Nitin Gadkari-led road ministry’s highway construction woefully slow at 18-23km/day; required target 41 km/day
The pace of highway construction has gathered momentum to reach at an average of 18.23 km/day till January-end of the current fiscal compared with 16.6 km/day in the 2015-16 fiscal. The pace, however, is still way lower than what is required to meet the construction target of 41 km/day set by the ministry of road transport and highways (MoRTH) for this fiscal. Nitin Gadkari has recently said the pace of construction could reach to 30 km/day by March this year. The ministry has targeted to build 15,000-km highways in the current fiscal. In 2015-16, total highways construction was 6,061 km only. It has built 5,471 km highways in the April-January period of the current fiscal. Of the total construction till January-end, projects directly implemented by MoRTH was 3,466 km, against 3,217 km a year ago. NHAI constructed 2,005 km in the first ten months of this fiscal, compared with 1,532 km in the corresponding period last fiscal. Apart from the continued torpor in private investments — build–operate–transfer (BOT) projects have barely kicked off and the hybrid annuity model that mitigates developers’ risk too has seen only moderate success — over-optimistic targets were also to blame for the slippage, analysts said. This year’s construction target is 2.5 times what was accomplished last year. On the award front also, the 25,000-km target for the current fiscal is unlikely to be met, as only 8,183 km of project awards were made in April-January. The ministry is now hoping to award 15,000 km projects in the current fiscal. In the last fiscal, India had awarded 10,098 km highway projects. While NHAI awarded 2,912 km projects in April-January of FY17 compared with 3,145 km a year ago; MoRTH awarded 5,271 km against 4,495 km a year ago. Maximum projects (6,187 km) has been awarded through the engineering, procurement and construction (EPC) model while the remaining, 1,996 km, through the BOT (toll), BOT (annuity) and HAM models, sources said. Clearly, with private investments (read BOT projects) not gathering much steam, the Centre’s efforts to push activity in the sector with the use of its own funds (EPC projects) have brought only moderate results. The construction and award of highways in the April-January period this year was higher than a year ago by 15% and 7%, respectively. Gadkari had earlier blamed procedural delays in getting clearances for delay in project awards. The government has taken several steps to address the private investment famine in the sector: It eased the exit policy for developers to enable them invest in new projects and introduced the hybrid annuity model where the Centre bears 40% of the project cost. Russell Wilson Authentic Jersey
NHAI to float bids for monetising 10 projects by April
Buoyed by response from institutional investors from the Middle-East, Canada and the US, NHAI plans to come out with bids for monetisation of 10 out of 75 public-funded national highway projects in the first phase. The move follows the government’s decision in August last year authorising the National Highways Authority of India (NHAI) to monetise public-funded highway projects in the country. “Bids are likely to be out by April inviting tenders for monetisation of at least 10 projects on toll operate transfer (TOT),” a senior NHAI official told PTI. The official said 10 such projects out of a basket of 75 have been identified for monetisation and several investors, including Canadian Pension Fund, Abu Dhabi Investment Fund and those from the US, Europe and Singapore, have shown keen interest in buying them. “Investors are keen on our projects and we are going to bid out the same,” the official said. Road Transport and Highways Minister Nitin Gadkari has earlier told PTI that monetisation of public-funded highway projects could result in funds in the range of Rs 80,000 to Rs 1 lakh crore initially. Ever since the government’s nod for monetisation, NHAI has been conducting traffic studies related to such projects, the revenue streams available and their overall viability. The Cabinet Committee on Economic Affairs on August 3 last year had authorised NHAI to monetise the public-funded highway projects for mobilising funds. Close to 75 operational NH projects completed under public funding have been preliminarily identified for potential monetisation using the toll operate transfer (TOT) Model. The corpus generated from proceeds of such project monetisation could be utilised by the government to meet its fund requirements regarding future development and operation and maintenance of highways in the country and could address development of highways in unviable geographies. Market feedback indicates that certain institutional investors from outside the country have long-term investment appetite and are keen to participate in operational highway projects with stable toll revenue outlook. These investors generally hesitate from taking construction risk, but are willing to look at de-risked Brownfield road assets, the government has earlier said. Jesper Fast Womens Jersey
Aerospace engineering co Aequs to set up ₹500-cr facility in Goa
Aerospace precision engineering and manufacturing company Aequs announced at Aero India 2017 that it is setting a dedicated facility for Indian defence production in Goa. The company’s multi capability aerospace and defence manufacturing facility will come up at Tuem, Goa. Aequs, which entered into the defence manufacturing business in 2013, has been actively looking for opportunities to partner with many India’s R&D organisations and Hindustan Aeronautics Ltd (HAL). Since then, Aequs has been working with HAL on machined structural parts for various platforms, including Light Combat Aircraft, Sukhoi 30MKI, ALH, among others. “This is the first venture in the private sector, which will manufacture high-end components and systems for aerospace and defence sector and support the ‘Make in India’ initiative,” Aravind Melligeri, Chairman and CEO, Aequs said. The new facility will be set up with an initial investment of ?500 crore towards development of physical infrastructure, plant, machinery and equipment and is strategically located at the Industrial cluster (EMC). Melligeri said the new facility will be a multi-capability precision engineering with Computer Numerical Control (CNC) machines and new age technology to design and produce precision components for the Indian Defence sector. Aequs Aerospace is headquartered within the Aequs Special Economic Zone, Belagavi. Generating jobs “It will also support the ‘Skill India’ initiative by upskilling employees in the fields of precision manufacturing and other new age technologies, thus bringing a key capability in aerospace manufacturing in the country,” he added. The company sees more technology transfers taking place from aerospace giants around the globe adding further to our manufacturing capabilities, besides generating employment to close to 2,000 people. Ameya Abhyankar, Secretary and Director, Information Technology, Goa said: “To support our robust growth and expansion in the aerospace and defence sector, we are happy to host Aequs’s manufacturing facility in Tuem, Goa.” Ed Dickson Womens Jersey
India’s first dedicated heliport to open in Delhi on February 28
The capital will soon get India’s first dedicated “heliport” for flying in and out of Delhi to nearby areas in choppers. Aviation secretary R N Choubey said the Rs 100-crore project will be inaugurated on February 28 and will be an integrated one with a chopper maintenance, repair and overhaul (MRO) unit part of the complex at Rohini. Owned by Pawan Hans Helicopters Ltd (PHHL), the hugely-delayed heliport will have a large number of parking bays and an AC passenger terminal building with car parking area for the flyers. Choubey said that the heliport will bring choppers within the reach of common man. “Being a busy airport, IGI airport does not have much space for helicopter movement. The Rohini one will be a dedicated heliport and will make chopper movement much easier,” he added. Only top VVIPs and industrialists manage to get permission for flying in or out of IGI in choppers. The country’s top dignitaries, including the president, prime minister, home minister and chief ministers of a few states, use choppers from Safdarjung airport. “To promote regional air connectivity, Pawan Hans has also prepared a roadmap to connect all the major destinations from this heliport such as Delhi to Shimla, Haridwar, Dehradun, Mathura, Agra, Meerut and industrial hubs such as Manesar, Bahadurgarh etc,” PHHL had said in February last year. Pawan Hans had successfully carried out the first trial test landing an Eccuriall B3 chopper exactly a year ago to assess standard operating procedures and safety standards. Since then it has carried out many more tests. This heliport has a terminal building having capacity of 150 passengers, four hangers with parking capacities of 16 helicopters and 9 parking bays. DeMarcus Cousins Womens Jersey
GMR wants to demerge airport arm; seeks lenders’ nod
GMR Infrastructure which operates the New Delhi international airport and the Hyderabad international airport has sought the approval of its lenders to demerge its airports arm and list it separately, according to a tweet by CNBC TV18. GMR Infrastructure which operates the New Delhi international airport and the Hyderabad international airport has sought the approval of its lenders to demerge its airports arm and list it separately, according to a tweet by CNBC TV18. According to the same unnamed sources, the demerge will be done to unlock value and to cut debt. GMR which runs the Indira Gandhi International Airport in New Delhi and the Rajiv Gandhi International Airport in Hyderabad recently lost out to GVK to build the new Navi Mumbai airport. This would be the second airport in the country’s financial capital. Giovanni Fiore Authentic Jersey
Over to Hisar: New airport and aviation hub coming soon
Good news for the city: Hisar would soon get an airport. A feasibility report and the Centre’s approval have come in to air-link this counter-magnet city to other parts of the country. Capt DK Punia, executive director of Haryana Institute of Civil Aviation, said that initially the city would be linked to Delhi, Chandigarh and Jaipur. “The small distance air services would begin in the first phase. The 20 seat and 40-seat airplanes would be available on these routes,” he said. Flights to Mumbai, Ahmadabad and other far-off cities would start in the next phase. Plus, the Haryana government has expedited work on the Integrated Aviation Hub in the city. The government thinking is that besides a rise in demand for airport connectivity, there is urgent need for expanding services such as maintenance, repair and overhaul (MRO) and Fixed Base Operation (FBO). An official spokesman said the project would be developed over 3,000 acres adjoining the existing Hisar airfield which will also have features such as aircraft parking and transit facilities, an aerospace park and an aviation training centre. With an existing airstrip of 4,000 feet, spread on 3,000 acres of government owned land, the Haryana government has invited ‘global expression of interest’ for developing the proposed integrated aviation hub. Due to its close proximity with neighbouring airports and states including the National Capital region, Hisar could also serve as a potential location for commercial development, the official said. Stacy McGee Authentic Jersey
A perfect storm gathers for India’s airlines
The nascent recovery in India’s airline industry is under threat as rising costs and seat capacity combine with a crippling lack of airport infrastructure to hobble growth prospects. India’s carriers are likely to report combined losses of as much as $380 million to $450 million in the year to March, 2018, according to a recent estimate from the Center for Asia Pacific Aviation, a Sydney-based consultancy. Meanwhile, fleet expansion plans may be hit given the shortage of landing and parking slots at airports, say observers. That means airlines would be unable to take advantage of the robust growth in passenger traffic. “It will be difficult (for airports) to accommodate the newer planes. Most of the deliveries will be delayed,” said Jeet Ghosh, an analyst with Kolkata-based research firm Stewart and Mackertich. Less than a year ago, India’s airlines seemed on the verge of a turnaround as low fuel prices enabled steep discounts on fares, stirring a boom in passenger numbers and in revenue. Rayshawn Jenkins Authentic Jersey
No such thing as a perfect renewable energy contract
India’s 175 GW renewable energy (RE) targets by 2022 are ambitious, to say the least. Compared to RE targets in Europe, China, or California that require 4-5% growth in RE capacity annually, Indian targets require 25% growth. This translates to enormous capital investment (well over $100 billion), including from global investors. RE investors used to complain that dealing with India was like dealing with 30 countries; each state had its own norms. The model bidding document across states took care of that complaint. This is now being supplemented by model power purchase agreements (PPAs), drafts of which have been circulated to stakeholders. While this is a positive step, it ignores a fundamental challenge: A “perfect” contract is only on paper. What happens when things don’t go as planned? RE is overwhelmingly in the hands of the private sector. Even the Solar Energy Corporation of India Ltd (Seci), NTPC Ltd, and other quasi-governmental RE programmes involve private developers. While all power producers face counter-party (off-taker) risk, i.e., risks from struggling state utilities (distribution companies, or discoms), this challenge is particularly acute for RE, which is volatile and expensive for discoms in the short term, at least on a cash basis. What happens when utilities don’t buy the power as they promised, despite a PPA? Or, worse, take the power but don’t pay? If states don’t offtake power, can developers easily sell this power to third parties? Due to scheduling and grid reasons, this is neither automatic nor easy. Worse, the prices available may be lower than contracted in the PPA, especially considering the low power exchange (spot) prices in the last few years. Yet, one doesn’t often hear of developers declaring defaulters, because doing so effectively severs the relationship, leaving few alternatives for the power projects. It also has a negative impact on investor sentiment. Instead, projects muddle along, else risk becoming political or murky, potentially attracting palm-greasing. What violates a contract? RE contracts, like most contracts, have fine print. Even the upcoming model contracts have conditions under which a utility may refuse to offtake power, ostensibly under grid security norms. Even if required, all such backing down must be transparent, and ideally declared by an independent system operator (ISO). The affected party should not be the one unilaterally determining when a force majeure (unexpected events that prevent the fulfilment of a contract) equivalent clause applies. Otherwise, we risk a charade similar to how airlines get to absolve themselves of any delays under the guise of “weather”. The risks of not buying will only increase as RE grows from today’s approximately 6% of power consumed to over 10% in just a few years. Even if the price premium comes down, the operational impacts are non-trivial—RE often helps with energy requirements but not power capacity requirements, since India’s peak power demand is mostly in the evening. Just like Open Access (retail choice) was mandated under the Electricity Act, 2003 but overtly and covertly resisted by utilities (also often under grid security claims), who feared losing their paying customers and disliked the operational and planning headaches, such a “go slow” mentality towards RE by states represents one of the largest risks for scaling up RE. Transparency is the first requirement When one doesn’t trust the buyer (or seller), a common mechanism has been the use of escrow accounts. For RE projects, pooled mechanisms such as the Payment Security Mechanism envisaged by Seci—the special purpose vehicle for buying and bundling RE across projects—have limits on the power capacity they can cover. Any amount could, in theory, be covered, but at a cost, which today is being borne by the Central government. Even with an escrow, if drawn down, how is this to be replenished or prevented from becoming a moral hazard? Instead of focusing on risk management, why not improve risk avoidance? The Clean Energy Finance Forum has suggested improved transparency for utilities as a key need, especially related to RE purchases. In fact, we don’t even have consistent, granular and timely data on RE production. For starters, stakeholders, especially developers, need to know quanta of backing down, along with a reason (if declared). Importantly, we need to have transparent data on payments made to RE (and all) power projects. Delays cannot be swept under the rug, masking under-performing assets that will also never be declared non-performing. The ultimate need for RE and other infrastructure is “patient capital”, which is low-interest-rate funding seeking modest yields over time, like a home rental, instead of capital willing to take on higher risks but expecting higher returns, like an equity developer interested in asset appreciation or resale. Patient capital is held by sovereign, pension and insurance funds, which seek governance, predictability, and then returns. The sooner we recognize that improved contracts are necessary but not sufficient, the sooner we can tackle risks not addressed by the contracts, either because they are outside the scope of the contract, or because the contracts only cover the risks in theory but not in practice. Chris Chelios Womens Jersey
Non-renewable power capacity addition slows down
Subdued demand coupled with surplus electricity availability has slowed down the addition of new capacity for generating power from conventional sources of energy such as coal and gas. The installed electricity generation capacity of non-renewable energy sources in Gujarat grew by just 0.7% in 2015-16. The growth was 6.2% and 5.2% in 2013-14 and 2014-15 respectively. According to data from the Union power ministry data, Gujarat’s installed power generation capacity from non-renewable energy sources stood at 20,765.82 MW in 2015-16 as against 20,611.30 MW in 2014-15, an annual addition of 154.52 MW. Power sector experts attribute the sluggish demand of power coupled with surplus electricity generation to slower growth in addition of new capacity for conventional power. “The power sector across the country is passing through tough times. Demand for power has not grown in proportion with new capacity added in the last few years. As a result, capacity addition has slowed down noticeably,” said K K Bajaj, a city-based energy expert. Industries and agriculture are among the major consumers of power in state. “If the manufacturing sector grows, demand for power picks up. However, reduced manufacturing activities has affected electricity demand. Gujarat ends up with around 1,500-2,000 MW of surplus power every day,” said a source who is closely monitoring the power scenario in the state. “Considering the current demand-supply situation, no new capacity is being planned and work on power projects already taken up is currently going on,” the source added. According to experts, increased usage of power efficient equipment in industries, agriculture and homes has also contributed to the rationalization of electricity consumption. “On the other hand, power from renewable energy sources, especially solar, is giving tough competition to conventional energy,” added Bajaj. Sluggish demand has prompted power generators to divert surplus power to the open market, which has further resulted in easing of power tariffs in the market. Matt Dumba Jersey
Capacity utilisation at coal-fired power plants touches 60 per cent
Capacity utilisation of coal-fired power plants has risen to 60.5 per cent in December from a low of 52 per cent in August, a significant growth after years of decline, official data shows Plants owned by states saw capacity utilisation jump almost 18.5 per cent during the same period in 2016 against a small 5.7 per cent growth in the corresponding previous period, data from the Central Electricity Authority showed. Analysts say power plants may find it difficult to repay debts if capacity utilisation falls below 60 per cent. Thermal capacity utilisation had fallen earlier in the year as good monsoon rainfall reduced agricultural demand and increased hydroelectric supply. “Hydel power is way cheaper than thermal power and distribution companies prefer hydel power since it reduces their costs,” said Rajesh K Mediratta, director-business development at Indian Energy Exchange. Spot prices had fallen to about Rs 2 per unit, he said. Santosh Kamath, partner at KPMG in India, said higher hydel generation hits power plants of states because they charge higher tariffs than central sector supply. “This monsoon, distribution companies bought more hydel power and drastically reduced state sector power intake. As monsoons ended, they restored their purchase from the state sector leading to the 18.5 per cent growth,” he said. “Nevertheless, a 60.5 per cent capacity utilisation for coal-fired plants may be comfortable in developed countries but it may not be so in India specially with plants that do not have longterm supply agreement with consumers,” he said. Howie Long Jersey