Private players will be able to exit PPP projects in all sectors
The revised framework for public private partnership (PPP) projects in India will offer an exit options for private players in all sectors, including power, railways and SEZs, among others. At present, only road projects under the PPP model have an exit clause. PPPs, awarded through a competitive bidding process, are typically very high-value contracts, often with huge capital and operating costs, making it difficult for developers to cope with financial losses. Besides, difficulties in land acquisition and environment clearances often lead to delays and litigation. In some cases, PPP projects can even extend up to 30 years. According to the Centre for Monitoring Indian Economy (CMIE0, the total value of stalled projects stood at around ?11.2 lakh croreas of June 30,2016, with 75% of the projects belonging to the private sector. The Centre last year allowed developers to exit highway projects two years after completion. “There is no question of stalling the PPP model… we are just revising it,” said a senior finance ministry official who did not wish to be identified. “The PPP model has been a success. We admit certain projects have landed problems but those were related to unforeseen events such as availability of coal. In the revised model, we will plug those holes and ensure that in cases of stalemates due unforeseen events, private players can have an easy exit and bring in fresh blood without hindering the project execution .” Apart from the exit clause, the government has also asked the PP P cells in various ministries to study the reasons behind delayed projects. “Alist of such projects is being made, and the reasons for the delay will be analysed,” said the official quoted earlier. According to sources, once the reasons are analysed and solutions provided, the Project Monitoring Group will start tracking the progress of the projects. “The concept of allowing changes in the PPP contract to aid exit of private players is underway in the road sector. The power ministry has started experimenting with it ,” another finance ministry official said. In fact, the ministry has identified hydroelectric projects in the north-east, where it will allow private players to exit, a source said. The Vijay Kelkar panel report on the PPP model for infrastructure development, released last year, had also suggested that the private sector needs to be protected in case of “abrupt economic or policy changes.” Meanwhile, minister of finance for state Arjun Ram Meghwal on Sunday said the government can use the PPP mode to optimally utilise idle assets of public sector units to promote skill development and generate new jobs. Trey Hopkins Womens Jersey
Patil hopes to clear key infrastructure projects
Chandrakant Patil, a trusted aide of BJP president Shah, has taken giant strides with chief minister Devendra Fadnavis allotting him the crucial revenue portfolio during the state cabinet reshuffle. Moreover, Patil has also retained the public works as well as revenue and rehabilitation departments. The move to club the revenue and PWD ministries is aimed at pushing pending infrastructure projects. The state government has so far announced numerous projects such as widening roads and converting these into national highways. It is also getting investment from the railways for laying new rail lines. With Patil holding both the portfolios, expectations among stakeholders are high as far as speedy clearances of land acquisition and pending proposals are concerned. Speaking to TOI, Patil said, “It is true that the public works and revenue departments work closely. I will have to give justice to the requirements and procedures of the respective departments. My priority will be to work harder so that orders are issued at the earliest. If I can start a sizeable number of projects within the next six months, the change should be felt by May 2019. The change would be in terms of easy commutation, good experience while driving, speedy movement of goods and other services among others. I will use this opportunity to achieve the targets.” Moreover, Patil’s proximity with Shah and Prime Minister Narendra Modi can also help in getting clearances for major projects. A retired state government officer said on the condition of anonymity, “The only problem with Patil holding both the portfolios would be his availability. Both the ministries are known for heavy workload. The minister needs to give extra time when it comes to tricky issues. It needs complete attention to handle things delicately. Land acquisition has become a sensitive issue as the existing government does not take land owners into confidence. Moreover, the overall treatment lacks basic decency in terms of discussions and negotiations.” “People should be aware of the people’s basic rights. Losing a piece of land or entire land forever will be a major shock for them. In such situation, Patil will have to use his all skills. Besides, people working in both the departments will also have to carry out negotiations for major land acquisition in the state,” the retired official added. A lot in the bag for Patil * Conversion of 12,000km-long roads in state into national highways * The state government has already bagged investment projects worth Rs 8 lakh crore through the Make In India drive, which would need huge land bank * The government is hunting for huge land in Konkan for setting up the country’s biggest oil refinery at an investment of Rs 1 lakh crore * Jaitapur nuclear power plant in Konkan is already stuck due to opposition over land acquisition. Though Shiv Sena has not yet given its green signal, Patil will have to use his skills to get it through * Pune-Miraj-Londa railway line doubling is underway for which additional land is required * Karad-Chiplun and Kolhapur-Vaibhavwadi fresh railway lines have been proposed. Land acquisition and getting clearances from the environment ministry will be the key aspects. Tyler Bozak Authentic Jersey
Roads sector prospects brighten with new project awards
The prospects for India’s roads sector have brightened with new project awards and fewer stranded assets, after delayed clearances and poor traffic held up projects for years and soured bank loans. Regulatory changes and greater government spending have helped revive the sector, multiple sector analysts and companies said. According to a 3 July Deutsche Bank report, the number of stressed projects in the roads sector is now down to just 19 from 384 in 2014. Faster clearances and dispute resolution, last mile funding and easier exits for companies are among steps taken by the National Democratic Alliance (NDA) to help the sector since it came to power in May 2014, Deutsche Bank analysts said. In recent quarters, traffic has grown 6-9% across road projects, according to numbers reported by firms, a positive sign for the sector at a time large and debt-laden conglomerates are looking to sell assets have skipped bidding for new projects. “Increasing spending on infrastructure through reviving targeted public spends has been one of the core pillars of the Modi administration’s economic strategy. While there was initial skepticism on the success of this strategy, the progress—particularly in the power, coal, road and railway sectors—is now becoming visible and has also started showing tangible results,” the Deutsche Bank report said. The centre has spent about Rs.71,700 crore on roads and highways over the past two years, 70% more than the average annual spend of Rs.21,100 crore in fiscal 2013 and 2014. The total value of infrastructure projects awarded in fiscal 2016 is also up sharply by 28.3% to Rs.3.5 trillion—the highest in the past five years—led by roads and water, according to a 23 June report by Dolat Capital. “The Indian construction and infrastructure sector offers massive investment opportunities to the tune of about Rs.28.2 trillion in coming years. Of this, power, road and railways account for 81.7%. Moreover, the government will lead this uptick in investments with a 67% share and the private sector contributing the rest 33%,” the report said. The government has cleared several project proposals and offered a one-time capital infusion to revive those short of money. It plans to award 25,000km of road projects in 2016-17, compared with the 10,000km awarded in 2015-16. In January, it approved a so-called hybrid annuity model, where it commits up to 40% of the project cost. R. Shankar Raman, chief financial officer at Larsen and Toubro Ltd (L&T), the country’s largest engineering and construction firm, said these attempts are beginning to show results, but that the sector is only at the second stage of a full investment cycle revival. “There has been an attempt to revive the sector and I think today all that we see is the results of those efforts. It’s too early to conclude the sector has revived because the stranded assets and NPAs (non-performing assets) have still not got off the books of banks. With traffic improving and regulatory conditions becoming easier, maybe they have a better chance of turning around,” Raman said. Vinayak Chatterjee, chairman at consulting firm Feedback Infra Pvt. Ltd, says it takes at least 20 months for any government action to show results. “At a macro level, my theory is very simple—that the NDA government settled down around September 2014. From that day, the time theory of impact of public investments of 20 months is proving itself true, because all indicators across cement, steel, construction equipment, toll collection, freight movement and roads are showing an uptick,” he said. India has the world’s second largest road network, with about 4.8 million km, but national and state highways constitute a small percentage of that network. Only 24% of the national highways have four lanes or higher, indicating opportunities for expansion. Easier rules to exit projects have also helped, with at least five deals worth Rs.2,070 crore transacted in fiscal 2016 (see chart). Reforms in roads, construction and mining will have a lasting impact on the business environment of the sector and in kick-starting a new wave of capex cycle, Antique Stock Broking analysts Dhaval Patel and Rahul Modi wrote in a 28 June report. “Assuming GDP (gross domestic product) growth at 8%, investment in infrastructure can be expected to increase to Rs.76 trillion over the next five years (from an estimate of Rs.11.3 trillion in the current fiscal) assuming an increase in construction spend to 9% of GDP which provides significant opportunity for industry players,” they wrote. Investment in projects under implementation across sectors slowed during the quarter of fiscal 2017 with stalled projects at an all-time high, according to a recent report on India by Standard Chartered. While the stock of stalled government projects seems to have peaked at around Rs.2.8 trillion in the first half of fiscal 2016, stalled projects in the private sector continue to increase. About 56% of total stalled projects are in the electricity and metals sectors, and private sector investment at this point remains muted. Cole Bardreau Authentic Jersey
1,446 km long roads to be completed before March 2018
Raipur Chief Minister Dr Raman Singh has directed for completion of under construction roads in Chhattisgarh including those in Left Wing Extremist affected areas by March 2018. Dr Singh, who was chairing a review meeting of Public Works Department in Mantralaya, directed for timely completion of roads while also ensuring plantation on both sides. He directed the officials to monitor the Cement Concrete road between Kawardha and Chilfi as the road is being built using modern technology. The same technology may well be used in cement concrete roads in limits of municipal councils and municipal corporations. In the meeting, Dr Singh gave the target of completion of 100 kilometers road construction every month. It was informed in the meeting that a total of 1,446.65 kilometers of roads is under construction worth Rs 9264 crores. Arang-Saraipali (21.6 kms), Raipur-Bilaspur (126.5 kms), eight roads under NHDP are included in the package. Rs 656.48 crores worth four road works totaling 186.8 kms in all are also under construction in left wing extremism affected areas. Public Works Department Minister Rajesh Munat, Additional Chief Secretary N Baijendra Kumar, PWD Principal Secretary Amitabh Jain, Aman Singh, Principal Secretary to Housing and Environment department along with other officials were present in the meeting. Daniel Pribyl Authentic Jersey
Busy days for Highway Research Institute as high-rises shoot up
INCREASE in the number of high-rises in Thiruvananthapuram has benefited Kerala Highway Research Institute, which makes most of its revenue as a consultant in construction quality. Set up in 1972 at Kariavattom, the oldest research institute of Public Works Department is now the sought after lab for providing quality checking for various builders, road contracts and other government agencies. Buildings alone require 30-odd tests, ranging from soil, steel and concrete. The city has more than 250 high-rises and new constructions suggest that it is going upwards when it comes to living. “Many builders come to us because of specific demand from home buyers,” said Thrivikraman B S, Joint Director of the Institute. Besides builders, the Institute provides consultation for Power Grid, BSNL, VSSC, Airport, Army etc. With most tests costing less than Rs 1,000, the Institute has managed to generate a revenue of Rs 20 lakh a year. According to Thrivikraman, all PWD contracts will be passed only after a quality certificate from the Institute or from its regional labs in Ernakulam and Kozhikode. For such projects, cement properties, steel, sand, bricks, tiles, bitumen, aggregates of roads soil etc. are tested. The Institute also provides technical assistance for the Vigilance wing of PWD. It is also engaged in research work. “We are working on a readymade pothole patching mix using copper slag. The project has already been approved in Indian Roads Congress,” said an official of the Institute. According to her, the Institute has a staff of 40 against the sanctioned strength of 71 and has still a long way to go to get NABL accreditation for its laboratory. Cortez Kennedy Authentic Jersey
Nitin Gadkari to seek infra investment during his week-long US visit
Road Transport and Highways Minister Nitin Gadkari will invite investments in ports, ship building and coastal economics zones during his week long visit to the US. “Indo-US cooperation in the vital infrastructure sector will get a new impetus when (the minister) holds official talks with his counter-part US Secretary of Transportation, Anthony Foxx in Washington tomorrow, on a wide range of projects of mutual interest”, an official statement said. The minister will be “particularly looking” for widening and deepening the scope of Indo-US cooperation in innovative technologies for improving highway development, road engineering, road safety and development of green fuels in automobile sector and electric vehicles, it said. During his interaction with the US captains of trade and industry and pioneers in the maritime sector, he will highlight investment opportunities in Indian maritime sector. He will invite US investments in building ports, port-led industrialization, coastal economic zones, construction of new berths/terminals in existing ports like JNPT, Mumbai and Kandla Ports, capital and maintenance dredging, mechanization, hinterland connectivity and evacuation infrastructure, ship building, ship repairing and ship recycling. India has envisaged USD 50-60 billion foreign investment for infrastructure. Another USD 100 billion is envisaged towards industrial development for port-led economic growth and inland waterways, water transport, coastal and cruise shipping and solar and wind energy generation to further boost the country’s growth momentum. The minister hopes to add two percentage points in India’s GDP through creating world-class infrastructure. At the US Department of Transportation, Gadkari will witness Modal Presentations by Federal Highway Administration, US Maritime Administration and National Highway Traffic Safety Administration. During his visit to New York on the second leg of his visit, he will visit New York City State Transport Department to understand intelligent transport management, city traffic management and control centre and other technology-based transport solutions. In the commercial capital of the US, Gadkari will also have a series of interactions with investors at the meets organised by the Indo-American Chamber of Commerce, J P Morgan, Goldman Sachs and US Indian Business Council. “Some of these interactions will be a follow up of the deliberations at the Maritime India Summit in Mumbai where a large number of US companies had evinced keen interest in promoting bilateral cooperation with India in Maritime sector,” the statement said. Gadkari will invite US companies for technology cooperation in road and highway building, road engineering, innovations in automobile sector, road safety and green fuels. Gadkari will also visit St Louis to understand Inland Waterways System on world famous Mississippi River by undertaking a boat trip. On the next leg of his visit to San Francisco, he will have talks with senior officials from the California Transportation Agency, and departments of International Affairs and business development. He will also visit Tesla, manufacturers of electric cars, and hold a meeting with investors and interact with TiE Charter members over dinner. TiE is a global organisation of entrepreneurs with over 12,000 members. He will also have interactions with and visit Oracle and Bloom Energy. More than 150 projects were identified under the ambitious Sagarmala Programme at the recent Maritime India Summit in Mumbai. India has 7,500 km long coastline, 212 ports, 70 coastal districts, one billion tone cargo handling currently, 111 waterways and 90 per cent of export-import trade (by volume) handled at ports. Deadrin Senat Jersey
National Highways sells 10,000 tags for cashless payment
The sale of FASTag, which is a cashless payment mechanism on toll plazas on National Highways, crossed the 10,000-mark in June, said a release. The monthly transaction through Electronic Toll Collection during the month has crossed Rs. 1 crore. NHAI rolled out the cashless payment mechanism (FASTag) on toll plazas on National Highways on April 25. FASTag offers near non-stop movement of vehicles through user plazas and the convenience of cashless payments of toll fee with nationwide inter-operable Electronic Toll Collection Services. FASTag is operational on more than 335 toll plazas on National Highways across the country. A dedicated FASTag lane has been earmarked at 48 toll plazas on the Delhi–Mumbai and Mumbai-Chennai corridors. To facilitate purchase of FASTag by road users, Points of Sale (POS) on 23 toll plazas are available on these two corridors. In order to promote cashless payment through FASTag, Government has allowed NHAI to give a 10 per cent cash-back incentive on toll payments in financial year 2016-17 for FASTag users. The cash-back amount for a particular month is credited back to the FASTag account at the beginning of the next month. In addition, NHAI has decided to provide FASTag to existing monthly pass-holders by absorbing the one-time cost of their FASTags. NHAI aims to cross two lakh FASTags by the financial year-end and fix dedicated lanes for ETC/ FASTag on all national highways. Use of FASTag would increase user convenience from payments without stops at toll plazas, thus, saving on time, money and fuel. The online payments would improve transparency of toll transactions and reduce revenue leakages, thus, improving overall efficiency and commercial competitiveness. Javorius Allen Womens Jersey
China’s private infrastructure firms face unexpected competition
Private Chinese companies taking part in a scheme to reduce the state’s dominance in building infrastructure are finding competition is coming from an unusual place – the government peers they are supposed to replace. Private-sector businessmen say they are losing out in most projects to state firms, which are favoured by local authorities because they are seen as financially stronger and better able to raise capital. State companies are also more likely to bid for projects that private firms consider financially unfeasible. Finance ministry data shows that 600 public-private partnerships (PPP) have so far found partners, and analysts say that about three quarters of the investment has come from state-owned firms. “The government is willing to work with government firms, but co-operation with private companies is a shambles,” said Yan Jiehe, chairman of China Pacific Construction Group, which grew to become China’s largest private builder by revenue over the last 20 years by building roads and bridges for local governments. Yan has no plans to invest in any of the advertised PPP projects, which range from municipal works to highway schemes. “None of the projects make financial sense,” he said. The central government is investigating why the private sector is winning so few projects. The central government has promised to reduce the oversized role of state enterprises in the economy, so any failure of the PPP scheme would raise doubts about that goal. China’s Ministry of Finance and the state planning agency, the National Development and Reform Commission, did not respond to requests for comment. Government officials are already worried about signs of a rapid slowdown in the private sector. Investment growth slowed to a record low 3.9 percent in January-May from the year-earlier period, which compares with a double-digit pace last year. Private firms provide the lion’s share of overall investment in China and create 90 percent of new urban jobs. SHUT OUT Problems with the PPP scheme may be more fundamental. Local authorities have advertised close to 9,000 PPP projects – worth an estimated 9.8 trillion yuan ($1.47 trillion) – so most have yet to find a partner at all. While Britain’s PPP scheme limits partnerships to a state authority and the private sector, China does not differentiate between government and private firms. At best, government firms are not allowed to bid on projects in their home province but are free to do so elsewhere. Still, infrastructure projects would not get done without the participation of government firms because the state is so dominant in the economy, said Wang Shouqing, a Tsinghua University professor who advises local authorities across China on the financing of PPP projects. “It was unrealistic to stop state and government firms from participating,” Wang said. “But placing no restrictions on them has resulted in this, because they run on a different playing field.” In 2014, Beijing pledged to give PPP funding more policy support and began offering rewards of up to 8 million yuan to all participating firms. That prompted local governments across the country to advertise projects as PPP, hoping Beijing’s policy focus would lead to faster approvals. State media has reported that the government is seeking views on a draft PPP law. UNSUITABLE The finance ministry’s database shows just 565 projects out of 8,644 have funding partners. Shanghai-based privately-owned YHX Bank found 73 percent of the investment came from government firms. “At all the projects we’ve dealt with, we’ve been told that what they want is a government or state contractor,” said a project manager at a private construction firm in southwestern Sichuan province who only wanted to give his surname as Long. Water treatment PPP projects have been the most popular among private investors because many have operating agreements that allow firms to collect fees from end-users, unlike other “build-and-transfer” schemes, like roads, that rely on the local authority for payment, analysts said. Agreements with local authorities leave the firms at risk of sudden changes in policy or budget priorities. Government firms, however, have tended to heavily undercut private companies on bids, said He Yuanping, chief financial officer of water treatment firm Beijing Originwater Technology . The company is involved in close to 80 PPPs and has mostly won projects on the back of its technology, he said. Other executives said project terms are not always viable. Some offer lengthy repayment periods of up to 30 years, or uncompetitive returns as low as 1-2 percent, they said. “In my opinion, out of those 8,000 plus projects, half are unsuitable for PPP,” said Wang. “We find that a lot of government officials have an incorrect understanding of PPP.” Nate Stupar Womens Jersey
‘Nod for Colachel port is a boost for domestic industry’
The Union Cabinet’s in-principle approval to establish a major port in southern Tamil Nadu is a shot in the arm for domestic economy, say industry representatives and officials. The proposal to set up a deep-draught port and related infrastructure at Enayam near Colachel in Tamil Nadu is a “good move in capturing transhipment and deep berthing vessel movement,” said R Dinesh, Head of National Committee on Logistics, Confederation of Indian Industry. Enayam located on the west coast can be a major transhipment hub for domestic industry as it is a “central point for the entire east and west coast of India. And with related road and rail connectivity, it can increase ease of goods movement and bring down costs for the industry,” he said. Now the industry looks to Singapore, which is 5–7 days away, for transhipment. Domestic industry can access Enayam in less than two days, he said. However, speed of execution has to be demonstrated, he said. A senior government official said the proposed port can be a catalytic factor in the development of the southern districts in Tamil Nadu. The State will be unique in getting a fifth major port and this one will have the potential to draw major lines. Once a Special Purpose Vehicle (SPV) is formed by the three major ports in Tamil Nadu — the V.O. Chidambaranar Port Trust, at Tuticorin, Chennai Port Trust, and Kamarajar Port at Ennore — the project is bound to be expedited, he said. Tyler Eifert Jersey
Waste to wealth: Railways to sell garbage collected at stations
Eager to generate non-fare revenue from various sources, the Railways is firming up proposals to sell the garbage generated at stations across the country. “We are examining a proposal from a waste management group which has offered ?1.50 a kg for garbage to be collected at railway stations,” said a senior railway official involved in exploring various avenues for generating non-tariff revenues. The Railways has created a separate Non-Fare Revenue Directorate to find ways for generating substantial revenue from sources other than passenger fares and freight. The waste management company will collect the garbage from stations round-the-clock. “The collection and disposal of garbage will be the company’s responsibility. It can be utilised for generating energy and manure,” the official said. Risk insurance cover for workers involved in garbage collection, provisions of black plastic bags for carrying it from dustbins at stations will be the responsibility of the waste management company, according to the proposal. The company has offered to take up garbage collection at 12 stations, including Amritsar, Ambala, Haridwar, Jammu, Katra, Dehradun, Moradabad, Saharanpur, CST, Mumbai Central and Dadar. It will serve the dual purpose of maintaining cleanliness at stations and also generate revenue for railways, he said. A substantial amount of solid waste is generated by passengers, visitors, vendors and staff. The solid waste consists of biodegradable as well as non-biodegradable materials. At present solid waste generated at the stations is transferred to the nearest designated location of municipality and, in this process, a considerable effort and physical transportation is required. The delay in transfer also causes early degradation leading to unhygienic conditions within the railway premises. Jeff Samardzija Womens Jersey