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Infrastructure & PPPs in India - Q2 2022 Update - Transport and Urban Infra

YOG INFRA Q2 2022 insights

INDIA's transport and urban infra sector is developing new projects for implementation through PPPs; and some of these are first-of-kind projects in the country - school PPPs, ropeway PPPs, transit oriented developments and port/ airport developments. Besides, the tradition road/ highway development continues to see excellent growth, both greenfield (HAM and BOT models) and brownfield (ToT model)

Read more in our latest insight for the country.

This is second publication on a 2-part insight series on India

 

April 2022

DEVELOPER WINS INDIA HIGHWAY PROJECT WITH USD 148 Mn BID

India's Prakash Asphaltings & Toll Highways has won a contract for a highway upgrade project in Uttar Pradesh state. The company submitted a winning proposal of INR 11.36 Bn (USD 148 Mn) and agreed to share 1% of annual toll revenue throughout the 20-year concession.

The project requires the developer to upgrade an 82.5 Km stretch connecting the towns of Bindki and Pukhrayan to four lanes from two. Traffic on the road is dominated by commercial vehicles that cater to several small industrial clusters.


INDIA TO SEEK BIDS FOR NEW DELHI STATION REDEVELOPMENT

An Indian government agency is preparing to call for bids to redevelop the New Delhi railway station in a revised public private partnership (PPP) model. The Rail Land Development Authority estimates the cost of the project to be INR 44.8 Bn (USD 593 Mn), the model has been revised to a hybrid PPP from the design, build, finance, operate, transfer (DBFOT) method planned earlier.

The revised model and decision to retender the project follows a move by the Ministry of Railways to designate the Rail Land Development Authority as the sole procuring authority for all redevelopment projects. Previously, the duties were shared with the Indian Railway Stations Development Corporation.


INDIAN STATE TO PRIORITISE PPPS IN NEW TOURISM POLICY

India's Tamil Nadu state is preparing to introduce a new tourism policy that will prioritise public-private partnerships (PPPs) and frame rules to speed up project approvals. The state government will also consider granting the sector industry status, which will result in lower power charges and property taxes.

The document will spell out various incentives and subsidies and identify government support required for creating peripheral infrastructure and public amenities.

It will focus on creating a tourism brand, training local operators to collaborate with private investors, and integrating all tourism associations under a single entity so they can work together. One of the focus areas will be adventure-related projects such as water sports and cable cars, said Nanduri, adding that the aim is to attract investments exceeding INR 10 Bn (USD 130 Mn).


INDIAN STATE TO INCREASE VIABILITY FUNDING FOR SOCIAL INFRA

India’s Karnataka state has decided to increase funding support for social infrastructure projects to increase their attractiveness for investors. The government's viability gap funding will rise to 30% of a project's cost from the current 25%.

The state has approved almost 100 PPPs since the Bangalore international airport in 2007 but fewer than a fourth of these have been successful. The government aims to train its lower-level bureaucracy in the concept of PPPs.

The Infrastructure Development Department will only approve PPPs valued at USD 5 Mn or higher, projects usually do not draw interest from reputed developers. The department has approved PPPs of as low as USD 1 Mn.


INDIAN AUTHORITY SEEKS CONSULTANT TO PREPARE LOGISTICS PARK PPPS

India's National Highways Logistics Management is seeking consultants to prepare a feasibility study to set up two multimodal logistics parks in Andhra Pradesh state. The assignment includes preparing a detailed project report to establish connectivity infrastructure to the two sites – one at Visakhapatnam and the other at Anantapur.

The consultant will need to prepare cost estimates, the two projects are part of a programme to set up multimodal logistics facilities at 35 locations in India, covering the movement of more than 50% of the country’s road freight.

National Highways Logistics Management - which is tasked with setting up multimodal logistics parks - issued a single request for proposal for both parks. The parks must occupy a land area of at least 100 acres, accommodate several modes of transport and include facilities such as warehouses, storage and cargo terminals


INDIAN STATE TO TWEAK MODEL FOR METRO RAIL PPP

India’s Telangana state will tweak its public-private partnership model for the second phase of a metro rail project in Hyderabad city. The 30.7 Km line, which will cost an estimated INR 55 Bn (USD 719 Mn), will be built in the hybrid annuity method.

The details are yet to be worked out, the state government aims to make the project more attractive to prospective concessionaires. The Telangana government’s contribution and other financial details are being worked upon.

The first phase of 69.2 Km - divided into three corridors - was built by engineering major Larsen & Toubro (L&T). The project incurred time and cost overruns owing to a delay in securing right of way.

The asset was built in the design, build, finance, operate, transfer model and carries a concession of 35 years that can be extended by another 25.

L&T invested about INR 180 Bn, including debt of more than INR 135 Bn. It needs a daily ridership of around 900,000 to break even 250,000, lower than the 300,000 per day before the COVID outbreak.


INDIAN TOWN PLANNING AUTHORITY PLANS PPPS

A town planning authority in India’s Gujarat state will call for private investments to set up city infrastructure in 2024. The projects will potentially involve the development of roads, car parks, water supply, social housing, waste management and other urban infrastructure facilities.

The authority is currently developing a 22 sq Km area, which is the first phase of the project, estimated to cost about INR 45 Bn (USD 587 Mn), with the help of central government funds.

In the second phase, the authority will take up about 30 sq km, the first tenders calling for

private sector investment will be published in 2024. It will require a total investment of about INR 50 Bn, of which it will seek about half from investors.

The authority is currently in the process of leasing out land that has been developed in the first phase of the project and expects to fully allot the entire 22 sq km area.


DILIP BUILDCON LOWEST BIDDER FOR INDIA HIGHWAY UPGRADE


Infrastructure developer Dilip Buildcon has been declared as the lowest bidder for a highway upgrade project in India’s Jharkhand state. The company offered INR 9.76 Bn (USD 127.4 Mn) to expand a 51.8 Km stretch connecting Mahagama town to Hansdiha village to four lanes from the existing two.


INDIA'S DEENDAYAL PORT PLANS OIL-JETTY PROJECTS

India's Deendayal Port Authority aims to call for bids to build two oil jetties after finishing the procurement process for another later this year.

The port aims to call for bids for Jetty 10 in the second half of 2023 and - once that project is awarded - it will seek investors for the 11th. The three facilities will add more than 10 million tonnes of capacity and cost an estimated INR 6.1 Bn (USD 79.5 Mn). The contracts will be handed out in the build, operate, transfer model and carry a concession of 30 years.

Located on the western coast, Deendayal is India's busiest government-owned port by throughput and handled a record 127 million tonnes in the 12-month period through March 2022. It has 10 projects worth a total of INR 31.6 Bn in various stages of implementation, and another seven estimated to cost INR 66.85 Bn that are yet to be implemented. They will together add close to 100 million metric tonnes of capacity per annum.


LOCAL DEVELOPER WINS 41KM HIGHWAY UPGRADE PROJECT IN INDIA


Chandigarh-based MG Contractors has won a project to upgrade a 41 Km highway to four lanes from two. The stretch links the village of Khajuri in Jharkhand to Wyndhamganj in Uttar Pradesh’s Sonbhadra district. The company confirmed its status as the lowest bidder and its price proposal of INR 8.46 Bn (USD 110 Mn).

MG Contractors beat five other contenders, the NHAI had estimated the project cost at INR 7.65 Bn. MG Contractors is an unlisted company and was established as a partnership firm in 1989. The company is involved in the construction, upgrade, and maintenance of roads, including state highways and in rural areas.


May 2022

INDIAN CITY AUTHORITY PLANS ROPEWAY PPPs

A city development authority in India’s National Capital Region is planning ropeway projects to be developed in a public-private partnership (PPP) model. There are four ropeway (elsewhere known as cable car) projects of which the Ghaziabad Development Authority is initially taking up a 5.2 Km stretch.

The authority estimates the project cost to be about INR 4.68 Bn (USD 61 Mn). The feasibility study is being prepared by the National Highways Management Logistics company, a subsidiary of the National Highways Authority of India. It was set up to mainly oversee the implementation of multimodal logistics facilities.

The central government is placing importance on ecologically sustainable alternatives to conventional roads, especially in hilly areas, and that it would take up a National Ropeways Development Programme in the PPP model. The plan involves awarding eight ropeway projects totaling 60km in the year through March 2023.


ADANI PLANS USD 60 Bn CAPITAL EXPENDITURE

Indian conglomerate Adani Enterprises is planning a capital expenditure of about USD 60 Bn in the next seven years. It will spend USD 10 Bn in the next two years. Of the USD 10 Bn, it will spend about USD 4.2 Bn on its airports business and an equal amount through its subsidiary Adani New Industries.

The unit was set up in January this year to invest in green hydrogen, and manufacture wind turbines and batteries for solar modules, among other components. Adani Enterprises will also spend about USD 2.2 Bn on roads and has a plan to set up data centres with a total capacity of 300 MW in the long run, estimated to cost USD 600 Mn.

The group is planning a presence in the healthcare segment with an investment of about USD 500 Mn. This would most likely be through a partnership with an established healthcare provider.


ADANI AIRPORTS ARM RAISES USD 250 Mn FOR CAPITAL EXPENDITURE

India’s Adani Airport Holdings (AAHL) has tied up USD 250m of debt from a consortium of Standard Chartered Bank and Barclays Bank. The senior secured three-year facility will be used for capital expenditure and development of six operational aerodromes. The airports subsidiary of diversified business group Adani also has an option to raise an additional USD 200 Mn.


INDIA OUTLINES USD 7.5 Bn COASTAL INFRA SPEND

India’s Ministry of Ports, Shipping and Waterways has identified 567 projects to be part of an ongoing programme to improve infrastructure and economic opportunities in coastal districts.

The projects are estimated to cost INR 587 Bn (USD 7.59 Bn) in total. This takes the total number of projects under the Sagarmala programme to 1,537, estimated to cost INR 6.5 Trn.

The initiative is supervised by the National Sagarmala Apex Committee and aims at modernizing the country’s ports and creating maritime industrial clusters. It is targeting to complete 802 projects worth INR 5.5 Trn by 2035 of which it has executed 29 projects worth INR 450 Bn as public-private partnerships.


INDIA'S ANDHRA PRADESH MOVES AHEAD WITH GREENFIELD AIRPORT PPP

The state of Andhra Pradesh in India expects to finalise a project report for a greenfield airport at Dagadarthi in Nellore district. The corporation estimates the cost of the airport at about INR 4 Bn (USD 51 Mn).Once the Andhra Pradesh Airports Development Corporation (APADCL) finalises the report, it will seek approval from the state cabinet.

The bid document calling for investors can be published once the state approves the same.

The aerodrome will be located at Dagadarthi in Nellore district and will be the state’s second attempt at constructing the facility.


DILIP BUILDCON LOWEST BIDDER FOR INDIAN GREENFIELD HIGHWAY

Indian infrastructure developer Dilip Buildcon said it has been declared the lowest bidder for a contract to construct a four-lane road in Chhattisgarh state. The company offered a proposal of INR 19.55 Bn (USD 252 Mn).

The project requires Dilip Buildcon to build the 87.6 Km stretch connecting the villages of Bhaisma and Taruama and is part of a greenfield economic corridor between Raipur and Visakhapatnam. The contract will be handed out in the hybrid annuity model, in which the National Highways Authority of India (NHAI) covers 40% of the cost and the developer arranges the rest in a combination of debt and equity.

The company is repaid its investment with interest either in annual or half-yearly installments over a 15-year concession, during which the NHAI assumes the traffic risk.


INDIAN AUTHORITY RETENDERS ROPEWAY PROJECT AS HYBRID PPP

An Indian project authority has changed the implementation model for a ropeway project to a mixed public-private partnership style after a lack of interest in the build, operate, transfer method.

The 3.75 Km ropeway in Varanasi in Uttar Pradesh state will now be built in the hybrid annuity model. The National Highways Logistics Management Company, which has a mandate to develop ropeway projects across India, suggested that the state authority change its implementation model.

The hybrid annuity method is used in road contracts by the National Highways Authority of India (NHAI).

The Varanasi Development Authority will assist the National Highways Logistics Management Company with regard to local clearances and approvals. The cost of the ropeway project, which will connect the marketplace of Godowlia with the Cantonment Railway Station, is estimated to be INR 4.6 Bn (USD 59.2 Mn). This is a pilot project, and if successful, the route will be extended to Khidkiya ghat.


GMR INFRA TO INCREASE FOCUS ON NON-AERO REVENUE

Indian airports major GMR Infrastructure will spend up to INR 5 Bn (USD 64 Mn) to develop land parcels around its aerodromes in the next three to four years as it looks to increase non aeronautical revenue. The focus is to build offices and commercial properties for build-to-suit customers.

The company will consider monetising the properties once they are built and will also earn a profit on their construction, The move presents a shift in strategy from selling its land parcels to other realty companies.

In 2019, its Delhi International Airport awarded commercial development rights for 900,000 sqm to a consortium led by India’s Bharti Realty. The area is to be developed in two phases, with GMR receiving an annual lease of INR 3.63 Bn till 2036 for the first phase of 450,000 sqm, as well as a one-time payment of INR 18.37 Bn.


INDIAN PORT SEEKS EOIs FOR CONTAINER TERMINAL PPPS

A port authority in India’s Tamil Nadu State is seeking expressions of interest for an INR 72 Bn (USD 927 Mn) greenfield project. India’s VO Chidambaranar Port Authority invited expressions of interest.

The project requires the developer to construct two container terminals with a total annual capacity of 4 million twenty-foot equivalent units (TEU). Each terminal will need to have a berth of 1 Km and a draught of 18 metres so that they can accommodate vessels requiring a depth of at least 16 metres.

The developer will also have to carry out capital dredging, mechanize the berths and develop some shore facilities to support the planned capacity.

The developer will later need to dredge further to accommodate vessels requiring a draught of 18 metres, said the source, adding that dredging in the initial phase will cost an estimated INR 13.9 Bn. The development and mechanization of the berths will cost about INR 32 Bn.


INDIAN AUTHORITY INVITES BIDS FOR USD 100 M HIGHWAY PPP The National Highways Authority of India (NHAI) has invited bids to develop a INR 7.3 Bn (USD 100 Mn) highway in Tamil Nadu state. The 20 Km project involves the construction of a six-lane greenfield highway between Pondavakkam and Kannigaipair villages in Tiruvallur district in the hybrid annuity model.


The stretch is part of the longer 126 Km greenfield highway between Chittoor and Thatchur, which has been divided into four packages. The highway will be designed for speeds of up to 100 Km per hour and is envisaged as an alternative to an existing route that is congested.

The hybrid annuity model is a mix between the public-private partnership (PPP) and engineering, procurement and construction (EPC) models.


INDIAN DEVELOPER TO BUILD SEWAGE TREATMENT PLANT

Indian wastewater solutions company VA Tech Wabag said it has signed a concession agreement with the Ghaziabad Municipal Corporation to develop a sewage treatment plant. The contract is in the hybrid annuity model.

The project involves the construction of a plant that can process 40 million litres per day, and associated infrastructure. The sewage water will be treated to make it fit for industrial use. Wabag is the technical partner for the project, which will cost an estimated INR 5.9 Bn (USD 76.6 Mn).


ADANI AMONG BIDDERS FOR INDIAN PORT BERTH PROJECT

The Jawaharlal Nehru Port Authority (JNPA) has accepted proposals from Adani Ports and Special Economic Zone, JSW Infrastructure, Bothra Shipping, JM Baxi and Yogayatan Port.

The JNPA in February sought bids to modernise two berths - a shallow-water facility and another meant for coastal shipping - together estimated to cost INR 3.4 Bn (USD 45 Mn). The combined capacity is 6.8 million tonnes. This will remain the same.

For the shallow-water berth, the concessionaire will need to invest in two cranes capable of handling breakbulk cargo, while at the second facility, it will have to build a silo.

The JNPA, India’s largest container port by throughput, is in the midst of procurement to also redevelop a container terminal at an estimated project cost of INR 8.6 Bn.


GUARANTCO AND AXIS BANK PARTNER FOR INDIA'S EV INFRASTRUCTURE

Private Infrastructure Development Group (PIDG)-backed GuarantCo has agreed to provide Axis Bank a USD 200 Mn guarantee to expedite the e-mobility ecosystem in India. The climate mitigation guarantee will be used to accelerate the South Asian country's electric vehicle (EV) sector through capex financing of a wide range of entities engaged in manufacturing, distribution, and servicing of EVs, batteries, and charging infrastructure.

Loan proceeds within the framework agreement will be used for greenfield capital expenditure in the EV infrastructure under three categories — manufacturing and distribution of EVs, batteries, components, and charging infrastructure; services based on EV use and/or to the EV sector; and finance companies providing funding for the purchase of EVs.


INDIAN STEEL COMPANY SECURES DRY BULK TERMINAL PPP

The Paradip Port, on India's east coast, has awarded a contract to New Delhi-based Jindal Steel and Power to develop a dry bulk terminal. The estimated project cost is INR 30 Bn (USD 386 Mn). It will be developed in the build, operate, transfer (BOT) model.

The contract involves the construction of the terminal in two phases of 12.5 million tonnes each, with the first to be completed in three years. Jindal Steel will have to start building the second phase within two years of the first turning operational. The asset carries a 30-year concession.


June 2022

INDIA AUTHORITY PLANS USD 4.5 Bn ROAD CONCESSIONS THIS FISCAL YEAR

India’s main roads agency intends to offer roads worth an estimated INR 350 Bn (USD 4.5 Bn) as concessions. These comprise of 14 assets totalling 1,750 Km. The roads will be offered to investors either through an infrastructure trust or through an auction in the toll, operate and transfer (TOT) model.

Investors in India’s roads sector have long wished for the NHAI to identify the projects it intends to monetise a year ahead of the bidding process. A reasonable size would be at least USD 400 Mn to USD 500 Mn for long-term investors.

Canada Pension Plan Investment Board (CPPIB) and the Ontario Teachers’ Pension Plan (OTPP) each bought a 25% stake in an infrastructure trust launched by the NHAI. The agency raised INR 60.1 Bn in equity from the two funds as well as from local institutional investors.


INDIAN STATE PLANS MARITIME SCHOOL PPP

India’s Goa state is planning to redevelop a maritime school in a public-private partnership (PPP). The Department of Public Private Partnership will prepare all the pre-feasibility and other reports.

The government aims to redevelop the existing facility into a centre of excellence. The existing structure is old and decrepit and needs to be rebuilt. The department will tender two more projects - an ethanol plant and a commercial property project.

Goa set up a committee in 2020 to push PPP projects and has since then converted its PPP cell into a government department. It awarded a convention centre project last year and is planning more PPPs.


INDIAN AUTHORITY COMPLETES LAND ACQUISITION FOR MUMBAI'S SECOND AIRPORT

The procuring authority for an INR 170 Bn (USD 2.1 Bn) greenfield airport project in India has handed over possession of the required land to the concessionaire.

Indian conglomerate Adani Group, which will design, finance, build and operate the airport, tied up INR 127.7 Bn in project loans. The airport, to be developed in multiple phases, will have a total annual capacity of 60 Mn passengers.

In the initial phase — expected to be completed by December 2024 — it will cater to 20 Mn passengers and 800,000 tonnes of cargo. The facility will cover an area of 1,160 Ha. In all, landowners from 10 villages in the state’s Raigad district gave up their land for the project.


EV MAKER'S INDIAN UNIT CONSIDERS INVESTING IN CHARGING INFRASTRUCTURE

The Indian arm of the UK-based electric vehicle (EV) manufacturer Switch Mobility will consider investing in charging infrastructure. The company is keen on getting more companies to partner with it and invest in charging infrastructure. Switch will guarantee their usage with its fleet of electric buses. It currently owns 115 such vehicles in India, and about 300 globally. It plans to expand the number to about 2,000 buses in two years.

The consulting firm estimates that India will attract between USD 15 Bn and USD 20 Bn of foreign investment in EV and charging infrastructure from private equity and venture capitalists in the next 10 years.


INDIAN PORT SELECTS HIGHEST BIDDER FOR CONTAINER TERMINAL PPP

A joint venture of India’s JM Baxi and global port terminals operator CMA Terminals Holding has offered the highest proposal to redevelop and operate a container facility at India's Jawaharlal Nehru Port.


The contract win will make JM Baxi the first local company to have a significant equity stake at the Jawaharlal Nehru Port, located just outside Mumbai. There are four other container terminals at the state-owned port, two of which are operated by DP World. PSA International runs one of the facilities while a fourth is with a joint venture between APM Terminals Management and Container Corporation of India.

The Jawaharlal Nehru Port Authority (JNPA) called for proposals to upgrade a self-owned container terminal in a public-private partnership (PPP). The project is expected to cost an estimated INR 8.63 Bn (USD 110 Mn).


INDIA'S GOA STATE TO ALLOCATE LAND FOR EDUCATION INFRA PPPS

India’s Goa state plans to allocate land for education infrastructure projects in the public-private partnership (PPP) model. There are many encroachments on government land and the administration has now initiated a process to recover them. The state plans to seek interest from international institutions for higher studies.


Goa, which intends to set up infrastructure projects with private sector participation, established a PPP cell in 2020. Its pipeline so far includes an international convention centre to be built in two phases, solar power, a waste-to-energy and an ethanol plant, a commercial real estate project and a school for seafarers.


INDIAN STATE APPROVES USD 1.8 BN LIGHT RAIL PROJECT


India’s Andhra Pradesh state has cleared an INR 143 Bn (USD 1.8 Bn) light rail metro project and will soon issue formal approval.

The project will most likely be cleared in the next few cabinet meetings, it will then be sent to the central government for approval. Once cleared by the federal cabinet, the procuring authority will launch the project.

The corporation is planning a 77 Km light rail, which will be built using a mix of private investment, viability funding by the state government and a grant by the central government. The concession period will be for 38 years, of which five will be for construction.


INDIA IDENTIFIES 12 LOCATIONS FOR MORE LOGISTICS INFRA PPPS


The Indian government has identified 12 locations where it will set up multimodal logistics parks using the public-private partnership (PPP) model.

Detailed project reports are being prepared for facilities in locations such as Mumbai, Pune and Hyderabad, while pre-feasibility studies are ongoing at other places such as Siliguri, Jodhpur, Gorakhpur, Ranchi and Bikaner.

Multimodal projects, which the government mandates must occupy a land area of at least 40 Ha, accommodate several modes of transport and include facilities such as warehouses, storage and cargo terminals.

 

List of key transactions - Transport and Urban Infra - India Q2 2022




Source: YOG INFRA analysis

 

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