Highway construction: Narendra Modi govt looks to mobilise Rs 50,000 cr in unique way; find out how
The government, which has taken highway construction upon itself given the paucity of private equity capital, has aimed to mobilise upwards of Rs 50,000 crore over the next few months through a unique asset monetisation exercise. It will lease out 75 operational projects — with combined length of 3,000 km — in the state sector to private players including global funds with patient capital through the toll-operate-transfer (TOT) route. After the expiry of the 30-year lease period, these projects, which have been operational and generating toll revenues for at least the last couple of years, would return into the government’s fold. Bidders will recoup their investments – and returns – by collecting toll over the lease tenure. According to official sources, the ministry of road transport and highways (MoRTH) would use the upfront receivables exclusively for funding construction of highways. For the current year, the highway construction target has been set at 15,000-km (41 km a day), more than two and a half times achieved last year. The Cabinet’s approval for the innovative asset monetization model came last week. The sources said around 20 global funds with long-term capital including Nomura, Macquarie and Abu Dhabi Investment Authority are expected to participate in the bidding for the TOT projects. “We have made around 20 presentations to patient capital players such as Nomura, Goldman Sachs, Macquarie, Abu Dhabi Investment Bank, Canadian Pension Fund and American Pension Fund. All of them have shown interest. However, since they are unlikely to invest in a single project, we propose to bunch 5-6 projects, together valued at around $200 million,” an official said. Asset recycling of this kind is going to be tested for the first time in India, although internationally, there have been many precedents for this. The US, for example, did it during the subprime crisis of 2008 to bolster the cash flows to the exchequer; the practice is also prevalent in Australia. The monetization of assets, according to analysts, is a win-win for both the investors and the government. While it would help the government to spend the upfront money to build more highways, investors could benefit with low-risk steady returns. Investors will also have the opportunity to borrow funds for the upfront payment by securitising the toll. The government has held several roads shows in India and abroad to sell the model to the global investor community, including a few of them held in the US by a team led by joint secretary in the ministry, during transport minister Nitin Gadkari’s recent visit to the US. These projects have been built by the government under the conventional engineering, procurement and construction (EPC) model. Tolls are currently being collected by the government. graph5 Highway construction this fiscal is proposed to be funded by borrowings by the NHAI to the tune of Rs 50,000-55,000 crore, budgetary outlay of Rs 54,000 crore and the proceeds of road cesses and toll revenues. Rasul Douglas Womens Jersey
‘Logistics sector could save USD 200 bn annually post GST’
Logistics sector, which accounts for nearly 14 per cent of the GDP, could see savings to the tune of USD 200 billion annually on implementation of GST, which will ensure faster movement of goods and less idle hours, say experts. With the introduction of Goods and Services Tax, many taxation procedures will come down, nearly halving the cost of inventory as customers will not need to pile up stocks in different warehouses, say experts. “For a USD 2-3 trillion dollar economy, this could mean a potential of USD 200 billion wasteful inventory spent being available to deploy in productive value creation and further propelling the economy’s growth,” said Deepak Garg, founder of logistics firm Rivigo. Describing the passage of the GST bill in Rajya Sabha as a “positive reform”, apex transporters body All India Motor Transport Congress (AIMTC), which represents 80 lakh truckers, said the new regime would create efficient ecosystem and bring down the cost. “The new regime must usher in border-less, barrier-less, seamless movement of goods and passenger so that efficiency is engendered in road transport ecosystem and transportation and logistics cost is brought down to internationally competitive level,” said AIMTC former president Bal Malkit Singh. According to a transport sector expert, delays at toll plazas and extra fuel consumption result in annual loss of over Rs 1 lakh crore. IIM-Calcutta in a study earlier estimated an annual loss of Rs 87,000 crore because of delays and extra fuel consumption at toll plazas. According to Singh, while trucks in the US cover a distance of 800 km in a day, in India it is barely 280 km. The government intends to roll out the GST, which will subsume central excise, services tax and various local levies from April 1, 2017. Implementation of GST will enable creation of a common market, thereby allowing free movement of goods and services across the country. Simpler documentation, Garg said, will allow faster movement of cargo, less stoppages and minimal damages. Moreover, he added, the GST will allow companies to operate one large central warehouse, rather than having multiple warehouses. GST will also give a boost to organised service providers leading to greater efficiencies, better use of technology and cost advantages, he said, adding these could result in savings to the tune of 30 to 50 per cent. According to Garg, “GST reform, along with innovation in logistics sector can be a game changer for Indian economy. It will be a constitutive shift which will propel our economic growth and benefit not only businesses, but also the Indian society in entirety.” Terry Sawchuk Womens Jersey
Multimodal logistics park will improve the infrastructure in the State, says Cochin Chamber
The trade and industry has hailed the decision of the Centre to set up a multimodal logistics park in Kochi, saying that it will improve, streamline and centralise the multimodal infrastructure in the State. The proposed park at an investment of ?32,853 crore will be a highly positive initiative as it is bound to improve logistics efficiency, reduce costs, create job opportunities, promote ancillary industries/investments in the long run, C.S. Kartha, president of Cochin Chamber of Commerce and Industry said. Kochi has been selected along with 14 other cities based on the highest freight movement in the country. It is one of the 15 cities which together account for 40 per cent of the freight movement. “We need to capitalise on this”, he said adding that this mega project will act as a catalyst for other such projects in the State to enhance their efficiency and effectiveness in promoting Kerala’s logistics sector. Connor Brown Authentic Jersey
Britain launches fraud probe into Airbus
Britain’s Serious Fraud Office has said on it had opened a criminal probe into Airbus Group, investigating allegations of fraud, bribery and corruption. “These allegations relate to irregularities concerning third party consultants,” the SFO said in a statement yesterday. The authority said it opened the investigation in July and asked anyone with relevant information to come forward. A spokesperson for the SFO said additional details of the probe would not be made public until charges were brought or the investigation is dropped. European planemaker Airbus said it was aware of the probe and the aviation firm was working with investigators. “Airbus Group has been informed by the SFO that it has opened a criminal investigation into allegations of fraud, bribery and corruption in the civil aviation business of Airbus Group relating to irregularities concerning third party consultants,” the company said in a statement. “Airbus Group continues to cooperate with the SFO,” the statement concluded. The company was informed on Friday that the authority had launched an investigation, an Airbus spokesman told AFP. “We ourselves detected this issue and self-disclosed it to the authorities. “This is as an effort of our enhanced anti-corruption (policy). Management has taken robust action and is determined to resolve this issue in cooperation with the authorities,” spokesman Jeremy Greaves said. Airbus informed authorities of the irregularities in April. The same month the UK Export Finance decided to suspend export credits to the firm, a move followed by France and Germany. The aviation firm said at the time it hoped to resolve the financing problem as soon as possible. The current SFO investigation is expected to take years. The probe was described by the Financial Times newspaper as a “severe blow to the European aircraft maker” which would be exploited by its US rival Boeing. Airbus is the largest commercial aerospace company in Britain and last month said its net profit rose 15 per cent in the first half of the year. Profits were up 1.76 billion euros (USD 1.94 billion), but the gain was due to exceptional items that masked a slide in operating earnings. The company was hit by charges of just over 1 billion euros related to its troubled A400M military cargo transporter programme, while adverse currency movements and charges on its widebody A350 aircraft totalled nearly 900 million. However, these were compensated for by the sale of shares in Dassault Aviation and the creation of a rocket launcher joint venture with Safran that generated a net gain of nearly 1.9 billion euros. Alex Biega Jersey
‘500 cities & towns to vie for cleanest area’
After cities tried to outdo each other to get the “smart city” tag, now 500 cities and towns with more than one lakh population will compete to rank among the cleanest urban areas in the country. This will include all state capitals, heritage and tourism destinations. A similar assessment will also start for all the villages across the country. The urban development ministry on Saturday launched the Swachh Surveskshan (cleanliness survey) that will start from January 2017 where citizens’ feedback will be key to ranking cities. Urban development minister M Venkaiah Naidu said this survey will cover 70% of the country’s urban population and the results will help government understand the sanitation status of urban India. The nationwide survey both in urban and rural areas will be done by Quality Council of India. The urban development ministry, which is carrying out such a survey for the third time has increased the weightage being given to citizens’ feedback while ranking cities on sanitation parameters. Justifying this increase and the reduction in weightage given to municipalities’ response, Naidu said there have been cases when people have expressed surprise to find their cities ranking high in the cleanliness index ones when results were declared. “It’s natural that the municipalities will give the best reports. So, we need to get people’s response and an independent third party assessment,” the minister said. The ministry also launched ‘Swachhata App’ and ‘Swachhta Helpline 1969’ to enable citizens associate more and more with the mission in urban areas. Meanwhile, the drinking water and sanitation ministry has added a new feature in its Swachh Bharat App enabling people to rank their villages. Earlier the urban development ministry had come out with the cleanliness ranking of 423 cities in 2015 and in January this year 73 cities with each having more than a million population and state capitals were ranked on sanitation parameters. Raekwon McMillan Authentic Jersey
Here’s what it costs to maintain non-operational airports
A total amount of Rs 36.98 crore was spent on maintenance of non-operational airports over the last three years while Rs 897.28 crore were spent on 24 additional operational airports from where no scheduled airline is operating, Minister of State for Civil Aviation Jayant Sinha told the Rajya Sabha. This amount was being spent from the consolidated fund of India, he said. Several members of the house raised questions relating to non-operational airports while several others spoke about the need for air-connectivity to various important cities and towns. However he added that the government is working on a “regional connectivity scheme” and once it takes off, “many (non-operational) airports would be put into service.” Sinha said while private airlines have the freedom to decide their routes, they could be given concessions for operating under the regional connectivity scheme like reduced tax on Aviation Turbine Fuel, Viability Gap Funding, reduced langing as well as route facilitation charges for flying to regional towns etc. To a question on connecting cities in Maharashtra, Sinha said that while government is keen, the reduction in fuel prices has led to an increase in demand for air travel across the world. This situation has resulted in shortage of planes domestically and the Mumbai Airport getting “congested” as it is difficult to find landing slots. To a question asked on connecting various cities in the states of Tamil Nadu and Andhra Pradesh he said that the Centre is willing to work with the state governments on this. Tony Watson Jersey
Air Costa grounds fleet, says renegotiating with lessors
Another regional airline Air Costa has suspended its operations on Thursday claiming that it is renegotiating contract with its lessors. The Vijaywada-based airline suspended all its flights but said it will resume the operations on Friday. GE Capital Aviation Services (GECAS) is Air Costa’s lessor and is also the world’s leading commercial aircraft and engine lessor based out of the US. Last week, the Bengaluru-based Air Pegasus suspended its operations after lessors took back all its aircraft after the airline failed to pay the rentals. “We are resolving the issues we have with lessors. Currently, we are operating with 3 E190’s and simultaneously other developments about inducting new aircraft as well as the pan-India licence is in process,” a spokesperson for Air Costa said. He added that the airline was neither committed to its future expansion plans nor were there any delays in disbursing salaries to its employees. This is the second time the airline is renegotiating its contract with its lessors. A year ago, it had carried out a similar exercise and brought down the leasing cost to ?1.2 crore from ?2 crore. Mounting losses The airline had two E170s in its fleet earlier, which was a major reason for the airline’s mounting losses. The E170 has a total capacity of 78 but the airline chose to have a configuration of 60 economy and seven business class seats, thereby losing 11 seats per aircraft in the process. On an average, the airline was incurring loss of about ?2.5 crore per month for both the aircraft. Hence, E170s were phased out and replaced with two more 112-seater E190s. The airline has three E190s. An analyst with a global consultancy firm, who did not wish to be quoted, said in spite of carrying out the necessary correction in the fleet, the airline has not been able to post profits. The airline as of last year has invested over ?400 crore in its operations and was planning to invest a further ?60-80 crore this year. It had also placed an order for 50-E190s for a total ticket price of $2.94 billion. As of last year, the airline which was in the process of phasing out E170s, used to incur costs of up to ?40 crore per month, while revenues were of the order of between ?36 crore and ?37 crore per month. Victor Rask Womens Jersey
SpiceJet, Ajay Singh move HC against order to deposit Rs 579 crore
Budget carrier SpiceJet and its owner Ajay Singh have moved the Delhi High Court against its single judge’s order directing the airline to deposit Rs 579 crore within 12 months in connection with a share transfer dispute with the previous airline owner Kalanithi Maran. The single judge’s order had come on a plea of Sun Group chief Kalanithi Maran, along with his Kal Airways, for issuance of stock warrants in SpiceJet to them as per a sale purchase agreement (SPA) of 2015 which led to transfer of ownership of the budget carrier to its co-founder Ajay Singh. A bench of Justices Pradeep Nandrajog and Jayant Nath, before which the matter was listed today, merely ordered that the pleas of SpiceJet and Ajay Singh be taken up by the appropriate bench on August 8. Maran and his airline had alleged before the single judge that despite giving Rs 579 crore to SpiceJet, the carrier had failed to issue them the warrants or allot tranche 1 and 2 of Convertible Redeemable Preference Shares and that the amount was not utilised for paying statutory dues due to which they were also facing prosecution. Apart from ordering deposition of the amount in the court, Justice Manmohan Singh had also asked Spicejet and Maran to appoint an arbitral tribunal to decide the share transfer dispute between them in a year. The amount was to be deposited in five instalments with the first one in August this year, the court had said. Market regulator SEBI had earlier expressed its inability before the single judge to approve the board resolution passed by SpiceJet for issue of warrants in favour of Maran and his Kal Airways. The board resolution was passed on the court’s direction. Under the SPA, Maran and Kal Airways had transferred their entire 350,428,758 equity shares (58.46 per cent stake) in the airline to Ajay Singh. According to the SPA, Maran and Kal were to receive the redeemable warrants in return for around Rs 679 crore that they were to give to the airline towards operating costs and debt payment, Maran had said in his plea. SpiceJet had earlier told the court that the change of ownership was effected as a rehabilitative measure to address the liability of Rs 2,000 crore incurred by the airline when it was under the management of Maran. It had also claimed that every penny had been utilised towards operations and discharge of liabilities. Brandon Mebane Authentic Jersey
Airlines should keep pilots records for 3 years after training
Airlines offering type-rated pilot training programmes should maintain records of the concerned individuals for at least three years after they complete their courses, aviation regulator DGCA has directed. The watchdog’s directive, part of guidelines to be followed for Airline Type Rating Programme (ATRP), comes in the backdrop of persisting concerns over aviation safety and focus on psychological well-being of pilots. These requirements are part of the fresh Airline Type Rating Programme (ATRP) guidelines for scheduled operators issued by the Directorate General of Civil Aviation (DGCA). Among other things, the operator should retain detailed student records to show that all requirements of the training course have been met as approved by the DGCA. These records have to be “kept for a minimum period of three years after completion of the training,” as per the guidelines. The operator should maintain a system for recording the qualifications and training of instructional and examining staff. Such records would be kept for at least three years after the instructor or examiner ceases to perform a function for the operator. The guidelines or Civil Aviation Requirement (CAR) would be applicable from October 1. According to the DGCA, the operator should have a minimum fleet of five aeroplanes for the type proposed to be included in the ATRP. “For operators with an approved ATRP on one type of aeroplane, the requirement of a minimum fleet of five aeroplanes for another type may be met by an order of the additional type without the aeroplanes being held on strength at time of inclusion of the additional type in the ATRP,” the regulator said. In recent times, concerns about overall aviation safety have been growing. The crash of a Germanwings plane flying from Spain to Germany in March last year raised serious concerns as it is believed that the co-pilot had deliberately done it. Chris Davis Womens Jersey
Greenko to pay $100 million to take over SunEdison’s assets here
Greenko Energy Holdings, which is set to buy SunEdison’s Indian assets, will pay a small premium of less than $100 million (Rs 670 crore) for them in an all cash deal, according to a source involved in the negotiations. This will include the assets held by Terraform Global, one of SunEdison’s publicly held subsidiaries – called an ‘yieldco’ – with which some of them are vested. Greenko will also take over the outstanding debt of both SunEdison and Terraform Global in India, issuing fresh bank guarantees of Rs 200-250 crore. SunEdison, the world’s largest renewable energy company, has been looking to divest its global assets ever since it filed for bankruptcy protection in the US in April this year. It has hired Rothschild Inc to facilitate its divestment process. The company owns around 1400 MW of solar and wind projects in India across several states – about 400 MW operational and the rest under construction. The total outlay of these projects is estimated at around $1.2 billion. Some of the solar assets were acquired through extremely aggressive bidding at auctions, such as the 500 MW project in Kurnool, Andhra Pradesh, won in November last year, for which the company quoted a tariff of Rs 4.63 per kwH, a historic low at the time. The divestment is complicated by the fact that, since the bankruptcy declaration, Terraform has sued SunEdison in a US court, charging that it diverted funds to pad its balance sheet while claiming they would be used to complete the Indian projects. It was not clear how this will affect Greenko’s acquisition. Pashupathy Gopalan, MD, SunEdison Asia Pacific, and Greenko refused to comment in response to emails sent by ET. Started by two Hyderabad-based entrepreneurs, Anil Kumar Chalamalasetty and Mahesh Kolli, Greenko currently owns around 1000 MW of renewable assets, primarily in wind. But it has been looking for a major foray into the solar business, and was also among the contenders for Welspun Energy’s renewable assets of around 1100 MW, though it was pipped to the post by Tata Power, which bagged them in a S1.4 billion deal in June this year.Greenko is backed by two global sovereign funds – GIC of Singapore, which holds majority stake, and Abu Dhabi Investment Authority which pumped $150 million into the company in June. Jalen Richard Authentic Jersey