After suffering a major setback last year due to policy delays, the infrastructure industry is expecting a marginal improvement in the situation this year, even as it continues to be sceptical about the power sector.

Industry experts said that the slow growth in the infrastructure sector was primarily driven by a range of sector specific issues, such as land acquisition, environmental clearances, high interest rate regime and macro economic factors.

They pointed out that while the performance of the roads sector was quite satisfactory, others including, ports, airports, railways and water saw a marginal improvement.

The power sector continues to be hit the most due to several factors, including unavailability of funds, issues on coal linkages, high international fuel cost and uncertainty in government's policy about transfer of high tariff cost.

PricewaterhouseCoopers executive director Mr Jai Mavani told PTI that "Besides, availability of coal and its increasing prices, environmental clearances and land acquisition continue to be major challenges for this critical sector. Further, introduction of benchmark pricing norms for coal in Indonesia has upset the economics of several power projects based on imported coal.”

He said that "We don't see a major improvement in the sector even in this year although there are some green shoots in the form of the new Land Acquisition Bill and infrastructure debt fund.”

Mr Mavani further said that lowering of capital costs particularly in solar equipment space has helped bridge the viability gaps in the renewable projects.

Nearly 55% of the country's installed power capacity is coal based, a large chunk of that has to be imported due to the shortage in domestic production.

(Sourced from PTI)