Infrastructure & PPPs in India - Q12021 Update - Transport
INDIA's transport sector, mote notably roads, has attracted private capital (both under PPP model and by institutional investors like pension funds). Read more about key developments in Infrastructure and PPPs in Q2/2021 in India in transport sector in our latest insight.
This is second publication on a 2-part insight series
INDIAN SHIPPING MINISTRY IDENTIFIES SEVEN BERTHS FOR PRIVATISATION
India’s Ministry of Ports, Shipping and Waterways has drawn up a list of seven operational facilities at state-run ports it intends to privatize.
The list comprises of:
A berth at Paradip Port Trust.
A bulk cargo terminal at VO Chidambaranar (VOC) Port Trust that needs to be converted to a container terminal.
A second berth, also at VOC Port Trust.
A berth at Visakhapatnam Port Trust.
A mechanized fertilizer berth at Deendayal Port Trust.
A container terminal at Jawaharlal Nehru Port Trust (JNPT), the process for which has already been initiated; and
A second berth, also at JNPT, that will be meant only for ships on local routes.
The incoming private operators will need to upgrade and expand the existing facilities, the list of projects will attract a cumulative investment of at least INR 25.5Bn (USD 343.4Mn). Of the total investment, the two berths at VOC Port Trust will require a total investment of INR 8.55Bn.
Of the assets identified, JNPT has already started the process to privatise the container terminal. It has appointed SBI Capital Markets as an adviser. The developer needs to invest about INR 8.5Bn to upgrade the facility so the asset can be utilized better.
Earlier in February 2021, Ministry of finance while the presenting the union budget also announced that major ports will shift from managing their own operational services to a model where operations will be managed by a private partner on their behalf.
INDIA TO FORM NEW POLICY TO APPROVE PPP PROJECTS
Indian government will formulate a new policy to appraise and approve public-private partnership (PPP) projects. The current process for approval of PPP projects is long and involves multiple levels of approval.
The new policy will also include revamping the process of approvals for privatizing state-owned assets, including through infrastructure trusts. The aim is to ensure speedy clearance of projects and reap the benefits of the private sector’s efficiencies in financing construction and management of infrastructure.
Healthcare infrastructure incentives
Ministry of Finance announced credit incentives of INR 500Bn (USD 6.7Bn) in an effort to ramp up healthcare infrastructure in tier-two and tier-three towns and cities.
The federal government will provide a guarantee cover of 50% of the loan amount for expanding existing facilities and 75% for new projects. The loans will be for a maximum amount of INR 10Bn and will last for three years. The interest rate will be capped at 7.95%. Without the federal government’s guarantee, the borrower would need to pay about 10% to 12% interest.
RAILWAY AUTHORITY TO SEEK BIDS FOR MUMBAI STATION REDEVELOPMENT
The Indian Railway Stations Development Company (IRSDC) will soon be calling for bids to redevelop a railway station in a suburban area of Mumbai city in a public-private partnership (PPP).
IRSDC will publish a request for proposal for Andheri railway station once it secures certain approvals for the first phase of development. To be developed in two phases, the first phase will cover 2.1 acres at a cost of INR 2.18Bn (USD 29.4Mn). The second phase of 2.21 acres is in the planning stages. The project will be taken up in the design, build, finance, operate and transfer (DBFOT) model.
STATE AUTHORITY SEEKS BIDS FOR INDIA PORT PPP
The maritime authority of Gujarat state in western India is inviting proposals to build a greenfield port in a public-private partnership (PPP). The concession period is 50 years. The project site is 140km from Mumbai city and close to a railway freight corridor, adding that the facility will be designed to handle solid, liquid and container cargo.
The state-run Jawaharlal Nehru Port near Mumbai will reach its optimum operational capacity by 2025 and a greenfield port in neighbouring Gujarat can cater to cargo from the surrounding states. The concession period of 50 years is offered as compared to the usual 30 years as this gives the developer an assurance of a greater return on investment.
THREE FIRMS BID TO TAKE OVER SOUTH INDIA BRIDGE PROJECT
Three of 11 firms that submitted expressions of interest (EOI) for a stressed bridge project (Rajahmundry Godavari Bridge) in southern India have now bid to take over its debt. The three firms are GR Infraprojects, PNC Infratech and Prakash Asphaltings & Toll Highways (India).
A total of 11 firms, predominantly global and local distressed credit managers, had initially shown interest in the stressed asset. The project is 14.48km Rajahmundry Godavari Bridge built by Gammon India for INR 11.1Bn (USD 151.1Mn) in the design, build, finance, operate and transfer (DBFOT) model. It comprises a 4.15km bridge and approach roads totaling 10.3km. The project carries a concession of 25 years.
INDIA AUTHORITY SEEKS CONSULTANT TO PREPARE EXPRESSWAY FEASIBILITY REPORTS
The National Highways Authority of India (NHAI) called for bids from consultants to prepare detailed reports to develop 885km of expressways. The main objective of the assignment is to establish the technical, economical, and financial viability of the projects and prepare reports to upgrade the existing roads to four, six and eight-lane configurations depending on the flow of traffic, according to the request for proposal document.
Along with the feasibility reports, the consultant needs to provide a financial analysis and the preferred mode of implementation as well as cost estimates. Bid documents need to be prepared for both the public-private partnership (PPP) and turnkey formats.
The expressways are divided into three packages: the first is of 415km, the second is 330km and the third is 140km. They are located across the states of Madhya Pradesh, Chhattisgarh, Maharashtra, Rajasthan, Uttar Pradesh, and Bihar. The proposed projects are part of the second phase of the government’s flagship highway construction mission, Bharatmala Pariyojana, which aims to build 65,000km in two phases. In the first phase launched in late 2018, the government set a target to construct 32,800km by 2024.
GREATER NOIDA AUTHORITY APPOINTS CONSULTANT TO PREPARE INFRA BLUEPRINT
The Greater Noida Industrial Development Authority has appointed Rudrabhishek Enterprises Limited (REPL) as a consultant to prepare a master plan to expand Noida city. The master plan till 2041 aims to augment infrastructure as well as address existing gaps in the greater Noida area in Uttar Pradesh state.
While most projects will be developed in the engineering, procurement, and construction (EPC) method, public-private partnerships (PPP) are not ruled out and will also play a part in the overall development. The master plan includes a proposal to develop transport infrastructure, real estate, low-income housing, social infrastructure, and disaster management projects.
JAIPUR DEVELOPMENT AUTHORITY SEEKS CONSULTANT TO PREPARE CITY ROAD REPORT