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Infrastructure & PPPs in India - Q3 2022 Update - Transport and Urban Infra

YOG INFRA Q3 2022 insights

INDIA's transport and urban infra sector is the most active PPP market in Asia, with developments across multiple sectors. A lot of these are bound to set precedents for PPPs in the region across sectors - grain storage, development of ports/ jetty terminals, EV charging stations, waste management, hospitals, sports stadiums, railway stations/ transit oriented developments. The country is expected to see multiple investments, from both local and international developers in these PPP projects.

Read more in our latest insight for the country.

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

 

July 2022

INDIAN DEVELOPERS EXPRESS INTEREST IN INDIAN OIL JETTY PPP

A port authority in the state of Gujarat in western India aims to complete the procurement for an oil jetty redevelopment project in three to four months. Five companies attended a pre-bid meeting and requested extensions to form their proposals. The companies are JM Baxi, Adani, Indian Oil tanking, HPCL-Mittal Pipelines (HMPL) and DBL Infra.

The jetty is one of three assets for which the port aims to procure investors. The three facilities will cost an estimated USD 80 Mn and will add about 10 Mn tonnes.

Deendayal is India's busiest government-owned port by throughput and handled a record 127 Mn tonnes in the 12-month period. The port will call for bids for jetties 10 and 11 with a four-month gap between each contract it awards. These will be handed out in the build, operate, transfer model with 30-year concessions.


INDIA FLOATS TENDERS FOR GRAIN STORAGE PPPS

The Indian government floated tenders for the first phase of construction of wheat storage units in the public-private partnership mode. The Department of Food and Public Distribution is targeting a storage capacity of 11.13 Mn metric tons (MMT) at 249 locations across the country. The implementing agency will be the Food Corporation of India.

The proposed silos will operate under the design, build, fund, own, and transfer (DBFOT) as well as design, build, fund, own, and operate (DBFOO) models. The tenders concern 14 locations for DBFOT projects (1.01 MMT) and 66 locations (2.48 MMT) for DBFOO projects. The federal and state governments have identified some land parcels for lease or transfer to the relevant concessionaires.


INDIAN AUTHORITY TO EVALUATE MORE THAN 200 ROPEWAY PPPS

India’s main agency for ropeway infrastructure has received proposals for more than 200 projects. The Indian government aims to award contracts for eight ropeway projects in the year. These will be part of a National Ropeways Development Programme , which will be taken up in the public-private partnership (PPP) model.

The programme was introduced after a study by global consulting firm Mckinsey, which identified seven hilly states for its initial phase. At the time, the National Highways Logistics Management Limited (NHLML) received proposals from states such as Himachal Pradesh, Manipur, Arunachal Pradesh, Sikkim, Maharashtra and the union territory of Jammu and Kashmir.

The agency is in the midst of procurement for an INR 4.6 Bn (USD 57.7 Mn) ropeway project in Varanasi in Uttar Pradesh state, it aims to appoint a concessionaire.


INDIAN MUNICIPALITY PLANS EV CHARGING STATIONS PPP

A municipal corporation in western India aims to soon seek investors for installing electric vehicle (EV) charging infrastructure. The Ahmedabad Municipal Corporation (AMC) in Gujarat state will provide land at subsidized rates of INR 10 (USD 13 cents) per sqm, it intends to allot about 50 sqm for each charging station.

The AMC plans to establish 25 charging stations in the first phase. It will set up more facilities, depending on demand. The contract will be awarded to the bidder offering the highest fee. The concession will be for 10 years, with amid-term review at the end of five years.

The charging rates to be paid by users will soon be decided by the state government. The AMC has three charging stations as of now, while private EV companies which have set up charge points, have their own land. India has set a goal to achieve EV sales accounting for 30% of private cars, 70% of commercial vehicles, and 80% of two and three-wheelers by 2030.


INDIAN MUNICIPALITY PLANS WASTE PROCESSING PPP

A municipal corporation in southern India is planning a solid waste management public-private partnership project. The corporation aims to be ready to call for bids in about nine to 10 months. The cost estimate, preliminary studies and the feasibility report have not been prepared yet.

More than 1,000 tonnes of waste is dumped daily because of lack of capacity at the city's existing processing facilities. The 160 hectare dump has been accumulating waste for more than 30 years.

Chennai generates almost half of Tamil Nadu's 13,422 tonnes of municipal solid waste per day. The state is making efforts to improve its waste treatment capabilities, with a government document showing that it has applied to the central government to set up 224 facilities.


August 2022

ADANI AND JSW BID FOR PORT BERTH REDEVELOPMENT PPP

Indian infrastructure conglomerates Adani and JSW Group have submitted bids for a berth redevelopment project at the Mormugao Port in Goa state. The project involves the revamp of a berth to handle multiple cargo categories. The redevelopment will cost an estimated INR 7 Bn (USD 88 Mn). The actual cost needs to be determined by the winning bidder.

The Mormugao Port Authority has seen declining revenue after a ban on mining activities in Goa. The port was set up mainly to handle iron ore. The closure of the state’s mining industry has led to declining cargo volumes.


CONTRACTOR SECURES FINANCING FOR INDIA HIGHWAY UPGRADE PROJECT

Indian contractor Ravi Infra build has secured approvals from local lenders to finance a 48 Km road upgrade project for which it was the lowest bidder.

Public sector lenders State Bank of India (SBI) and Punjab National Bank (PNB) have approved a loan of INR 2.7 Bn (USD 34 Mn) for the INR 6.3 Bn project. SBI will provide INR 1.4 Bn, and PNB about INR 1.3 Bn. The project requires the company to upgrade a stretch between Khedakhajuria and Suhadadi villages in Madhya Pradesh state to four lanes from two. The contract is in the hybrid annuity model.


INDIA ROADS AUTHORITY TO LIMIT EXTENSIONS FOR PROJECT BIDS

The National Highways Authority (NHAI) decided to limit extensions for bid submissions to a maximum of two times. Previously bid deadline extensions were unlimited. Now, one extension will be allowed and a second only in exceptional cases.

The move is being taken to reduce the delays in awarding projects, the NHAI is planning to award projects comprising a record number of kilometers this fiscal year.


INDIA’S RELIANCE TARGETING 20 GW SOLAR CAPACITY BY 2025

India’s Reliance Industries (RIL) is targeting 20 GW of solar energy generation capacity by 2025. The energy will be entirely consumed for its captive needs of power and intermittent energy for green hydrogen. Once proven at scale, the group is prepared to double the investment to scale up its manufacturing ecosystem.

RIL has also earmarked an investment of INR 2 Trn (USD 25 Bn) to roll out its fifth-generation communications (5G) network. It is planning to launch the service in multiple key cities – including Delhi, Mumbai, Kolkata, and Chennai.


INDIAN AUTHORITY CONSIDERING NEW INDEX TO CALCULATE DEVELOPER PAYMENTS

The National Highways Authority of India (NHAI) is considering changing an index that is used to calculate payments for developers. The agency will soon decide on the composition of the new gauge – to be called the Construction Price Index – to better reflect input prices for developers.

Considering the contribution of each raw material in the overall cost, sustained high prices during the execution period could dent the profitability of road contractors by 100-400 basis points.

Developers, that won contracts in the six months, have made representations to the NHAI on the issue of rising costs. The discussions about the new index are at a preliminary stage.


INDIAN DEVELOPER SEEKS BUYER FOR 10 ROAD PROJECTS

Indian infrastructure developer Ashoka Buildcon is looking for a buyer for 10 road projects, most of which are under construction. Five projects are under construction while five more are either operational or almost ready to start operations.

Ashoka’s toll roads subsidiary Ashoka Concessions signed an agreement to sell five highways to Singaporean affiliate of global investment firm Kohlberg Kravis Roberts (KKR) for INR 13.37 Bn (USD 168 Mn).


INDIAN MUNICIPALITY PLANS HOSPITAL PPP

India’s Pune city will soon seek investors for a new hospital to be built in the suburb of Warje via a public-private partnership (PPP). The Pune Municipal Corporation is planning a 700-bed facility, it will cost an estimated INR 3.5 Bn (USD 44 Mn). The corporation will assist in securing project finance from The Netherlands’ Rabobank at a rate not exceeding 1.5%.

The decision to construct a hospital was taken recently following the pandemic during which city authorities felt the need for additional healthcare facilities. The winning bidder will be allowed to staff the hospital with its own people as well as appoint doctors and health care professionals of their choice.

The only condition is that a certain number of beds must be reserved for patients sent by the municipal corporation at concessional rates. The operator will be free to price the remaining number of beds as it sees fit.


INDIAN REALTY FIRM WINS NEW DELHI STADIUM REDEVELOPMENT PPP

Indian realty firm Omaxe has won a bid to redevelop a stadium in New Delhi, in a public-private partnership (PPP). The contract to refurbish the Jawaharlal Nehru Stadium was awarded by the Ministry of Youth Affairs and Sports, adding that the company will redevelop the facility in the design, build, finance, operate, transfer (DBFOT) model.

New Delhi-headquartered Omaxe was one of two bidders, the other being infrastructure and airports group GMR Infrastructure. The ministry had estimated the project cost to be about INR 75 Bn (USD 940 Mn).


September 2022

INDIAN AUTHORITY INVITES BIDS FOR 45 Km HIGHWAY UPGRADE

The National Highways Authority of India (NHAI) has invited bids to upgrade a 45.2 km highway in Jharkhand state for an estimated INR 9.75 Bn (USD 122 Mn). The developer will have to expand a single road to four lanes, connecting Basukinath, a city in Dumka district, to Deoghar. The contract will be handed out in the hybrid annuity model.


INDIAN PORT AUTHORITY SIGNS CONCESSION FOR CONTAINER TERMINAL

A port authority in India signed a concession agreement with domestic ports and logistics major JM Baxi Ports & Logistics for a container terminal project. The cost to convert the dry bulk terminal into a container facility is estimated at INR 4.3 Bn (USD 54 Mn). It will increase the port’s annual throughput by 600,000 twenty foot equivalent units (TEU) to 1.8 Mn TEUs.

The project is part of the National Monetization Pipeline - a list of infrastructure assets worth more than USD 80 Bn - that the government intends to offer to investors. The list includes 31 projects in nine central government-owned ports that is expected to fetch INR 128 Bn. The ports sector makes up 2% of the total list in value terms.


INDIAN TOLL ROAD COMPANY RAISES DEBT FROM JP MORGAN AND BARCLAYS

A special project vehicle (SPV) of Indian highways major IRB Infrastructure Developers has privately placed INR 7.15 Bn (USD 90 Mn) of non-convertible debentures (NCD) with Barclays Bank, JP Morgan Securities India and Aseem Infrastructure Finance.

The NCDs were allotted by Yedeshi Aurangabad Tollway. Aseem subscribed for INR 4.4 Bn while Barclays bought INR 1.67 Bn and JP Morgan the remaining amount.

The transaction is the first tranche of a INR 15.15 Bn planned fundraising by the toll road company, according to the debenture trust deed. The toll road company plans a second INR 5 Bn tranche and a third INR 3 Bn tranche.

The NCDs carry a 8.65% coupon, payable monthly for five years, according to the National Securities Depository website. The annualized yield on the NCDs is around 8.75%-9% and there is no redemption premium. The notes are rated AAA/Stable by CRISIL, the local arm of S&P Global.

The SPV will use the funds to repay INR 13.85 Bn of primary debt, maintain a mandatory debt service reserve account and undertake major maintenance.


INDIA HIGHWAYS AUTHORITY ATTEMPTS TO AWARD CONCESSIONS DESPITE LOW BIDS

The National Highways Authority of India (NHAI) is seeking government approval to accept bids for two road concessions because the proposals came in below the reserve price.

The decision to involve the ministry is because the bids are only marginally below expectations and the NHAI would like to award the concessions instead of cancelling them and having to redo the procurement process. The NHAI has a policy to not reveal the floor price until after it awards the contracts.

The NHAI had opened proposals for the two concessions - a 72.6 km stretch in Uttar Pradesh state and a 125 km section in Madhya Pradesh. The National Investment and Infrastructure Fund (NIIF) offered a winning bid of INR 30.1 Bn for the first and Edelweiss Group INR 11.7 Bn for the second.

The central roads agency has a target to raise about INR 350 Bn-INR 400 Bn (USD 4.2 Bn-USD 4.8 Bn) this financial year. It has not raised any money so far. It is expecting to be paid INR 62.6 Bn by Canadian pension fund Caisse de dépôt et placement du Québec (CDPQ), which won a 135 km highway concession in March.


ADANI SECURES USD 1.25 Bn PROJECT FINANCE FOR INDIA EXPRESSWAY

Adani Enterprises has secured an INR 102.4 Bn (USD 1.25 Bn) loan for constructing and operating a part of the six-lane, 594 km greenfield Ganga Expressway in Uttar Pradesh state.

Adani Enterprises, which was awarded the contracts to develop three stretches totalling 464 km, will invest INR 68.2 Bn of its own equity. The state government will provide viability funding of almost INR 60 Bn.

The expressway - connecting the cities of Meerut and Prayagraj - will be India’s longest project to be implemented in the design, build, finance, operate, transfer model. It carries a 30-year concession.


INDIA SWITCHES RAILWAY STATION REDEVELOPMENT PROJECTS TO EPC

The Indian government cancelled the public-private partnership model to redevelop three railway stations. The cabinet approved an investment of about INR 100 Bn (USD 1.2 Bn) to refurbish the Chhatrapati Shivaji Maharaj Terminus (CSMT) in Mumbai, and the New Delhi and Ahmedabad railway stations in the engineering, procurement and construction (EPC) model.

The government has chosen the EPC method so that passengers - the bulk of whom are middle and lower middle class citizens - are not burdened with potentially higher fares. Work on the redevelopment of 199 railway stations is ongoing, with tenders issued for 47, which did not specify their procurement models.

The Indian Railway Stations Development Corporation received 10 applications in response to a call to revamp the CSMT in a PPP, including from foreign investors such as ISQ Asia, Brookfield, and Anchorage Infrastructure Investments. The three were among those also shortlisted for the New Delhi Railway Station redevelopment project by the Rail Land Development Authority.


CDPQ SECURES FINANCING FOR INDIA HIGHWAY CONCESSION

Canadian pension fund Caisse de dépôt et placement du Québec (CDPQ) has secured INR 36.8 Bn (USD 452 Mn) of financing for a highway toll concession in India. Government-owned State Bank of India has signed an agreement to provide the loan facility at an interest rate of 8%, the lender will syndicate the debt.

CDPQ won the highway concession, its first from the Indian government, through its Indian Highway Concessions Trust. The platform offered a winning proposal of INR 62.67 Bn for the 135 km Eastern Peripheral Expressway, which spans the states of Uttar Pradesh and Haryana.

CDPQ bid jointly with Egis Road Operation India, a highways maintenance arm of French consulting and engineering multinational Egis. The company will provide the maintenance.

CDPQ will take charge of the project in the next few weeks and start collecting toll. The contract was handed out in the toll, operate, transfer (TOT) model, in which the National Highways Authority of India(NHAI) offers the right to collect toll for a fixed period in exchange for an upfront amount.


ADANI WINS USD 3 Bn INDIAN PORT TENDER

The Indian state of West Bengal has decided to issue a letter of intent to Adani Ports and Special Economic Zone to develop a greenfield port. The Tajpur deep sea port, to be located in the Purba Medinipur district, will cost an estimated INR 250 Bn (USD 3.12 Bn). The conglomerate submitted the highest bid.


INVESTEC TO FUND INDIAN CONTRACTOR'S HIGHWAY PROJECTS' EQUITY

Indian contractor Shivalaya Construction is in talks with the Indian unit of Anglo-South African financial services company Investec to raise up to INR 3.5 Bn (USD 44 Mn).

New Delhi-based Shivalaya is setting up a separate company and will pledge its shares as collateral against the loan, the new entity will hold some road projects. The contractor will use the funds raised to put up the equity portion for projects that it won from the National Highways Authority of India (NHAI), it was the lowest bidder for seven projects. Their total contract value is more than INR 80 Bn.

These were all awarded in the hybrid annuity model, in which the NHAI covers 40% of the cost and the developer arranges the rest in a combination of debt and equity.

Shivalaya has secured debt financing for one of the projects - a 33 km highway upgrade assignment in southern India.


INDIA AUTHORITY TO ADD MORE ROADS TO PRIVATISATION LIST

The National Highways Authority of India (NHAI) is planning to add more roads to an existing list of assets that it plans to privatise in the year through March 2023. The agency aims to complete procurement for the existing list by December or January, consultants are already preparing detailed reports for more projects that can be offered this fiscal year.

The NHAI has not finalised the number of projects that will be added as a decision will be taken at a board meeting towards the end of 2022. It will then publish a second list so investors can identify early and prepare for the projects they want to bid for.

The NHAI published a list of 14 roads with a combined length of 1,750 Km that it said it would offer to investors. The agency wants to raise about INR 350 Bn (USD 4.4 Bn) from the assets. The roads will be offered either through an infrastructure trust or through an auction in the toll, operate and transfer (TOT) model.


INDIAN STATE PLANS BUSINESS CENTRE PPP

A government housing agency in southern India’s Tamil Nadu state is planning a business centre project in a public-private partnership. The Tamil Nadu Housing Board has estimated the development cost to be about INR 12 Bn (USD 150 Mn), the centre will be located on the Marina Beach (pictured) in Chennai, the state capital.

The business centre complex will include malls, movie theatres, hotels and a convention centre. The housing board aims to call for bids in the first six months of next year.

 

List of key transactions - Transport and Urban Infra - India Q3 2022

Source: Inframation, YOG INFRA analysis

 

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