Banks still not confident about PPP projects: Gammon Infra MD
Prime Minister Narendra Modi has finalised infrastructure targets for road and rail sector for FY17. The government has sought to encourage private participation by August 2016 and also wants the Road Ministry to develop a contractor-rating system to incentivise early completion of projects. Bloomberg TV India discusses its impact with KK Mohanty, MD, Gammon Infrastructure. We heard about 30 per cent contracts are being awarded through NHAI under the hybrid annuity model. How do the prospects of the hybrid annuity model compare with the erstwhile model? The whole business position in this PPP sector runs with the basic philosophy: higher the risk, higher the returns. The hybrid annuity model has drastically reduced the risk by primarily giving 40 per cent at the initial construction stage and taking away the toll collection risk. That takes away the offside on the investment too. So you are likely to get only a marginal return on your investment when you borrow from a bank and complete the annuity project. So from a business proposition or investment angle, it reduces the risk and it also takes away the offside of the investment. But I would like to make another point. Even if out of ?3 lakh crore, 30 per cent as stated by the government has to be through the PPP model; at least a ?50,000-crore credit facility from public sector banks will be necessary to take forward the project. The present situation is that the doors of the banks are almost closed against PPP or road projects. So we need to address that issue. How do you address the concern of the banks and bring back their confidence? In the initial half, for a dozen projects that have been bid, frontline players have stayed away and and new-generation players have come forward to take annuity projects. These may not have a very large balance-sheet. So that brings in another area of risk. Because in a country like ours, you cannot be always in a learning curve and the new player comes in and just keeps on learning, and new challenges come along the way. There are certain major roadblocks which need to be addressed. What about project divestments for completed projects? You have also undertaken a few of those and been a beneficiary of the same. How much of an enabler do you think it has been for the industry? We have monetised six of our operational projects in a very difficult time. That is a one-of-a-kind deal in the infrastructure segment in the country. We got some valuable additional cash flows and resources that have improved our balance sheet, and we are slightly a cash-surplus company today. It might be easier for us to rebuild the business again from this level, because our balance-sheets are not stretched today. Going ahead, we need to see that all asset monetisation cannot happen in such a depressed market or when we are practically operating in a buyer’s market than a seller’s market. The market has to be more balanced where both the buyer and the seller have a choice. It is just not getting into a seller’s market where there is only one or two buyers and you have to sell the projects at an unattractive evaluation. That puts the investors at a disadvantage and sometimes shatters the confidence of new investors. George Fant Jersey
Union govt to give Rs. 97,000 crore for state highways
The NDA government has decided to spend Rs. 97,000 crore over the next three years on the state’s national highways, which includes adding new ones. The state government plans to increase the length of national highways passing through the state to 19,000 km from the existing 7,500 km, PWD Minister Chandrakant Patil said on Thursday. Tenders for all road contracts will be issued by December 2016 and the first instalment of Rs. 10,000 crore will be disbursed by March 2017, sources in the state Public Works Department (PWD) said, adding the rest of the amount will be sanctioned in two instalments. The decision was taken in a meeting held on Thursday that was attended by Mr. Patil and officials from the state and the central governments. The official announcement is likely to be made on Monday. Of the total funds to be allocated for the state, around Rs. 50,000 crore will be spent on building new highways and the rest will be for repairing existing ones, which includes upgrading state highways to national highways. “The centre is keen on improving road conditions in the state, which will lead to better connectivity between cities. The government’s focus is on adding more highways in the state, and money required for the projects will be provided by the Centre,” a PWD official said. At present, over 15 new national highway projects are under construction, for which around Rs. 7,000 crore have already been allocated. These projects include the second phase of the Pune-Solapur highway, six lanes of the Pune-Satara highway, the one connecting Solapur to the Karnataka border, four lanes of the Solapur-Yedshi highway and the Panvel-Indapur stretch on the Goa highway, six lanes of the Pimpalgaon-Nasik-Gode highway, four lanes of the Khed-Sinnar and Yedshi-Aurangabad highways, the Nagpur-Kondoli and Nagpur-Betul highways among others. The government has also decided to change the contractor for the Panvel-Indapur stretch on the Goa highway. According to sources, the Centre has agreed to extend Rs. 700 crore to the new contractor and the road will have toll booth. The pending road construction between Pune-Satara will now be given priority as PWD minister himself has decided to visit areas which are facing problems. “The minister, along with the district collector and police authorities, will be visiting local people to sort out their problems. The work has been pending for years and needs to be completed soon as per the directions from the centre,” the official said. Last year, around 11 projects were declared as national highways including the ones connecting Vadkhal to Alibaug, Duggipar to Gondia, Shewali to Gujarat border, Muramgava to Karanji, Sarad to Pimpalgaon, Malkapur to Aurangabad, Savner to Gaundkhairi, Nagpur to Armori, Sakoli to Sironcha, Umred to Warora and Butibori to Wardha. At present, over 15 new national highway projects are under construction Cameron Artis-Payne Womens Jersey
Smart city project in Kochi to be completed by 2020: CM Pinarayi Vijayan
The construction of the Smart City Kochi in will be completed in three years. This was announced by the Chief Minister Pinarayi Vijayan after a meeting with Smart City authorities in his office in Thiruvananthapuram. The project will create 1 lakh job opportunities. The construction of about 55.5 lakh square feet of space out of the 88 lakh square feet Smart City will be completed by 2020. In the Smart City project 67 lakh square feet space has been earmarked for IT industries and 21 lakh square feet for non-IT purposes. So far only 6.5 lakh square feet of space has been developed in Smart City. The next board meeting of Smart City will be held at Kochi on August 6, 2016. Jesse Davis Jersey
Arun Jaitley woos Chinese firms to invest in India’s infra sector
Making a strong pitch for Chinese investments in India’s expanding infrastructure sector, Finance Minister Arun Jaitley today said India will be the only economy in the world which is poised to grow at 7.5 to 8 per cent in an “unsupportive global environment.” Addressing ‘Invest in India’ Business Forum here, Jaitley said “in the immediate future we will certainly maintain the growth rates which we have.” “Hopefully if there is good monsoon this year, which is expected to be, we have a potential to improve upon those growth rates. Even in an unsupportive global environment we probably would be only economy which moves up towards 7.5 per cent and more towards the eight per cent growth rate,” he said referring to the IMF downgrading global economic growth. “In a supportive global environment if things change for the better I do not know what the rate itself would be. But I am assuming that the global environment would remain the same,” he said laying out a detailed roadmap for massive development of rural and urban infrastructure across India. “Therefore India in these roadmaps offers an attractive opportunity,” he said at the meeting attended by a large number of top Chinese bankers and wealth fund managers. “Because this size of the economic activity is now going to carry on and expand in the next few decades,” he said inviting Chinese firms to step up investments in India. Outlining a host of measure initiated by his government, Jaitley said Goods and Services Tax (GST) bill which is pending in Rajya Sabha is expected to be passed soon. “We are now trying to bring direct taxes down and the corporate tax to a highest level of 25 per cent. The first significant step in this regard has been taken. Over the two to three years one can expect major reforms in that direction,” he said. “Indirect reform is pending before the Parliament and I hope to see it through very soon. It is called Goods and Services Tax (GST). We had a major challenge about resource allocation in India. We completely distanced the government from allocation and allowed the market mechanism now to determine that,” he said. Elaborating on “emphasis areas” of the development in India in the next few years, the Finance Minister said “the first emphasis area is going to be infrastructure creation. “And for a large number of Chinese investors present here, I think having gone through that experience in China, we are now passing that phase where there is massive infrastructure programme which is on India. Part of the infrastructure programme we are building rural roads, national highways,” he said. “Seven hundred thousand villages in India are going to be connected with regular road by 2019,” he said. “This year we are building about 10,000 km of national highway. That is the pace at which the changes are being carried on,” he said, adding that plans are afoot to build more airports and sea ports. There is also “private participation in railways infrastructure”. Indian railways is a large network therefore its modernisation is necessary, he said. In the power sector, particularly in renewable energy, a very big target has been set besides establishment of smart cities. “These are the infrastructure programmes which are on the anvil. Therefore the kind of returns they offer are also very large. Investors can look at each individual project or they can even look at the national infrastructure investment fund which we have set up, where the government itself remains a minority partner consistently,” he said. “We are also putting in a lot of resources as an emphasis in India’s rural sector like rural sanitation, roads, electrification, housing so that we could create development apparatus in those rural areas,” he said . Manufacturing is a great emphasis area, he said. “Startups are being given utmost priority. There is a big programme of financial inclusion which is going on in India as a part of the social sector reforms,” he said. Jaitley said, “State support, subsidies as they are called, we have rationalised the whole process. This again is work in progress. This has been one of the most important changes which have taken place in India. So that state support reaches those who really deserve it and not those who do not deserve it.” “Therefore through legislation a unique identity number being given to every Indian. We have managed to put that reform in place. We have tried and brought in major amendments to our arbitration law and other legal systems to ensure that resolution of disputes in relation to commercial matters including public private partnership contracts takes place expeditiously,” he said. “We passed the bankruptcy law which makes exits even easier. Over the next one year besides the indirect tax reforms and certain reforms in the company law, certain reforms of regulations in banking and easier resolution of disputes are all legislative changes which are pending,” he said. While explaining India’s economic development since his government took over, he said in the last few years significant changes that have been taken place in India. “Three years ago India was considered relatively among the weaker points as far as BRICS nations were concerned” with questions whether India will be able keep up with the reforms and its growth potential. “These were the questions being raised. India succeeded in putting all the questions behind it because the country managed to grow and grow reasonably well and grew in environment where the rest of the world has slowed down,” he said. “When in unsupportive global environment you grow that displays your real strength potential. That is what India has been trying to do. Last two years has consistently seen India pass the seven per cent growth rate. 7.6 last year and 7.2 per cent the year before last,” he said. Corey Clement Jersey
Karnataka to set up 500-acre exclusive township for Japanese firms: CM Siddaramaiah
Karnataka will develop an exclusive Japanese International Township (JIT) in a 500-acre plot in Tumakuru district, which is about an hour’s drive from Bengaluru. The township will come up at Vasantha Narasapur, and it will host only Japanese firms, Chief Minister Siddaramaiah said here on Thursday after opening the new engine unit of the Toyota Industries Engine India at Jigani on the city outskirts. The Chief Minister hailed Japan as a sturdy partner with Karnataka, and more than 400 Japanese firms operate here, making Karnataka one of the largest clusters for Japanese companies in India. Toyota Mitsubishi Engineering Industrial Corporation (TMEIC) and Mitsubishi Elevators are some of the Japanese companies that recently established their plants in the State. The government, the CM said, has been supporting Japanese investors by project facilitation mechanisms in the Industries department by constantly reviewing the progress. Nathan Beaulieu Jersey
Govt to take up highway projects worth Rs 1.5 lakh crore in Bihar, says Nitin Gadkari
The Centre will take up highway projects worth Rs 1.5 lakh crore in Bihar and is committed to package announced by Prime Minister Narendra Modi, Union Minister Nitin Gadkari said. The Prime Minister in the run up to Assembly polls in Bihar last year had announced to provide a special package of Rs 1.25 lakh crore for Bihar. “In our five years regime we will do work worth Rs 1.5 lakh crore in Bihar. Whatever package the Prime Minister declared, that will be done,” Road Transport and Highways Minister Nitin Gadkari said addressing the media. Gadkari said as of now the total projects approved in Bihar by the Centre stood at Rs 60,000 crore. Bihar has 4,967 km of National Highways including the 2,100 km approved by the Centre recently, he said. “We will increase it by another 2,000 km,” the Minister said adding, currently work is on 77 projects worth Rs 20,000crore in the state and another 27 projects worth Rs 5,000 crore will be awarded soon. He said under the Setu Bharatam projects, 13 railway over bridges (RoBs) will be built in the state at a cost of Rs 900 crore. Frederik Gauthier Jersey
Govt approves Rs 2,272 cr highway project in Karnataka
The government today approved a Rs 2,272 crore highway project in Karnataka. “CCEA approves development of four-laning of Hubli-Hospet Section of NH-63 in Karnataka,” an official spokesperson said after the Cabinet Committee on Economic Affairs (CCEA) meeting. The project pertains to widening of the 144 km stretch. “Four-laning would cost Rs 2,272.20 crore, and the total length is approximately 144 km,” he said. Mike Piazza Jersey
Haryana govt to develop two-lane highway
Haryana government has decided to develop a two-lane highway along the banks of Western Yamuna Canal connecting Karnal, Panipat and Sonipat districts as well as Bawana and Rohini in Delhi, to provide an alternative route to decongest National Highway 44. This came out in a meeting presided by Chief Minister Manohar Lal Khattar to review pending issues of metro and other railway projects here today. The proposed 121.302-km-long highway, which would cost about Rs 1,400 crore, would be constructed from Ghogripur near Karnal to Outer Ring Road near Haidarpur Water Treatment Plant in Delhi region, an official release stated. It would be constructed under a scheme of National Capital Region Planning Board, Khattar said. Reviewing various projects, the Chief Minister directed Public Works (Building and Roads) Department officers to construct a “magnificent and glorious” Swarn Jayanti Dwar at the entry point of Gurgaon from Delhi. He also directed the officers to construct welcome gates on the inter-state border at the remaining 27 entry points to the state to commemorate the golden jubilee of Haryana. Describing the railway link between Kurukshetra and Haridwar of “vital significance”, Khattar said there is no direct railway link between the two holy cities and directed the officers to explore the possibilities of starting a Delhi-Haridwar route via Ambala and take up the issue with Railways. Khattar also directed them to frame a policy in consultation with National Highway Authority of India (NHAI) for rescheduling of toll taxes at various locations so that the rates can be reduced. The state government has decided to elevate the existing Rohtak-Gohana railway line in Rohtak city at a cost of about Rs 230 crore. This would be a first-of-its-kind in the country, said Khattar. The Chief Minister also reviewed the progress of Sonipat-Jind and Rohtak-Meham-Hansi railway lines. He also reviewed the progress of Metro projects in Haryana and gave necessary directions to the officers concerned. The meeting was told that Gurgaon metro — Badarpur to YMCA in Faridabad and Sikanderpur Station to NH 8, Gurgaon — have already been made operational. The metro link from Sikanderpur station to Sector 56, Gurgaon, Bahadurgarh metro project and Ballabhgarh metro project are under implementation and would be completed by the end of 2017. The state government has requested Delhi Metro Rail Corporation (DMRC) to carry out a techno-feasibility study of three projects — metro connectivity from HUDA City Centre to Old Faridabad, extension of Delhi Metro till Kondli and metro connectivity between Faridabad and Gurgaon. Adrian Amos Jersey
National Highways Authority joins Masala bond drive
: National Highways Authority of India has invited banks to submit expressions of interest for an offering of Masala bonds at a minimum tenor of five years to raise the rupee equivalent of $750 million, according to market sources. These will be the company’s debut Masala issue. India Ratings, CARE and CRISIL have assigned AAA ratings to NHAI’s long-term domestic borrowing programme. Despite interest from issuers, no Masala bond issues have been completed yet, but there is a strong pipeline building from public sector companies. NHAI says it will consider issuing offshore rupee bonds of 10, 15 and 20 years. It has given banks until the end of this month to respond. Earlier this week, India’s largest power company, NTPCBSE -2.10 % , had said it was looking to raise $250 million from an offering of Green Masala bonds, according to market sources. NTPC was said to have mandated Barclays, Citigroup, Deutsche Bank, HSBC and SBI Capital Markets for the offering. Last week, Rural Electrification Corp sent a request for proposals to raise $100 million from Masala bonds, with a greenshoe option to increase the size for up to $200 million. The Reg S bonds were to have a tenor of three years and one day. The proceeds will be for financing infrastructure projects in the power sector. Banks have until July 4 to respond to REC’s call for proposals. REC is rated Baa3 and BBB by Moody’s and Fitch, equivalent to the sovereign rating of India. ICRA and CARE have assigned AAA ratings to REC’s local bonds. Bradley McDougald Jersey
Government approves Rs 2,272 crore highway project in Karnataka
The government today approved a Rs 2,272 crore highway project in Karnataka. “CCEA approves development of four-laning of Hubli-Hospet Section of NH-63 in Karnataka,” an official spokesperson said after the Cabinet Committee on Economic Affairs (CCEA) meeting. The project pertains to widening of the 144 km stretch. “Four-laning would cost Rs 2,272.20 crore, and the total length is approximately 144 km,” he said. Ryan Allen Womens Jersey