode which follows easing of FII selling vigour in the past few days. FIIs bought shares worth a net Rs 222.14 crore on Wednesday, as the provisional data released by the stock exchanges. FIIs can also take solace in the recent strong rebound in the rupee. A recent sharp slide in the rupee to a record low had resulted in a depreciation in the value of their equity portfolio to the extent of the fall in rupee.Attractive interest rates have lured foreign funds to Indian debt market. For instance, corporate debt returns in the US are 1-1.5 per cent, whereas in India, the rates are as high as 8-9 per cent. Bonds floated by state-run firms fetch yields in the range of 9.30 per cent, which are about 300 basis points higher than 10-year G-Sec yields. As per reports, FIIs are likely to invest in attractive PSU bonds floated by quasi-government entities like Power Finance Corporation and Rural Electrification Corporation. Bond prices surged in early trade on Thursday ahead of the central bank's purchase of Rs 10000-crore of existing debt from investors in an effort to cap yields. The yield on the 6.05 bond maturing in February 2019 dropped 14 basis points to 6.3 per cent as of 9:13 IST in Mumbai. Bond yields and bond prices are inversely related.
ICSA chairman G Bala Reddy said