Highway across nations: India approves $1-billion connectivity project
India has approved an ambitious $1.04-billion project for constructing and upgrading 558 km of roads to link it with Bangladesh, Bhutan and Nepal and ease the movement of passengers and cargo, as part of the larger effort to increase inter-regional trade by 60 per cent. The new project has been given an official nod by India’s Department of Economic Affairs with 50 per cent funding from the Asian Development Bank (ADB), officials told IANS, adding that the road project will cover West Bengal and Manipur on the Indian side, as of now. “The mandate is for completing the project within the next two years,” a senior official said. “The primary idea behind the Bangladesh-Bhutan-India-Nepal (BBIN) road initiative is to improve ground connectivity in the region,” said Leena Nandan, Joint Secretary, Ministry of Road Transport and Highways. “We have taken up five highway stretches in the country, which are very important for such a connectivity to succeed. This project is entirely different and new — and about to be rolled out,” Nandan told IANS. The project — as per a list accessed by IANS — includes, among others, an upgrade of the 122-km Siliguri-Mirik-Darjeeling ($15 million) and the widening of the 60-km National Highway-35 (Kolkata-Bangaon) on the border with Bangladesh ($130 million). It also includes a new 123-km road to connect with Diamond harbour, on the outskirts of Kolkata, at a cost of $250 million. All these are in West Bengal and will be entrusted to the state’s Public Works Department for execution, officials said. “This apart, two highways are going to come up in Manipur — 115-km Ukhrul-Tolloi-Tadubi ($230 million) and a 138-km split, four-lane road between the Kohima-Kedima Kring-Imphal section of National Highway-39 ($280 million),” said A.D. James, Deputy Secretary at the Ministry of Road Transport and Highways. “These two roads are to be executed by the National Highway Infrastructure Development Corp. They are currently in the DPR (detailed project report) stage,” James told IANS. Officials are also looking at the possibility of shorter routes. Apart from the works under the $1 billion project, a 600 metre bridge and a 110 km-road in the Impal-Moreh stretch of Manipur are also being planned under the broader BBIN road initiative. The Manila-based bank has agreed to fund up to 50 per cent of this project as well, officials said. The DPR for this is ready. Clearances are awaited from Nepal. “This bridge will connect Kakarbhitta in Nepal with Panitanki in West Bengal. Once we receive the necessary approvals, we would like to bid for the projects as early as possible, say by November-end,” said Anand Kumar, Managing Director, National Highways and Infrastructure Development Corp. The four South Asian nations, led by Road Transport and Highways Minister Nitin Gadkari from the Indian side, had signed a landmark Motor Vehicles Agreement in June last year in the Bhutan capital Thimpu to regulate passenger, personnel and cargo vehicular traffic among the South Asian neighbours. “This agreement between sub-grouping of four South Asian nations — Bangladesh, Bhutan, India and Nepal — will pave the way for seamless movement of people and goods across their borders for the benefit and integration of the region and its economic development,” Gadkari had said. A joint statement later said: “Taking note of the finding that transforming transport corridors into economic corridors could potentially increase intra-regional trade within South Asia by almost 60 per cent, and with the rest of the world by over 30 per cent.” As regards the funding, James said talks were simultaneously on with ADB to look beyond the committed 50 per cent. “There are chances that the bank may even fund up to 72 per cent of the total cost for the project. Then we will get around $700 million.” Zane Gonzalez Authentic Jersey
‘Nagpur-Mumbai expressway project report by month-end’
The proposed expressway between Nagpur and Mumbai will be a “game-changer” for Maharashtra and its detailed project report (DPR) will be finalised by the month-end after which tenders will be floated in October, said Chief Minister Devendra Fadnavis. The 710-km high-speed road corridor, connecting two key cities of the State and costing ?46,000 crore, will pass through nearly a dozen districts, most of them spread over backward Vidarbha and Marathwada regions. Boost to agro units The Maharashtra government will finalise its DPR by the end of this month and float tenders in October, he said. “The project will usher in prosperity, boost agro-based industries, attract globally competitive manufacturing units in Vidarbha and Marathwada, create thousands of job opportunities directly and indirectly for youth and put Maharashtra ahead of other States by at least 20 years in terms of infrastructure and economic growth,” he said. The project will be a “game-changer” and also lead to a turnaround in the farm sector and make the dream of sustainable agriculture a reality, he said. Fadnavis was talking to a group of regional editors at State Guest House ‘Sahaydri’ in Mumbai on Monday. He also made a power-point presentation on the project on the occasion. Crosses 30 talukas The expressway will start from Nagpur and pass through 30 talukas of Wardha, Amravati, Washim, Buldana, Jalna, Aurangabad, Ahmednagar, Nashik and Thane districts. It will have 22 nodes or prosperity hubs where truck terminus, commercial facilities, knowledge city, IT industries, and manufacturing units will come up, Fadnavis said. Land pooling method Making a departure from conventional approach to acquire land from farmers, the BJP-led government has adopted a participative approach for this project. It has opted for land pooling method by offering cash and developed land annuity-based returns to farmers, thus making them true partners in prosperity, he said. The six-lane highway would require 9,000 hectares of land. “So far, the response from farmers, particularly those from dryland areas, has been excellent,” Fadnavis stated. The land pooling model is being implemented by the government in Andhra Pradesh for building a new river-front capital city of Amaravati. Payment to farmers “The Maharashtra government, in its notification issued on July 5, 2016, has spelt out the details (on land acquisition). There will be no project affected person,” he said. “We will pay farmers, who voluntarily give land for the project, an amount of ?20,000-40,000 per acre for a period of 10 years with assured increase on annuity basis. “Moreover, farmers will get back around one-fourth of the area or a developed plot admeasuring 10,800 sq ft. “This is the first time the Maharashtra government will be pooling land for a project of this gigantic scale,” he said. Vince Coleman Authentic Jersey
Government to launch Rs 1,500 crore Eway projects in Uttar Pradesh: Nitin Gadkari
A Rs 1,500-crore expressway project between Kanpur and Lucknow in Uttar Pradesh would be launched soon, Union Minister Nitin Gadkari said today. The project is part of Rs 2 lakh crore highway projects in the state, the Road Minister said. “Detailed project report is being prepared for an eight-lane access controlled expressway between Kanpur and Lucknow. The estimated cost of the project would be around Rs 1,500 crore,” the minister said here. Once completed, “Kanpur to Lucknow distance can be travelled in 35-40 minutes”, Gadkari said adding that it will be an elevated road. The minister said massive road network would be laid in the entire state and the government has planned at least Rs 2 lakh crore projects of which work on about Rs 70,000 crore projects is underway. Gadkari last month laid foundation of three projects — Rs 806 crore Varanasi-Jaunpur stretch on National Highway No 56, Rs 785 crore Varanasi-Ajamgarh stretch on National Highway No 233 and Varanasi-Gazipur stretch on NH 29. The minister said Rs 868 crore would be spent on Varanasi-Gazipur stretch. These highway stretches are scheduled to be completed by June 2018. Gadkari said these stretches would result in all-round development of the state by promoting seamless flow of cargo traffic and passengers, and also also promote tourism and minimise the accidents. Lee Roy Selmon Authentic Jersey
NHAI plans Rs 6,000-crore boost for road developers stuck in litigation
The National Highways Authority of India (NHAI) plans to release Rs 6,000 crore to developers stuck in litigation under the new policy announced at the end of last month, a measure that will help banks recover some stuck loans while also providing funds for stalled projects. The government has asked its departments and ministries along with public sector entities to release 75% of disputed amount where the developer or concessionaire has won an arbitration case. Niti Aayog, which piloted the policy, has written to ministries and departments to act on the decision quickly. At present, 123 dispute cases worth Rs 25,000 crore are pending with NHAI, including cases worth Rs 13,000 crore awarded in favour of private parties. “In overall cases that have gone against us till date, the amount has been Rs 13,000 crore. We have already amicably settled claims worth Rs 5,000 crore,” a senior NHAI official said on condition of anonymity. “So, 75% of the remaining Rs 8,000 crore that has to be released under the new guidelines works out to be Rs 6,000 crore. We’ll start paying that amount on case by case basis. The claims are related to around 20 companies.” The payment process will be initiated as soon as the private party sends NHAI a letter. “Now this will be dependent on the private party as it needs to have a bank guarantee to back up the award claim. We are also revising our agreement format so that the company doesn’t back out from bank guarantee,” the official said. Hindustan Construction Company (HCC), which has already been awarded claims worth Rs 3,400 crore against various government departments, has sought release of Rs 1,000 crore from NHAI. “On Tuesday, we received a letter from HCC asking for a payment of Rs 1,000 crore. We’ll start looking into their claims,” the official said. HCC had in a statement said it has Rs 3,200 crore arbitration award and 75% of it should be released. Under the new guidelines cleared by the Cabinet Committee on Economic Affairs, government agencies will pay 75% of the arbitral award amount to an escrow account against margin-free bank guarantee. The escrow account can be used to repay loans or to meet commitments in ongoing projects. The move will allow recovery of loans by banks and allow companies to speed up ongoing projects. A total of Rs 70,000 crore in various sectors is stuck under arbitration. “Construction companies are reeling under liquidity crunch… Even with the release of 75% of amount this would…allow them to make a variety of payments to banks, suppliers and bid for more contracts,” said Vinayak Chatterjee, chairman of Feedback Infra. Justin Evans Authentic Jersey
Investment opportunities in 200 Gujarat infra projects: official
The Gujarat government has identified more than 200 infrastructure projects for foreign investment, a senior official from the state has told US investors. “More than 200 infrastructure projects have been identified by the state government where there are investment opportunities for the companies,” Bharat Lal, who is heading a high-powered Gujarat delegation, told a group of American investors during a road show in Chicago yesterday. The Gujarat delegation comprising of officials and business leaders is currently on a trip to the US and Canada wooing companies to attend the Vibrant Gujarat Summit in January 2017. More than 75 government officials and business leaders attended the roadshow organised by US-India Business Council (USIBC) and Federation of Indian Chambers of Commerce & Industry (FICCI) at the Baker McKenzie office. “Gujarat is the most progressive and trend setting state in the country and is years ahead on their approach in attracting global fraternity/investors into the state, said Ausaf Sayeed, Counsel General of India, Chicago in his address. Lal said Gujarat is also keenly focusing on sectors like – Agro & Food Processing, Chemical & Petrochemicals, IT & ITeS, Healthcare, Renewable Energy and many others. He further elaborated that the very culture of entrepreneurship that exist in Gujarat and the ethos of government, promotes business and industry as this creates opportunities for the people of not only Gujarat but whole India. “Due to these characteristics, Gujarat has become preferred destination of business,” he said. Ajay Kumar Pandey, CEO, Gujarat International Finance Tec-City (GIFT City) said it is India’s first model smart city with world-class infrastructure, offering ease of doing business and numerous tax benefits to the companies who operate in the GIFT City. Chris Conley Womens Jersey
Road ministry, NHAI to take up 82 highway projects for better port connectivity
The road transport ministry and National Highways Authority of India (NHAI) will together take up 82 projects under the ambitious Bharatmala project, to improve port connectivity. These are part of the broader highway expansion plan the government plans in the coming years for connecting economic hubs to major and minor ports, via road and rail. At present, this connectivity is an issue. As many as 44 routes, of at least 100,000 km of roads, would be connected. A source said the proposal by the ministry of shipping had been accepted by the roads ministry. The proposal would go to the Cabinet after discussion. Under the Bharatmala project, the ministry is to review the national highway network, to improve connectivity to coastal and border areas, religious and tourist places. Around 1,500 major bridges and 200 rail bridges are part of this, as is connectivity to district headquarters and the Char Dham places (Kedarnath, Badrinath, Yamunotri & Gangotri in Uttarakhand). Road transport, highways and shipping minister Nitin Gadkari has said improving of port connectivity is a focus area, requiring investment of Rs 4 lakh crore. There are 12 major ports — Kandla, Mumbai, Navi Mumbai, Marmugao, New Mangalore, Cochin, Chennai, Ennore, VO Chidambaranar, Visakhapatnam, Paradip and Kolkata (including Haldia) — which handle a little over 60 per cent of India’s total cargo traffic. There are 200 non-major or minor ports — in Maharashtra (48), Gujarat (42), Tamil Nadu (15), Karnataka (10), Kerala (17), Andhra Pradesh (12), Odisha (13), Goa (5), West Bengal (1), Daman and Diu (2), Lakshadweep (10), Puducherry (2) and Andaman & Nicobar (23). The central government is also developing three new ports at Wadhwan (near Dahanu in Maharashtra), Sagar in West Bengal and Colachel in Tamil Nadu. According to 2015-16 Economic Survey, cargo traffic at all ports increased by 1.1 per cent during the first six months of the financial year (April-September). It increased by 4.1 per cent at major ports but declined 1 per cent at the non-major ports, as compared with the same period in 2014-15. Gerald Everett Womens Jersey
In a first, Welspun ties funds for road project under ‘Hybrid Annuity Model’
Welspun Enterprises on Monday has closed financing for the country’s first expressway project under the ‘Hybrid Annuity Model’ on Delhi-Meerut Expressway with the total cost of ?841.50 crore. Of the total project cost, 40 per cent will be funded by the National Highways Authority of India (NHAI) under the new Hybrid Annuity Model, the company said. The remaining 60 per cent will be arranged by the concessionaire by way of mix of debt/equity of 48:12, 12 per cent being the promoter’s contribution and rest will be funded by Punjab National Bank-led consortium, it said. Hybrid Annuity Model (HAM) is a mix investments done by government and private players and payment is also made in a fixed amount for a considerable period and then in a variable amount in the remaining period. “With infrastructure spending going up, Hybrid Annuity Model is an opportunity to fast track highway projects and revive public- private-partnership mode. It will not only improve the traffic flow between the two states, but also contribute to enhancement of economic activity in the region,” Raghav Chandra, Chairman, NHAI, said. The project will be developed in 2.5 years, and thereafter the maintenance on the stretch for 15 years will be done by Welspun Delhi– Meerut Expressway Pvt. Ltd. It stretches across 8.716 km and is entirely within the city of Delhi. It consists of a six-lane express way in the centre, flanked by two four-lane highways on either side — making it 14-lanes in all. Will Hernandez Jersey
Languishing road projects
There are 46 projects which have been identified by NHAI as languishing with a total length of these projects is 4,860 km. covering a total project cost of Rs 51,338 crore. Out of 46, issues have been resolved in 27 cases whereas issues on 19 projects are yet to be sorted out. Reasons responsible for project delays: Lack of equity with the concessionaire: In several sections (e.g. Motihari-Raxaul section, Rohtak-Jind section, Gurgaon-Kotputli-Jaipur section, Haridwar-Dehradun section), the lack of equity with the concessionaires has delayed the projects much beyond the scheduled completion date. In some projects, this has also resulted in the bankers not disbursing even the loan sanctioned at financial close. Diversion of funds: In few cases the physical progress of work is not commensurate with the financial progress. These are likely cases where the funds may not have been utilised towards the projects and concessionaires are finding it difficult to bring back the funds so diverted. Delays due to reasons not attributable to the concessionaire: The Authority has also defaulted in fulfilling its conditions precedent in a number of cases due to land acquisition, environment /forest clearance /utility shifting /RoB issues. In cases like Rimoli-Roxy-Rajamunda, delay in forest clearance has turned the project unviable and therefore has to be terminated and re-bid. Refusal of banks to accept first charge of NHAI: For any languishing highway project in BOT (toll/annuity) mode that has achieved at least 50 per cent physical completion, NHAI will provide financial assistance to complete the project subject to first charge on the toll/annuity receivables of these projects. However, the banks have refused to accept the first charge of NHAI and therefore no progress in implementation of this policy to complete languishing projects is being achieved. High cost of interest during construction (IDC): The cost of construction in case of delay, whether due to concessionaire or the Authority, results in increase in the cost of debt which turns the project unviable. In case of termination due to delay by concessionaire during the construction period, there, too, is no termination payment. Difficulty in obtaining additional debt in stalled projects: In projects where the concessionaire is already faced with delays, there is no possibility of obtaining additional debt to complete the project as the account in many cases may have already turned NPA. Overleveraged balance sheet of the developers anticipating high level of growth. The economic downturn seen in the last few years has caused revenue realisation at a much lower rate than was anticipated. Many developers have taken future obligation which created difficulties in debt servicing. Stress on the existing road infrastructure loan portfolios of FIs: Reduced revenue realisation due to economic slowdown affected debt servicing by the concessionaire as the contracted debt servicing obligations could not be met with the existing revenue. As the sector got affected, the lenders debt portfolio for roads came to have a disproportionally high level of debts. NPAs saddled banks with additional capital adequacy requirements, provisioning demands and income recognition restrictions. Long period of revenue collection: The current practice of financing large infrastructure projects based on revenue streams spread over 20 to 30 years, but with project debt having tenure of 10 to 15 years, is also unsustainable. Debt sanctioned by banks higher than total project cost estimated by NHAI: Because the project debt is based on the developer’s cost estimates, which is, on an average, 35 per cent more than the NHAI project cost, the lenders are exposed to a higher risk particularly in the event of termination of the concession agreement, wherein NHAI guarantees compensation based on its own appraised project cost and not the developer’s estimate. Corporate debt restructuring has been affected in many SPV debt: Concessionaires unable to service debt have to propose to the lenders to restructure the debt: While the first restructuring exercise is permitted by lenders without any adverse asset classifications, any exercise going forward automatically affects the asset classifications in the books of lenders. A second restructuring necessarily requires that the debt be classified as non performing. Sector exposure norms of FIs getting exhausted: With the debt obligations mounting on account of debt repayment deferment, sector exposure increased, reaching exposure norms for this sector. Higher cost of financing: The lenders who provide major part of financing in the form of debt are concerned with the downside risks which influences the project progress and debt serving capability and consequently to mitigate the risk of financing have enhanced the cost of lending to the sector. Bond market for infrastructure financing: The Bond market can provide a viable option for long term financing. Under the Infrastructure Debt Fund, Banks have to accept the first charge of Infrastructure Debt Funds on termination payment . As projects have been financed at a much higher cost than the NHAI total project cost, the debt due may not cover the complete senior debt leading to resistance of banks to first charge of Infrastructure Debt Funds. Brandon Brooks Jersey
Infra pool to have separate funds for roads, clean energy
The government has tweaked the structure of the National Infrastructure Investment Fund (NIIF), which will now have two dedicated funds — one for roads and another for clean energy — as it looks to get long-term funds into two crucial sectors of the economy. Originally, the government had planned to have NIIF as the mother fund which was to raise money from sovereign wealth funds (SWFs), pension funds and other long-term investors. But based on discussions with investors, the finance ministry has now changed the strategy. “Interaction with various SWFs, pension and long-term funds showed that investor interest was not so high in multipurpose or multisectoral infrastructure fund. They wanted more focused investment in sectors or sub-sectors,” economic affairs secretary Shaktikanta Das said, when contacted. He confirmed that the two sectoral funds are planned, which sources said could have initial corpus of around Rs 5,000 crore each. The government had planned to start NIIF with an initial corpus of Rs 40,000 crore and had budgeted to release Rs 4,000 crore this financial year with funding from other investors such as Abu Dhabi Investment Authority, Russia’s RUSNANO, Qatar Investment Authority and Singapore’s GIC, among others. The idea is to provide long-term funding and reduce pressure on banks, which are the primary source of finance for long-term infrastructure projects. Bank lending comes with asset-liability mismatches since majority of bank deposits are for one-two year tenure while loans to infra projects are for 15-20 years. With Sujay Bose taking charge as NIIF chief executive, the government is set to release the budgetary allocation for the current financial year and is in talks to raise funds from multilateral agencies in the mother fund. A part of the allocation will also be transferred to the two sectoral funds with further fund-raising from long-term and private equity investors. Das said that the government has a long shelf of projects and money would start flowing to the two sectors quickly. Investor interest in the highways and renewables sector has grown in recent years after the NDA government unveiled a series of measures to promote investment in these two segments. Several overseas funds have shown interest in investing in the country’s highways sector after the government moved to uncog the sector and accelerated the award of projects. The government is banking on rapid infrastructure development through this fund and has identified several projects in which investments could flow into. The NIIF, announced in the budget, is expected to ease pressure on banks, which are facing severe stress from bad loans. Duke Johnson Womens Jersey
NHAI gives Rs 350 crore boost to Gurgaon-Jaipur stretch of NH-8
The NHAI board has approved the infusion of Rs 350 crore to complete the already delayed Gurgaon-Jaipur stretch of NH-8. The widening and maintenance work has come to a standstill as the highway developer has no funds to carry out expansion and even bankers have stopped releasing funds. The widening work had started in April 2009 and has missed several deadlines. Sources said banks had stopped releasing loans fearing they would not recover their debt that they had already extended to the project. TOI has learnt that the NHAI board, which has representation from highways and finance ministries, has approved the fund infusion considering that termination of the contract at this stage would create bigger problem. Sources said the project was 90% complete. “Re-tendering the work will take time and commuters will suffer, who have already faced the worst. The road also needs proper maintenance,” said an NHAI official. He added the fund will be used to complete the remaining three flyovers, building service roads, foot over bridges and installation of crash barriers along the entire 225 km stretch. According to the approved scheme, NHAI will first recover its interest on the amount it will infuse for the remaining work. “Since serving interest of loans already extended by the banks to this project is also important, we will allow payment of banks’ interest as well from the toll being collected. The remaining amount of the collected toll will be used first to pay back NHAI’s investment,” said a source. Last October, the government had approved one-time fund infusion by NHAI to revive and complete languishing national highway projects. NHAI chairman Raghav Chandra said this was the best possible solution to finish this languishing project. He added there are also issues regarding non-payment of toll by multi-axle vehicles at a toll plaza and Rajasthan government would have to compensate for the revenue loss. Sources said huge number of multi-axle vehicles have skipped paying toll at Shahpura by claiming that the vehicles are owned by locals. Ed Dickson Jersey