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Infrastructure & PPPs in India - Q3 2023 Update - Transport and Urban Infra

YOG INFRA Q3 2023 insights

INDIA's transport and urban infra sector is seeing new initiatives being undertaken both at central and at state level. We see new PPP projects being planned by state agencies across sectors like elderly care, waterfront development, sports stadum etc. We also see continued interest for investments by international developers in the country to develop transaport and logistics/ connectivity projects.

Read more in our latest insight for the country.

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

 

July

INDIAN CITY AUTHORITY PLANS THIRD CALL FOR GREENFIELD HIGHWAY

A city development authority in India’s Karnataka state will call for proposals for a third time for a 74 km greenfield highway project. Since the state will be acquiring land for the project governed by the Land Acquisition Act 1894 - which provides lower compensation compared to the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act 2013 - the government needs to decide on how they intend to look into the potential demands from farmers and landowners for a higher payout.

There is no deadline or timeframe for the procurement until such time that the compensation has been agreed upon. The Peripheral Ring Road project will connect Hosur Road in southern Bangalore to Tumakuru Road in the northwest and is meant to ease congestion.


INDIAN CENTRAL ROADS AUTHORITY SEEKS CONCESSIONAIRE

The National Highways Authority of India (NHAI) is seeking a concessionaire to operate a 189 km project in the toll, operate, transfer (TOT) model. The concession will be for 20 years. It involves operating and maintaining 3 separate stretches - one of which is on the Delhi-Meerut Expressway - a second in Odisha state and the third being a 51 km stretch between Delhi and Hapur.

The road is the 14th in a run of auctions in the toll, operate, transfer (TOT) model. The Ministry of Road Transport and Highways has not revealed its estimate for the latest asset on offer, as per a policy decision in 2020. This will be disclosed only after receipt of technical bids and after the NHAI selects the winner.


INDIAN PORT AUTHORITY SEEKS DEVELOPER FOR 30-YEAR CONCESSION

Indian government owned Deendayal Port Authority is seeking a concessionaire to build and operate a multipurpose cargo berth. The RFP estimates the project cost to be INR 17.1 Bn (USD 209 Mn) and requires the development of a berth with an optimal annual capacity of 18.3 Mn tonnes. The facility, which will process all types of cargo excluding containers and liquids, will be handed out as a 30-year concession in the build, operate, transfer model.

This is the second attempt by Deendayal Port Authority to select a developer for the project after interested bidders in the first call for proposals dropped out.


INDIAN STATE AUTHORITY SEEKS EOI FOR ROPEWAY PPP

India’s Uttar Pradesh state tourism department is seeking prequalification applications for a greenfield ropeway project. The project involves the construction of two separate ropeways - one at Valmiki Ashram in Chitrakoot district - and the other at Gorakh Giri Hill in Mahoba district. Bidders are free to decide the alignment for both stretches.

The tourism department estimates one of the stretches will be about 700 metres. The 30-year concession will be handed out in the design, build, finance, operate and transfer model. The Indian government is planning to develop more than 250 ropeway projects with a total length exceeding 1,200 km in the next 5 years, in the PPP method.


INDIAN STATE TO BOOST PPP IN TOURISM INFRASTRUCTURE

India’s Karnataka state will provide a boost to public-private partnerships to build and upgrade tourism-related infrastructure. The state intends to develop a master plan for the sector’s development. The minister promised to refurbish museums, develop beachfronts, as well as upgrade an exhibition centre on the lines of the Pragati Maidan in New Delhi. The facility in the national capital stretches is built on an area measuring about 150 acres and is owned and operated by an agency under the country’s Ministry of Commerce and Industry.


August

INDIA ALLOWS INFRA DEBT FUNDS TO LEND DIRECTLY TO HIGHWAYS

India’s central bank has amended rules aimed at widening financing sources for highway projects. Infrastructure debt funds will be allowed to directly lend to projects handed out as toll, operate, transfer (TOT) contracts. The funds have so far been allowed to only refinance these assets.

In the TOT method, the National Highways Authority of India (NHAI) offers operational highways to investors for an upfront amount in exchange for the right to collect toll for a pre-determined period. The new framework also permits the debt funds to raise capital through external commercial borrowings (ECB), as well as makes tripartite agreements optional for public-private partnership projects. Existing rules require debt funds to sign an agreement with the National Highways Authority of India (NHAI) in order to be able to lend to projects. This was a restrictive clause because the approval process would take a minimum of 6 months. Infra debt funds are likely to be able to conclude refinancing deals much quicker than earlier. The ECB route to raise capital opens an additional funding avenue in case a large-sized fund wants to explore the option.


INDIAN STATE AUTHORITY TO EMPANEL DEVELOPERS FOR EV INFRA

A state-owned authority in western India is seeking to empanel developers for a project to build electric vehicle charging stations. Mahatma Phule Renewable Energy and Infrastructure Technology Limited, Maharashtra intends to set up 310 stations alongside national highways, in municipalities including Thane, Mira-Bhayander and Chandrapur, as well as in railway stations under the control of the Konkan Railways.

Contracts will be awarded for 10 years and can be extended for another 5; and will be handed out to the bidder offering the highest revenue share. The project is being implemented as per the central government’s Faster Adoption and Manufacturing of Electric Vehicles scheme, introduced in 2019 with an allocation of INR 10 Bn (USD 120 Mn). The policy aims to support the development of EV charging infrastructure by extending capital grants and encouraging the use of electric vehicles.

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INDIA'S KERALA STATE PLANS USD 100 Mn PPP PROJECTS PIPELINE

A procuring authority in India’s Kerala state is aiming to complete the tendering of projects estimated to cost about INR 8.3 Bn (USD 100.3 Mn) within the next 12 to 18 months. The pipeline comprises a 32 MW solar-wind hybrid project, of which 14 MW of wind-generated electricity will be sold to the Kerala State Electricity Board, covered by a 25-year power purchase agreement. Institutional customers will buy the remaining 18 MW, to be produced from solar.

The project is estimated to cost INR 2 Bn (USD 24.1 Mn) with about 30% to be financed through debt. INKEL will also procure a developer to build and operate 1 Mn sq ft of warehousing facilities as well as an integrated logistics park. The park will include a bay for trucks as well as container freight stations. The warehousing and the park projects will cost an estimated INR 2 Bn (USD 24.1 Mn) and INR 3 Bn (USD 36.2 Mn).

A fourth project to set up more than 1,000 electric vehicle charging infrastructure stations will cost about INR 1.3 Bn (USD 15.7 Mn). This is planned over the next 12 to 18 months. In some cases, the charging stations will be developed with other infrastructure including cafes and wayside amenities.


NITI AAYOG IS EXPLORING CARE HOME PPPs

India’s top state planner is working on policy provisions for improving elderly care services which will include constructing retirement homes through public-private partnerships. Niti Aayog’s roadmap will focus on seeking higher resource allocation and converging current schemes regarding elderly care, the item stated, citing an unidentified senior government official.

The agency has sought feedback from stakeholder ministries as well as the public. The policy paper will outline licensing requirements, accreditation standards and clinical guidelines for private sector participants to ensure affordable healthcare services to the elderly.


September

INDIAN AUTHORITY SPLITS LRT PPP INTO TWO

An Indian metro rail authority has decided to split the development of a light metro rail project estimated to cost INR 143 Bn (USD 1.7 Bn) into 2 stages. The first phase of the Vizag light metro in Visakhapatnam city will require about INR 95 Bn-98 Bn (USD 1.14 Bn- 1.1.7 Bn), the government intends to award a single contract for both phases totaling 76 km. The procuring agency, the Andhra Pradesh Metro Rail Corporation, will give the winning bidder a timeline of 5 years to complete the first phase and another 3 years for the second phase. The first phase will require the development of 46 km, split into 3 lines of 6.5 km, 5.5 km and 34 km.

In the second phase, the third line will be extended by 30 km towards the new Bhogapuram International Airport being developed by India’s infrastructure conglomerate GMR Group. Due to the upcoming airport, many new hotels and other commercial developments have been planned and the government expects that once the first phase is developed, it will provide seamless connectivity to the new area combined with the extended line.


INDIAN MUNICIPAL CORPORATION PLANS STADIUM REDEVELOPMENT PPP

Indore Municipal Corporation in central India is planning to redevelop a sports stadium. A detailed project report is under preparation and a procurement process to select a developer is likely to begin after May 2024. The contract will require the winning bidder to redevelop the existing Jawaharlal Nehru stadium in a public-private partnership model. The estimated cost will be known after the report is prepared.

The project involves creating commercial spaces within the stadium complex. The sporting facilities will include fields for hockey, cricket and football, an indoor stadium and pool, as well as recreational spaces for children. Cafes and restaurants will also be included. The existing stadium was built more than 60 years ago. Indore is the largest city in Madhya Pradesh and had a population of 3.2 Mn as per the 2011 census.


INDIAN STATE PLANS 3 WATERFRONT PPPS

Kerala Maritime Board in southern India is planning 3 projects as public-private partnerships. The projects comprise a marina in Alappuzha, a coastal town; the Valiyathura pier at Thiruvananthapuram; and a bungalow on the beach at Kozhikode, which will be converted into a tourist attraction.

The maritime board will first seek feedback from potential investors and other stakeholders to decide on the best possible redevelopment plan. Alappuzha is known for its canals and lagoons. Valiyathura pier was built in 1956 and is now defunct. Kerala is a popular tourist destination, flanked by the Arabian Sea in the west and hilly terrain in the east, with a network of 44 interconnected rivers.


INDIA AND SAUDI ARABIA TO COOPERATE FOR ENERGY INVESTMENTS

India and Saudi Arabia have signed a memorandum of understanding specifying the areas for cooperation in the energy sector. The segments include renewables, energy efficiency, hydrogen and grid interconnections. The countries will also encourage bilateral investments in renewables including hydrogen, power storage, oil and gas, as well as carbon capture, utilization and storage.


INDIAN CITY READIES PROJECT REPORT FOR LIGHT METRO PPP

A metro rail authority in India’s Andhra Pradesh state has submitted a detailed project report to the state government for approval of the Visakhapatnam Light Metro Rail project. An approval from the Ministry of Finance will also be sought as the central government will be giving 20% of the INR 143 Bn (USD 1.7 bn) project cost as viability funding. The state government will match the amount contributed by the central government and the concessionaire needs to provide the remainder.

The bidder offering to make the maximum investment, correspondingly lowering the viability funding burden on the government, will be awarded the project. The contract will be handed out in the build, operate, transfer model. The project report was prepared by the consulting firm Urban Mass Transit Company. The metro corporation is planning a 77 km light rail project comprising four corridors. The entire approvals process will take a few months and the procurement for the project to be launched sometime in the second half of next year 2024.

 

List of key transactions - Transport and Urban Infra - India Q3 2023

Source: YOG INFRA analysis

 

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Our objective is to drive economic growth and make positive social impact through sustainable infrastructure development.

​YOG INFRA is an infrastructure focused financial advisory firm. We work with Developers and Development Finance Institutions (DFIs) and help them make informed investment decisions across infrastructure development lifecycle.

With our offices in Singapore, India and UAE we work on projects globally, and the team brings strong experience in supporting development of infrastructure projects.


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