Will auction of public funded highways work?
With the Union cabinet’s clearance to monetize public funded national highways in the country on Toll Operate Transfer (TOT) model, the road transport and highway ministry is expecting the sector to revitalize. Under this arrangement, the National Highway Authority of India (NHAI) is now authorized to lease as many as 75 National Highway projects, which are operational and have been generating toll revenues for at least two years to various entities on TOT model. The decision has come as the NHAI’s present model of Operation Maintenance and Transfer (OMT) has been partially successful. A highway ministry official requesting anonymity said in the traditional public funded NH projects once the project is completed and the contractor exits, the entire responsibility of regular and periodic maintenance and day-to-day operations including toll collection comes on to the NHAI and they usually outsource it to various vendors and contractors. However, the market feedback, which the NHAI and highways ministry has got, indicates that there are a lot of international institutions, which have a 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, he said, adding that the investors include Abu Dhabi Investment Authority (ADIA), Ontario Teachers’ Pension Plan, etc. He said that under this TOT model, the right of collection of user fee (toll) in respect of selected operational NH stretches constructed through public funding is proposed to be assigned for a specific time period, to developers/investors against upfront payment of a lump-sum amount to the government. Further, during the tenure of the contract, the operation and maintenance responsibility would remain with the assigned developer/investor. A senior NHAI official on condition of anonymity said, “This is not a ‘distress sale’ of assets. These assets continue to remain in the sovereign. Only the toll collection rights are being transferred for a specific period along with maintenance obligations in lieu of a lump sum upfront fee. The fee is to be determined by market in an open competitive and transparent manner. Such asset recycling has successfully being tried in other geographies of the world in the past.” With the increase pace of National Highway construction in the country, the number of public funded operational highway projects is likely to increase over time. Such completed and operational public funded projects in some cases have been bid out under the OMT contracts wherein the selected concessionaire is required to take care of the projects operation and maintenance of around six-nine years depending on when the major periodic maintenance is due. But the biggest limitation of this model is that it’s a short tenure model and NHAI fails to get an upfront payment for investments which the TOT will provide now. The road ministry official said, “The corpus generated from proceeds of such project monetization could be utilized by the government to meet its fund requirements regarding future development and operation and maintenance of highways in the country. This could address development/strengthening of highways in unviable geographies. The model would facilitate efficient toll realization through private sector.” The initiative is also likely to create new business opportunities for a new vertical of developers who specialize in operation and maintenance of highways, category of investors (Institutional Investors including Pension and Insurance Funds, Sovereign Funds, etc.) which is averse to taking construction risks but is adequately equipped for making long-term investments in road infrastructure. Greg Pateryn Jersey
Tamilnadu won’t join UDAY scheme until Centre meets our demands: Minister
MINISTER for Electricity, P Thangamani on Thursday clarified that the State government won’t join the UDAY scheme of the Central government until the demands put forth by Tamil Nadu were met. Replying to the discussion on the demands for grants for his department, he referred to the statement of DMK president M Karunanidhi, raising doubts as to whether Tamil Nadu had joined the UDAY scheme since TNEB officials had held talks with the Centre. “Chief Minister J Jayalalithaa already made the stand clear and even requested the Prime Minister to make some alterations in the Scheme. She opposed revision of power tariff once in three months as envisaged in the UDAY scheme,” Thangamani said and asserted that Tamil Nadu would not join the scheme unless its demands were met by the Centre. The revenue deficit of TNEB was brought down to Rs 8,542.12 crore in 2015-16 and is expected to touch Rs 6,374.17 crore this financial year. Due to the incessant efforts to reduce the debt burden, TNEB would start earning profit within three or four years. Soon, Tamil Nadu would get an additional 563 mw from the Phase-II of Kudankulam atomic power project, he noted. Giving a detailed account on the State’s power scenario, he said the average requirement of power now ranges between 13,500 and 14,000 mw. This would go upto 20,000 mw within the next five years. To meet this demand, three power projects would be implemented at a cost of Rs 34,375 crore. These projects were expected to be commissioned between 2018 and 2020, and steps are being taken to set up projects to generate 12,720 mw. Haydn Fleury Jersey
UPERC asks discoms to increase CGRF meeting
The UP Electricity Regulatory Commission (UPERC) on Thursday directed that the number of meetings of Consumer Grievance Redressal Forum (CGRF) be increased to address the problems faced by the power consumers in the state. Commission issued the direction after it came to know that as against six sitting in each district headquarters, only meeting was held in districts like Hathras, Aligarh, Bulandshahar and Muzaffarnagar, three sittings at Mainpuri, Badaun, Shahjahanpur, Ambedkar Nagar and Hapur, and four to five sittings in the other districts. UPERC chairman Desh Deepak Verma said that the representatives of Discoms have been directed to widely publish the place, date and other details of Consumer Forums through Radio, TV, Pamphlets and by providing the details on billing stations and on the back of electricity bills, so that the benefits of the CGRFs may reach to the consumers. Reviewing the status of disposal of cases, the Commission came to know that Kanpur had 26 cases pending for over 6 months while Bareilly had 201 cases pending for over 6 months. Likewise, Faizabad had 17 cases pending for more than 6 months and 9 for more than 1 year and Varanasi 7 cases for more than 6 months and 6 for more than 1 year. Similar situation prevailed in many other districts, UPERC said. Jim Otto Jersey
UP’s energy deficit has reduced on increased power supply:Govt
Uttar Pradesh, where the power situation is “serious”, witnessed a steep decline in energy deficit as more electricity was supplied to the state from central generating stations, Union Minister Piyush Goyal said today. Around 6,544 million units of additional power was supplied to Uttar Pradesh in 2015-16. As a result, the state’s energy deficit came down from 15.6 per cent to 3.2 per cent, Goyal told the Lok Sabha during Question Hour. The Power Minister said this has happened in one year as electricity supply was increased about 20 per cent to the state from central generating stations. When a member asked why in certain places the name Deendayal Upadhyaya Gram Jyoti Yojana is not displayed, Goyal said despite directions it has not been done. After coming to power, the NDA government renamed the Rajiv Gandhi Grameen Vidyutikaran Yojana as Deendayal Upadhyaya Gram Jyoti Yojana. In a written reply, Goyal said the government has specified norms and standards for reduction in specific energy consumption for energy intensive sectors. Under the Perform, Achieve and Trade (PAT), 478 industries from eight sectors were given targets to reduce their specific energy consumption in the first cycle, which was from 2012-13 to 2014-15. “The cumulative target for energy saving for the first cycle was 6.68 million tonnes of oil equivalent (MTOE) to be achieved by the end of 2014-15, against which energy saving of 8.67 MTOE have been achieved which is about 30 per cent more than the target,” Goyal said. Alejandro Villanueva Authentic Jersey
Power tariff to go up by 7percent in Gr Noida from next week
Greater Noida/Noida: The Noida Power Company Limited (NPCL) — a private company that provides electricity in Greater Noida — has decided to increase tariff rates by up to 7% for domestic consumers and up to 8% for commercial and industrial categories from August 10. The decision was taken following an order by Uttar Pradesh Electricity Regulatory Commission (UPERC) on August 1 to implement uniform tariff rates across Uttar Pradesh. However, there will be no retrospective charges. In Noida, which is already following the UPERC order of last year, there is no change in domestic tariff although a 6-7% increase is expected in the LMV 2 (low and medium voltage category used for commercial consumers) and in the industrial category when the relevant notification comes through, officials said. The UPERC tariff order of Monday is for financial year 2016-17 in which there is no increase in domestic and agricultural tariff rates. However, in the case of NPCL, since the domestic tariff rates of last year were not implemented, according to Sarnath Ganguly, general manager, NPCL (Operations), the company is implementing them from August 10 in order to comply with the UPERC order of August 1. “Last year, the tariff rates were lesser for the consumers of NPCL compared to the rest of UP including Noida,” Ganguly said. For example, while the tariff for Noida for domestic consumer was 4.40 for 0-150 units last year, the tariff for Greater Noida NPCL consumers was Rs 4.10 for 0-150 units (see box). Now from August 10, the uniform tariff of Rs 4.40 for 0-150 unit will be charged in Greater Noida as well. “The move is an effort to bring NPCL on par with other consumers of UPPCL as applicable across UP in terms of tariff rates,” Ganguly told TOI. Also, there will be no retrospective charges on new tariff, said Ganguly. The increased tariff ranging from Rs 4.40 to 6.20 per unit, is expected to affect nearly 60,000 consumers of Greater Noida and will be reflected in their September bills. Under the new tariff structure, NPCL has also increased the fixed charge on tariff which from Rs 80 per kWh to Rs 90 per kWh in the domestic category. In the commercial category, while the fixed charge earlier was at Rs 200 per kWh connection, it has now changed to Rs 225 for 2kWh connection, Rs 275 for 2kWh and 3kWh connections, and Rs 355 for connections above 5kWh. The change in fixed charge on tariff for small and medium industries by NPCL include Rs 245 for up to 4kWh connection, Rs 255 for 5kWh to 9kWh connections and Rs 275 for 10kWh and above connections. As for Noida, J K Gupta executive engineer, PVVNL (Distribution), said an increase of 6-7% in the LMV 2 and industrial categories is expected. “The notification for that is expected within a week,” Gupta said. DeVante Parker Jersey
No shutdown of transmission line without permission of SLDC
The Arunachal Pradesh power department on Thursday said that the proposed shutdown of the 132 KV Ranganadi-Ziro transmission line was not in the knowledge of the State Load Despatch Centre. Reacting to media reports about the proposed shutdown, the SLDC said that it was the nodal agency of the state to exercise supervision, monitoring and control of all grid-related operations and as such no shutdown of any element of the grid system could take place without its knowledge and consent. “Even if such shutdown is warranted due to urgency of the work, as stated by Power Grid Corporation of India Ltd, it should be coordinated by the SLDC to ensure minimum disturbance and after consultation with all stake holders to reduce difficulties to the consumers,” Chief Engineer A Perme in a statement in Itanagar said. Power Grid Corporation of India Ltd had informed about the likely shutdown of the transmission line for at least 15 days affecting power supply to Lower Subansiri, Upper Subansisri, Kra Daadi, Kurung Kumey, East Siang, West Siang, Upper Siang and some parts of Papum Pare. Taking a view on the media reports on the matter of shutdown affecting eight districts of central Arunachal, the issue would be discussed in a high level meeting to be chaired by the Commissioner at Pasighat on Thursday, Perme said. The matter would also be raised in the 124th OCC forum of North East Power Committee (NERPC) by the Department of Power on August 8 next in Meghalaya. Ibraheim Campbell Authentic Jersey
GST: Power firms left guessing
Power and renewable energy companies may have to reassess their viability as uncertainty looms over existing tax holidays in the goods and services tax (GST) regime. Most companies enjoy tax exemptions in several states. With the GST Bill being passed in the Rajya Sabha, all eyes are on the model guidelines and the state policies that will follow, particularly on exemptions. “The infrastructure sector will keep its fingers crossed, as there is no clarity on current indirect tax exemptions for this sector,” said Abhishek Jain, tax partner, EY India. The sector is hoping the government will allow existing exemptions to run their course. Jain said another area of concern was the clause in the model GST law that restricted credit on goods and services acquired for construction of immovable property other than plant and machinery. “This clause is interpretative, which may lead to litigation and result in denial of credits in certain situations,” he added. A major concern for energy companies is restrictions on passing on costs if tax exemptions are taken away. Power equipment, solar cell and wind turbine manufacturers fear there could be an increase in cost. “We are waiting for fine print of the GST regulations and how the states emulate these. As there is no electricity duty, wind and solar power companies cannot pass on the cost escalation due to removal of tax holidays,” said an executive with a renewable energy company. Experts expect a 15 per cent rise in the cost of equipment like solar panels and wind turbines if the tax holidays are removed.The ministry of renewable energy had sought from the finance ministry a zero GST rate for the sector. This is in the wake of the falling cost of renewable energy, especially solar power. Terrell Edmunds Authentic Jersey
Bidders remain elusive for Kingfisher House; auction may fail
The proposed auction of Kingfisher House, the erstwhile headquarters of Vijay Mallya-led group’s long-grounded airline, may prove to be a damp squib yet again tomorrow as bidders have remained elusive even at a reduced reserve price of Rs 135 crore. This is the second attempt by the banks to recover part of their unpaid loans from Kingfisher Airlines through auction of this prime office property near domestic airport here, after not even a single bidder turned up at an earlier auction in March at a reserve price of Rs 150 crore. Sources said same fate awaits for the one-hour auction scheduled for tomorrow, as not even a single bidder deposited the earnest deposit money within the deadline of August 1. Besides, the still high reserve price, the numerous legal issues facing the group may also be keeping the bidders away. Kingfisher House is just one of the several properties, together worth over Rs 700 crore that lenders and the tax department will put under hammer this month to recover part of their outstanding dues totalling thousands of crores of rupees from the airline. Gordon Hayward Jersey
Sector impact: GST and the aviation sector
The goods and service tax (GST) once implemented will increase the cost of air tickets and other services such as cargo transportation and aircraft maintenance. The Indian aviation industry believes that the exclusion of petroleum and aviation fuel from its ambit will continue to impact the aviation sector. The central government will continue to impose excise duty on five petroleum products—crude oil, diesel, petrol, natural gas and aviation turbine fuel (ATF), while the state governments will continue to impose value-added tax on these petroleum products. ATF contributes over 40% of an airlines’ operating cost. Jet fuel prices in India are among the highest in the world. ATF prices for domestic carriers vary at different airports across the country due to different rates of sales tax and value-added tax. The various tax components before arriving at the final price include import duty on ATF. While petroleum and petroleum products are technically under GST, the GST council comprising of the Union and state finance ministers will decide upon their induction after the final GST regime is in place. Experts believe that the proposition shall be discussed. Jeff Heuerman Authentic Jersey
AAI profit surges 30% to Rs 2,537 crore in 2015-16
Airports Authority of India (AAI) saw its profit after tax jump nearly 30 percent to Rs 2,537.36 crore last fiscal, on the back of higher passenger numbers and increased revenues. Minister of State for Civil Aviation Jayant Sinha informed the Lok Sabha today that AAI recorded a total revenue of Rs 10,824.50 crore in 2015-16 compared to Rs 9,284.98 crore in the year-ago period. In the last financial year, AAI’s profit after tax stood at Rs 2,537.36 crore, higher than Rs 1,959.22 crore in 2014-15. “Increase in passenger numbers, marginal increase of User Development Fee (UDF) charges in AAI airports, Passenger Service Fee (Facilitation Component) and increase in lease revenue from Delhi and Mumbai airports have contributed to the increase in AAI revenues,” Sinha said in a written reply. According to him, there was an 18 percent rise in passenger traffic, 11 percent increase in aircraft movements and 16.23 percent jump in airport lease revenue during 2015-16. State-owned AAI manages 125 airports, including 11 international aerodromes and 25 civil enclaves. It also provides air traffic management services. Jason Pierre-Paul Jersey