CENTRE TAKES THE HIGH ROAD, RESCUES PRR
The long-drawn debate between the Bangalore Development Authority (BDA) and National Highways Authority of India (NHAI) over who would build the Peripheral Ring Road (PRR) around Bengaluru has finally come to an end. The Centre has agreed to take up the project under the Bharat Mala Pariyojana. Union Minister of State for Road Transport and Highways Pon Radhakrishnan confirmed the development and added that the NHAI was preparing the detailed project report. The 65-km-long PRR stretch from Tumkur Road to Hosur Road — which looks to ease the load off the Outer Ring Road — will now be funded and built by NHAI. Around 1,810 acres have already been earmarked by the BDA for the project. A source said the NHAI would require around Rs 41,000 crore for the project. Of this, Rs 25,000 crore would be for land acquisition and compensation (according to the new Act), while the construction will cost Rs 16,000 crore. Now that ownership is out of the way, the focus is on the compensation package. A source in NHAI said they were looking into various models to take up the project. They can either take up the project on the usual PPP model or the hybrid annuity model (the Bengaluru-Mysuru six-lane project will be taken up under this mode). Under this model, the concessionaire would fund 60 per cent of the project cost while the rest would be borne by the Centre. The Centre hopes that by doing so, it can attract a number of bidders. The NHAI officials in Bengaluru said the current project details were being worked out in New Delhi. For years, the PRR project was like a game of football between NHAI and BDA. As the ORR was saturated, the state government, headed by the then Chief Minister SM Krishna, had mooted PRR to be constructed by the BDA. Later, however, NHAI officials had asked the state government to hand over the project. But during the time, the BDA had intervened and took over for the implementation which never took off. Then, the BDA said NHAI would construct it and the latter said the BDA had taken over the project. Only during the last meeting, it was decided at the Chief Secretary level that the project will be handed over to the Centre. PC Mohan (MP, Bengaluru Central) told Mirror that he had taken up the issue in parliament, and it was heard. “It’s a good sign for Benglauru. PRR is a much-needed project… we need to connect it from one point to another point. PRR will ease the pressure on city’s roads. Vehicles entering the city from Tumkuru side will have direct exit towards Tamil Nadu on Hosur Road,” he added. Bharat Mala Pariyojana Through Bharat Mala Pariyojana, the Union Ministry of Road Transport and Highways takes up a detailed account of the National Highway network with the aim to improve connectivity. ABOUT PRR The Peripheral Ring Road (PRR) is aimed to decongest the city’s roads, especially the Outer Ring Road, which is used by at least 10,000 trucks every day. To relieve the traffic pressure on ORR and other major roads of Bengaluru city, a Peripheral Ring Road of 65 km was planned outside of the ORR. This road would not only improve connectivity to areas beyond the ORR, but would also ease congestion. It will start from Hosur Road and extend till Tumkur Road, passing via KR Puram, Bellary Road, Old Madras Road and Sarjapur Road. The project is to take off from near Makali on Benglauru-Pune road and connect with Hosur Road. Mark Jackson Jersey
HDFC and NHAI likely to raise Rs 10,000 crore via Masala bonds
Housing Development Finance Corporation (HDFC) and National Highway Authority of India (NHAI) are set to raise funds from the international markets as the US’ Federal Reserve is widely expected to raise interest rates at least three times this year. Together, they could raise up to Rs 10,000 crore by selling rupee-dominated masala bonds (Rs 5,000 crore each) to investors before the end of this fiscal mostly, said multiple sources with direct knowledge of the matter. An email sent to NHAI remained unanswered till the time of going to press. “We have received in-principle approval to raise another Rs 5,000 crore via rupee-denominated bonds,” Keki Mistry, VC & CEO, HDFC, told ET. “We will deploy the proceeds in housing loans as we see larger demand over time as a result of the government’s continued focus on housing. We will look for a right time to enter the market and borrow money under the programme,” he said. “India is an attractive investment destination and the confidence of foreign investors is reflected in their continuing interest in investing in equity and debt of Indian companies,” he said. While NHAI has appointed three bankers –– Axis BankBSE 0.20 %, Standard Chartered Bank and Nomura –– HDFC is in talks with bankers, sources said. Individual banks could not be contacted immediately for comments. “Bankers would be aiming to raise the whole sum or most of it, before the financial year ends as US rate increases look imminent, adding to borrowing cost,” said a senior banker. HDFC, India’s largest mortgage lender, was the first to tap the masala bond market last year collectively raising Rs 5,000 crore worth of masala bonds. These bonds, listed on the London Stock Exchange, has three-year maturities and are priced a few basis points lower than its domestic corporate bond rates. Yields of those LSE-listed bonds have fallen recently pushing up prices. “Indian borrowers tap masala bond market either to diversify their borrowing resources or get a large sum at a cheaper cost,” said Ajay Manglunia, executive VP (fixed income), Edelweiss Finance. “If such overseas deals are sold 15-20 basis points less than their domestic corporate bonds, issuers stand to gain.” “HDFC and NHAI are top-rated issuers, and will play a crucial role in deepening the masala bond market,” he said. One alluring factor is the relative stable exchange rate as global investors, including hedge funds and private banks, are supposed to take the currency fluctuation risk on such investments unlike in dollar-denominated bonds where issuers take the same. “We have signed contracts worth Rs 5 lakh crore for infrastructure, roads, ports….we are receiving good response for the public-private partnership, build-operate-transfer and hybrid annuity (models),” Nitin Gadkari, road transport, highway and shipping minister had said a few days ago. Lucas Johansen Authentic Jersey
NHAI-hybrid annuity model: HAM model tailored to cut risk for developers, but bankers need more comfort to lend to these projects
Although nearly 40 road projects worth around Rs 35,000 crore, to be built via the hybrid annuities model (HAM) have been bid out by the government since December 2015, more than a dozen of these are stuck for want of financial commitments. Since it is mandatory to have financial closure within 150 days of the projects being awarded, there is a real chance many of these will fall by the wayside. As opposed to the build-own-transfer model, the HAM model was tailored to reduce the risk for the developers with National Highway Authority of India (NHAI) shouldering the obligation to acquire land, obtain the environment clearances, estimating traffic and collecting the toll. However, bankers are apprehensive that developers now have too little skin in the game. With 40% of the project cost coming as a grant from NHAI, the concessionaire’s equity participation is reduced to just 15% of the remaining 60% of the project cost, or a mere 9%. Given their mixed experience with lending to the roads sector, it is not surprising bankers are being cautious. They are reluctant to fund the projects even after it was decided thatNHAI’s grant of 40% would be drawn down in the early stages of construction rather than being a milestone-based release of funds. An analysis by CRISIL of eight projects shows the bids have been somewhat aggressive—it turned out the average number of bidders had increased from three to 10 and that only four of the projects were viable. In such a situation, bankers are right in saying this will expose developers to cost over-runs while the annuity payments are fixed; indeed, the costs budgeted for by builders are lower than those estimated by the NHAI. Even otherwise, risks associated with road projects are not low, which is why lenders want the concession agreement to build in a stiff compensation in the event of a default. They are looking at nothing less than 90% of the outstanding debt. If bankers are not given the requisite comfort, the new scheme to get roads projects could also trip up. Jonathan Jones Authentic Jersey
Governor discusses speeding up road projects in Assam with Centre
Assam Governor Banwari Lal Purohit today took up issues related to fast-tracking pending road and highway projects in the state during his meeting with Union Road Transport, Highways and Shipping Minister Nitin Gadkari in New Delhi. Following detailed discussion, Gadkari assured Purohit that he would personally look into speeding up all the ongoing road and highway projects which would be completed very soon, a Raj Bhawan release said here. Gadkari also said he would be visiting Assam as soon as the assembly elections in the five states got over. Lauding the interests shown by the Union Minister for his initiatives for roads and highway in the state, Purohit however commented much more needed to be done given the present condition of roads. Purohit, who also holds the additional charge as Governor of Meghalaya, has widely travelled across Assam by roads and traversed at least 24 out of total 33 districts in the state during the last six months. He did this after assuming the Gubernatorial stint in the state, the release added. Mark Bavaro Jersey
Rs 5 lakh crore worth of orders signed for roads, ports: Gadkari
The government’s road and highway building programme has enough cash to build the crucial infrastructure, Road Transport and Shipping Minister Nitin Gadkari has said. “We have signed contracts worth Rs 5 lakh crore for infrastructure, roads, ports. It is a remarkable contribution from our investors. We do not have any problem, we are receiving public, private investment… we are receiving good response for the Public-Private Partnership, Build-Operate-Transfer and hybrid annuity (models),” Gadkari told Assocham TV in an interview. As per the 2017-18 Budget, presented by Finance Minister Arun Jaitley earlier this month, the AAA-rated National Highways Authority of India (NHAI) has been permitted to raise Rs 70,000 crore through infrastructure bonds, he said. “For NHAI, triple-AAA rating is there. We already have permission from the Finance Minister for raising Rs 70,000 crore infrastructure bonds.” “My toll income is Rs 10,000 crore per year. So, I can monetise for 15 years and I get Rs 2 lakh crore. There are 101 projects which are ready with where I am going to monetise and I will get Rs 1.25 lakh crore… so, money is not the problem,” he added. Besides, there is easy availability of low-cost overseas loans, the minister said. “We are getting Rs 3,000 crore in dollar loans with 2.25 per cent interest, and we can raise Rs 50,000 crore without hedge with two per cent interest”. Gadkari was responding to a question by Assocham TV about how realistic the plans for the transport sector were when the private sector was facing severe financial stress. He also said his ministry was working on a number of waterway projects for improving inland connectivity within big metros like Mumbai, as well as for inter-city connectivity. Kareem Martin Jersey
NHAI to float bids for monetising 10 national highway 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. T.Y. Hilton Jersey
‘Infra projects hang fire, Rs 1,000cr dues pending’
The Telangana government’s decision to tighten purse strings, post-demonetisation, has adversely impacted contractors who had taken up irrigation, road and other infrastructure works in the state. Addressing the gathering at the National Academy of Construction (NAC) campus on Wednesday , contractors sa id that dues worth a staggering Rs 1,000 crore have piled up over the last three years. The event was held to discuss the issue under the aegis of the Telangana chapter of the Builders’ Association of India (BAI), a body of engineering construction contractors. “When the TRS came to power in 2014, the chief mi nister had sanctioned a hu ge amount of money for in frastructure projects, all of which were kicked off at the same time. After demo netisation, it is contractors from Panchayat Raj and R&B who have been worst hit as we are not able to get loans from banks for these projects, after exhausting all our funds. To complete works, we need costly concrete machinery , tippers and other advanced equipment, which can’t be procured without ample funds,” said Soma Srinivas Reddy , Nalgonda chairman of BAI. According to B Sugunakar Rao, state chairman of BAI, while the state government had officially stopped giving them monthly payments since November, 2016, certain pending bills from as early as April and May , 2016, ha ve still not been clea red.”While the go vernment wants to de velop Hyderabad into a global city, it isn’t re leasing funds for the same. The state government has to release funds on a monthly basis and they have stopped doing so from as early as April last year. Not only are we unable to procure equipment to complete works, we are not even in a position to pay workers’ salaries. We need the CM to address contractors’ concerns at the earliest,” said Rao.Members of the association have now decided to wait till February 15, before taking further action. “If all payments are not made, all sanctioned projects will be hampered and will come to a standstill,” Rao warned. Ron Francis Womens Jersey
Compensation for Land Acquisition for NHs
Instructions have been issued by the Ministry of Road Transport and Highways to all the agencies implementing the National Highways (NHs) Projects that the amount of compensation for acquisition of land for NHs projects is determined in consonance with the First Schedule to the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, with effect from 01st January, 2015. As per section 3G(5) of the National Highways Act, 1956, if the amount determined by the competent authority is not acceptable to either of the parties, the amount shall, on an application by either of the parties, be determined by the arbitrator to be appointed by the Central Government. Matt Prater Jersey
Govt doubles highways target to 15,000 km in next fiscal
The government has set a target of constructing 15,000 km of highways in the next financial year, 50 per cent more than that in the current fiscal. The road transport and highways ministry expects to construct a record 8,000 km of highways this fiscal, even as that will be 2,000 km short of the target. Officials said 5,000 km of highways were constructed between April and December 2016, at 18.5 km a day on average. However, they said, the pace always remains subdued during the monsoon months and picks up during the last quarter. In the last fiscal, the ministry built nearly 6,100 km of highways, higher than 4,410 km in the previous year. The budget for 2017-18 has earmarked nearly Rs 12,000 crore more for the ministry for the next fiscal, compared to the revised allocation of Rs 52,446 crore for the current year. Besides, the ministry has been allowed to raise another Rs 59,000 crore through National Highways Authority of India (NHAI) bonds during the next fiscal. Brett Hull Jersey
143 SEZ developers get more time for projects: Nirmala Sitharaman
During the last three years and the current fiscal up to January, the Commerce Ministry has granted more time to as many as 143 developers of SEZ (special economic zone) to complete their projects, Parliament was informed today. Commerce and Industry Minister Nirmala Sitharaman said that some SEZs developers have sought additional time for the execution of their projects for various reasons including adverse business climate due to global recession, delay in approvals from statutory bodies and delay in environmental clearance. “During the last three years and the current financial year (up to January, 2017), BoA (Board of Approval) has granted more time to 143 developers of SEZ across the country to complete their projects,” she said in a written reply to the Rajya Sabha. BoA is a 19-member inter-ministerial body headed by the commerce secretary. These zones are export hubs, outbound shipments which account for about 23 per cent of the country’s total exports. They enjoy certain tax and other benefits including exemptions from central sales tax, service tax and exemption from income tax for 15 years. Replying to a separate question, the minister said as many as 141 SEZ which have been approved are yet to be developed. As on December last year, 206 SEZs are operational. She informed that the maximum numbers of operational SEZs (units which have started exports) are in Tamil Nadu (36), Telangana (27) followed by Maharashtra (26), Karnataka (25) and Andhra Pradesh (19). Exports from these zones during April-December 2016 stood at Rs 3.58 lakh crore. It was Rs 4.67 lakh crore in 2015-16. Replying to a separate question, Sitharaman said as per reports available, some exporters are found to have “artificially inflated” their exports to avail financial benefits during the last three years. “The regional office concerned has taken appropriate action under Foreign Trade (Development & Regulation) Act, 1992 as amended including cancelling the duty credit scrips and imposing penalty in such cases,” she added. JK Scott Authentic Jersey