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Infrastructure & PPPs in India - Q4 2022 Update - Transport and Urban Infra

YOG INFRA Q4 2022 insights

INDIA's transport and urban infra sector is the most active PPP market in Asia, with developments across multiple sectors. Infrastructure is being developed across multiple sectors via PPP mode - logistics (multimodal parks, ports), connectivity projects (under Gait Shakti mission) and urban infra (larger role being played by state level agencies). Further, there is an active secondary market for operational PPP projects, wherein international investors have shown keen interest.

Read more in our latest insight for the country.

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

 

October 2022

KARNATAKA STATE PLANS INDIA’S FIRST EV INDUSTRIAL ZONE

The state government of Karnataka in India has drawn up a blueprint to develop the country’s first industrial zone for electric vehicles. The area, spread over 202 hectares, will have a common centre for testing, validation and certification. The plan is part of a wider initiative to develop the cities of Hubballi, Dharwad and Belagavi into an industrial hub.

Besides the industrial zone, the blueprint includes a hub to house 5,000 start-ups; infrastructure for an information and technology park, to be developed in the public-private partnership model; a readymade factory for engineering and manufacturing companies; and 5 centres for training, research and development, innovation and entrepreneurship.


DP WORLD PLANNING USD 3 Bn LOGISTICS INFRA FOR INDIA

DP World will invest up to USD 3 Bn to develop integrated logistics infrastructure in India. The United Arab Emirates-based port operator will invest through its jointly established platform with India’s National Investment and Infrastructure Fund.

DP World’s portfolio includes five port terminals with a total annual capacity of 6 Mn twenty-foot equivalent units, as well as five container freight stations. It also operates 31 container trains, seven rail-linked private freight terminals, cold chain facilities, and a fleet of 60 trucks.

The company is developing three free trade zones, more than 20 built-to-suit warehouses, and over 100 hubs for express cargo.


GIC TO INVEST IN IRB’S INDIA GREENFIELD HIGHWAY PROJECT

Singapore sovereign wealth fund GIC will acquire a 49% stake in a special purpose vehicle (SPV) of Indian highways-focused builder IRB Infrastructure Developers, which is constructing a greenfield toll road project.

IRB and GIC will invest about INR 5.3 Bn (USD 64.7 Mn) as equity in the Meerut Budaun Expressway as well as buy non-convertible debentures of INR 16 Bn. GIC's investment will be through an affiliate, Anahera Investment. IRB had signed the concession agreement for the six-lane, 130 km project connecting the Bijoli and NaglaBarah villages in Meerut and Budaun districts, respectively.

The concession period is for 36 years, including a construction period of 3 years. The project is part of the 594 km Ganga Expressway, which has been divided into four packages. IRB Infrastructure won the contract for one of the stretches while the other 3 were awarded to Adani.


INDIA IDENTIFIES 16 RAILWAY STATIONS TO REDEVELOP IN PPP

India’s Ministry of Railways will tender at least 16 railway stations for redevelopment in a public-private partnership.

The ones to be refurbished in a PPP include the stations at Pune, Chennai, some suburban stations in Mumbai, Bengaluru and Coimbatore, the government estimates the total investment to be more than INR 120 Bn (USD 1.5 Bn).

Detailed project reports are under preparation for most stations and tenders will be issued by the Rail Land Development Authority. Cabinet was switching to the turnkey model for redeveloping the Chhatrapati Shivaji Maharaj Terminus (CSMT) in Mumbai, and the New Delhi and Ahmedabad railway stations. The ministry has a plan to redevelop 200 railway stations. It has issued tenders for 47 facilities in the engineering, procurement and construction method.


INDIAN AUTHORITY SEEKS USD 245 Mn INVESTMENT IN SOCIAL INFRA

The metro rail authority in India’s Kerala state is looking for an investment of about INR 20 Bn (USD 245 Mn) from investors for social infrastructure and related projects. The Kochi Metro Rail Authority, which called for expressions of interest (EOI), has received initial inquiries from eight companies so far for its Bliss City project.

The metro authority has left it open to potential investors to suggest projects of their choice and so far, a group of foreign financial investors has proposed an ecological theme park. The authority will also consider private investment in education.

It has a tie-up with one of India’s premier business schools — the Indian Institute of Management (IIM)-Kozhikode — to build a campus at Kochi, it could bring in an investor to build and run the facility.

The project — to be spread over 31 acres — is being planned with an aim to reduce the authority’s share of the interest expenses it pays for the metro rail line, it pays about INR 1 Bn annually.


INDIAN MUNICIPALITY PLANS WASTE PROCESSING PPPs

The municipal corporation responsible for the Greater Bengaluru metropolitan area is planning to build 6 construction waste processing plants in a public-private partnership. The Bruhat Bengaluru Mahanagara Palike intends to set up 5 plants, each capable of processing 500 tonnes per day, and a sixth facility with a throughput of 1,000 tonnes per day.

A timeline for procurement has not been decided yet, although a detailed project report has been prepared and requires approvals. Once the projects have been awarded, the investors will need to complete construction in 6 months. The concession to operate and maintain the facilities will be 15 years.


INDIAN STATE AIMS TO SECURE DEBT PRIOR TO LRT PPP TENDER

Andhra Pradesh Metro Rail Corporation in India wants to tie-up debt capital before launching the procurement process for a light rail project. The government will take at least 3 to 4 months to solicit bids.

The metro corporation is planning a 77 km light rail project, which will cost an estimated INR 143 Bn (USD 1.7 Bn), of which the private operator will need to invest about INR 85.8 Bn. The remaining will be a mix of viability funding by the state government and a grant by the central government. The concession period will be for 38 years.


INDIAN STATE PLANS RETENDER FOR BUS DEPOTS PPP

India’s Uttar Pradesh state government will sweeten terms for a project to develop 24 bus depots in a public-private partnership after earlier calls for bids failed to draw interest. Changes potentially include longer concession period (vis-à-vis 60 years offer earlier) and to allow more commercial activity. It had earlier solicited bids to develop 17 depots initially, estimated to cost INR 25.5 Bn (USD 310 Mn).


JM BAXI BIDS HIGHEST FOR INDIA PORT BERTHS PPP

Indian ports operator JM Baxi Ports & Logistics is set to win a contract to operate two berths at the Jawaharlal Nehru Port off the coast of Mumbai. The company proposed INR 84.4 (USD 1) per tonne of cargo, the second highest proposal was from Bothra Shipping, which offered INR 40.

The two facilities - one meant for coastal shipping and the other a shallow water berth - have a combined capacity of 6.8 Mn tonnes. The concession is for 30 years. The concessionaire will be required to equip and operate the berths. The capacity 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 port authority estimates the project cost to be INR 3.4 Bn. The privatisation of the assets is in line with the government’s strategy of offering transportation and other infrastructure assets to investors and raising funds for greenfield development.


November 2022

CDPQ TRANSFERS INDIA ROAD CONCESSION TO TRUST, STARTS TOLLING

Canadian pension fund Caisse de dépôt et de placement du Québec (CDPQ) transferred a road concession it had won from the Indian government to its infrastructure trust Maple Highways. The acquisition is a major step in building a scaled portfolio of strategically located, long-term revenue generating road assets in India.

Maple Highways started collecting toll fees on the highway. The concession is for 20 years. The global investment manager won the auction for the 135 km Eastern Peripheral Expressway in March this year with a proposal of INR 62.67 Bn (USD 777 Mn). 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 tolls for a fixed period in exchange for an upfront amount.

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 has secured debt financing from the State Bank of India.


INDIAN INFRA CONGLOMERATE SEEKS INVESTORS FOR AEROCITY HOSPITAL PPP

Indian infrastructure conglomerate GMR is seeking investors to develop a hospital project in a public-private partnership. The 250-bed facility, to be located within its Hyderabad Aero City, will be developed as a multi-specialty hospital.

The investor will be required to design, develop, finance, construct, operate and manage the project. The AeroCity is planned as an urban centre with the Hyderabad airport at its core. The city will include various establishments like business, industrial, logistics and retail parks, rental accommodation, hotels, schools, hospitals, leisure and entertainment facilities.


INDIAN STATE SEEKS BIDS FOR 158 KM HIGHWAY CONCESSION

The Hyderabad Metropolitan Development Authority in India’s Telangana state is seeking bids for a 158 km highway concession that it intends to offer in the toll, operate, transfer (TOT) model. The authority will disclose the floor price for the Nehru Outer Ring Road after it declares the winning bid. The project carries a concession of 30 years.

The NHAI has held 10 auctions in the TOT model so far, from which it has raised more than INR 180 Bn (USD 2.2 Bn) since 2018. This is the second time the Hyderabad Metropolitan Authority is attempting to tender the expressway. It had appointed LEA Associates South Asia and S&P Global’s Indian arm CRISIL Infrastructure as advisors in 2018.


INDIAN STATE SEEKS BIDS FOR TRUCK TERMINALS PPP

India’s Odisha state government is looking at building 6 truck terminals in a public-private partnership. The total cost to develop the projects will be more than INR 3.3 Bn (USD 40 Mn).

In 2021, almost 25% of the 5,081 accidents involving trucks were with those illegally parked on the side of highways, the government decided to build the terminals with a view to providing proper and safe parking spaces and eliminate crashes.

The sites will be developed as integrated terminals with commercial components including office buildings, hotels, restaurants and malls. They will also have warehouses and cold storage facilities, a petrol station, weighing bridges, loading and unloading areas, dormitories and bathrooms for truckers, health clinics and other amenities.


INDIAN STATE TO SEEK INVESTOR FOR PORT PROJECT

A state maritime board in India is planning to look for a developer to invest in and operate a port project. The Tamil Nadu Maritime Board will issue a request for qualification next week to look for an operator for the Cuddalore Port.

The concession will be for 30 years. The developer will need to market, operate and maintain the facility. Cuddalore Port is at the confluence of the rivers Uppanar and Paravanar on the east Coast of Tamil Nadu in the Bay of Bengal. It is classified as a minor port, being owned by the state government, and is suitable for handling both general and bulk cargo.


NEW INDIAN INFRA BANK TO START OPERATIONS THIS YEAR

India’s new National Bank for Financing Infrastructure and Development plans to start lending to projects this fiscal year. Bank have identified a pipeline of projects including in roads, power transmission and renewables.

The bank is also looking to raise capital by issuing longer-tenor bonds in the domestic market. Pension and insurance funds have an appetite for such bonds and can invest a combined INR 2.5 Trn (USD 30 Bn). The bank is well capitalized as of now with INR 200 Bn provided to it by the central government and grants of INR 50 Bn.


December 2022

INDIAN AUTHORITY ISSUES SECOND CALL FOR MULTIMODAL PARK PPP

An Indian concession authority for multimodal parks has called for proposals a second time for a greenfield project in Karnataka state after it disqualified one of the two bidders. There were about five potential bidders who had asked for the submission deadline to be extended the first time. The project involves building a new facility at Muddalinganahalli near Bengaluru, with an investment of about INR 9.3 Bn (USD 113 Mn), in the design, build, finance, operate and transfer model. The concession period is 45 years.

Multimodal projects picked up pace in India after the idea was introduced in 2017 by the central government, which said such systems present clear economic benefits both for the movement of goods and people.

The Ministry of Road Transport and Highways would develop 35 multimodal logistics parks across the country with an aim to reduce the cost of logistics from about 18% to about 10%. Some of these parks are proposed in a public-private partnership (PPP).


INDIAN AUTHORITY AWARDS TENDER FOR FIRST ROPEWAY PPP UNDER HAM MODEL

India’s National Highways Logistics Management Limited has awarded the first HAM based ropeway project in Varanasi in Uttar Pradesh state to Vishwa Samudra Engineering limited.

The project involves constructing a 3.7 km ropeway, which the government awarded at a cost of INR 8.1 Bn (USD 100 Mn). It will connect the marketplace of Godowlia to the Cantonment Railway Station. This is a pilot project, and if successful, the route will be extended further.


INDIAN STATE PLANS CONVENTION CENTRE PPP

India’s Uttar Pradesh state is planning to build an exhibition and convention centre in a public-private partnership in its capital city Lucknow. Government is looking for a consultant and transaction advisor to prepare a feasibility report and manage the bid process.

The facility will have between 700 and 1,000 seats and will feature a retail area, which will include shopping centres, food courts, hotels and serviced apartments, as well as a commercial office space, entertainment and lifestyle amenities, up to 40 acres have been set aside for the project.

The transaction advisor will be required to conduct a site and viability analysis, prepare a masterplan, project structure and implementation model, assess market demand, as well as draft the bid documents and manage the auction process.


INDIA'S NIIF TO HELP STATE GOVERNMENT IDENTIFY INFRA OPPORTUNITIES

India’s National Investment and Infrastructure Fund (NIIF) has signed an agreement with Tamil Nadu state to identify potential infrastructure investment opportunities. The central government-owned fund will work with the Tamil Nadu Infrastructure Development Board to develop a pipeline in the areas of renewable energy, roads, waste management, water, tourism and related sectors.

The NIIF will also work to identify brownfield assets that can be offered to investors, helping to raise capital for the state government. The pair have already selected 7 projects, which have the potential to attract private investments between INR 50 Bn (USD 605 Mn) and INR 60 Bn.

 

List of key transactions - Transport and Urban Infra - India Q4 2022


Source: YOG INFRA analysis

 

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