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Infrastructure & PPPs in India - Q4 2023 Update - Transport and Urban Infra

YOG INFRA Q4 2023 insights

INDIA's transport and urban infra sector is set to see an extensive project pipeline with a strong focus on logistics. BOT is set to re-emerge as a preferred model for upcoming road PPP projects in the country, We also see good activity in ports sector with an objective to enhance transhipment capacity, including notification of a new maritime policy. Other sectors with planned projects include bus depots, hospital infrastructure, tourism etc.

Read more in our latest insight for the country.

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

 

October 2023 

INDIA TO ENCOURAGE PPPS FOR USD 24 BN ROAD PROJECTS 

The Indian government is planning to develop road projects with a cumulative value of more than INR 2 Trn (USD 24.08 Bn) in the build-operate-transfer (BOT) mode. The aim is to facilitate more public-private partnerships in road construction. The move from the current emphasis on the engineering, procurement, and construction (EPC) mode will encourage private sector entities to construct roads of improved quality as they will hold maintenance rights on the assets for 15 years. 

The Ministry of Road Transport and Highways is also prioritizing changes in fuel usage and the transformation of roads into electric highways, facilitating the operation of electric buses and trucks. This initiative is expected to lead to a substantial reduction in logistics costs, potentially up to 30% compared to diesel. India's current fuel import bill stands at INR 16 lakh crore (USD 200 Bn) and is projected to rise to INR 25 lakh crore (USD 313 Bn) with the expansion of our automobile industry. The overarching goal is to significantly decrease India's dependence on fuel imports by promoting the widespread adoption of alternative fuels, thereby mitigating pollution as well.

 

INDIA PLANNING NEW PPPS FOR COASTAL SHIPPING BERTH PROJECTS 

The Indian government is planning to introduce a public-private partnership (PPP) model to encourage investments in port projects dedicated to coastal shipping. The government will provide viability gap funding. The Ministry of Ports, Shipping, and Waterways plans to initially shortlist a central government-run port for a pilot project. A contract will be awarded, and a concessionaire will be required to redevelop an existing berth, procure equipment and vessels and operate these on the coastal route. 

The ports ministry has been holding consultations with stakeholders to identify the most suitable model. The country’s top policy planning body NITI Aayog, shipping lines, berth operators and ministries dealing with commodities including fertiliser and coal have all been part of the stakeholder discussions. India has a coastline of more than 7,500 km. The initiative to promote transportation of goods using the coastal route and inland waterways is meant to reduce the cost of logistics from about 13-14% of its gross domestic product to less than 10%.

 

INDIAN STATE OFFERS INCENTIVES AND EXEMPTIONS IN NEW MARITIME POLICY

The Maharashtra state government in India officially released its Maritime Development Policy 2023, proposing fiscal incentives and exemptions from various charges to developers on port infrastructure projects. These include incentives on land for marina development, exemptions from stamp and electricity duties as well as royalties charged on minor minerals extracted and used for building new ports and related infrastructure. 

The policy offers priority docking for cruise vessels, along with a 25% concession on port charges for floating hotel projects, houseboats and seaplanes. There is also a concession of 75% on passenger tickets for cruises for 3 years.  The government is seeking expressions of interest for projects along its approximately 720 km coastline from the private sector.

 

DELHI GOVERNMENT TO REDEVELOP BUS DEPOTS AS PPPs

The Delhi government plans to build a multi-storey bus terminal in Nehru Place, with an integrated commercial development area. The terminal will have space for 472 cars and over 120 buses, as well as charging ports for electric buses. The basement will be used for parking and the government aims to make the terminal self-sustaining through revenue from shop spaces. Two other bus depots- Vasant Vihar and Hari Nagar also being redeveloped into multi-storey terminals. The government has also signed an agreement to redevelop three inter-state bus terminals at Kashmere Gate, Sarai Kale Khan and Anand Vihar. 

Delhi government had announced the redevelopment of its depots into multi-storeyed terminals with airport-like facilities while presenting the budget for 2023-24. The transport department has signed a memorandum of understanding with the Delhi Metro Rail Corporation to develop the terminal under a public-private partnership.

 

ODISHA INKS AGREEMENT, TO SET UP 5 MULTISPECIALITY HOSPITALS AT USD 62 Mn 

The Odisha government signed agreements with private healthcare players for building 5 affordable multi-specialty hospitals in the state. These hospitals, which will have 100 to 200 beds, will be set up in PPP mode in Angul, Barbil, Bhadrak and Jharsuguda. This is first-of-a-kind initiative by any state to develop healthcare facilities in PPP (public private partnership) mode. The development of healthcare infrastructure is a priority of the Odisha government.

The government would provide land and capital assistance for the construction, besides the required infrastructure, while the private players will construct the hospitals, deploy manpower and provide healthcare service for 30 years. These five hospitals will be developed at an investment of nearly Rs 500 crore, and generate employment for more than 3,500 people.


INDIA’S ESSAR PLANS USD 1 BN GREEN TRANSFORMATION OF PORT

India’s Essar Group is looking to spend USD 1 Bn on the green transformation of its Salaya Port in the state of Gujarat. The whole plan is to convert Salaya Port into a green port, where green hydrogen production, storage for bio-fuels, and LNG would be undertaken. The port, which at present handles mostly bulk cargo, will have facilities for liquid and container cargo as well. The plan includes setting up rail connectivity of 17 km, and state of the art road highway, connecting Jamnagar with Amritsar. Salaya Port is targeting a capacity expansion of 100 Mn tonnes per annum over the next 5 years from 20 mtpa. Essar Ports had created 170 MTPA capacity across several ports but has divested many, including Vadinar Port, Hazira Port, Paradip Port, and the Vizag Port.

 

November 2023

INDIA PLANS BOT HIGHWAY PROJECTS WORTH ABOUT USD 6.8 BN

The National Highways Authority of India (NHAI) has identified 19 projects worth about INR 568 Bn (USD 6.8 Bn) that it will tender for development in the build, operate, transfer (BOT) model. The biggest in terms of value is a 56 km stretch worth an estimated INR 79.8 Bn (USD 957 Mn) proposed between Pune city and Shirur town, followed by a 30 km highway between Kasarwadi and Rajgurunagar for INR 65.6 Bn, both in Maharashtra state.

This is the first time in about a decade that the NHAI is preparing to tender BOT projects ever since the model accounted for more than 90% of the contracts handed out earlier. Since 2014, the annual share of BOT contracts fell to less than 5%. There were no BOT projects in 2019 and 2020.


GUJARAT GOVT APPROVES PPP MODEL FOR CNG STATIONS

The Gujarat state government has granted approval for the development of CNG stations through a public-private-partnership (PPP) model to promote green mobility in the state. The government has sanctioned the Full Dealer Owned Dealer Operated (FDODO) CNG scheme, which will be implemented by Gujarat Gas Limited and Sabarmati Gas Limited.

Gujarat is at the forefront in the country with 1,002 CNG stations. The FDODO scheme has been initiated to further increase the coverage of CNG stations in the state and to make CNG fuel easily available to CNG vehicle owners. Under this scheme, the dealer will be fully responsible for taking the permission regarding the land and getting the documents for setting up the CNG station.

 

INDIA PLANS TENDER FOR USD 5.3 BN TRANSSHIPMENT PORT

The Indian government is planning to call for bids early 2024 for a project to build the first phase of an international container transshipment port (ICTP) in Great Nicobar Island. The project, estimated to cost INR 440 Bn (USD 5.3 Bn), will be developed in the Galathea Bay. The project is strategically important for the country and crucial for the economic and infrastructural development of the entire region, has garnered key approvals and support from government bodies. 

The Ministry of Environment and Forests & Climate Change (MoEF & CC) granted environmental clearance in year 2022. Additionally, stage 1 forest clearance has been obtained. Also, the Department of Expenditure, Ministry of Finance, has granted "In-Principle" approval for the holistic development of the Great Nicobar Island and detailed project report of the ICTP project is under finalization.

 

INDIAN HIGHWAYS AUTHORITY TO SEEK PRE-ELECTION CODE WAIVER 

India’s national highways authority will seek exemption from the Election Commission of India's model code of conduct so it can award projects prior to general elections in year 2024. The code - which prevents government authorities from awarding projects or introducing new programmes – is applicable from the date of announcement of the election schedule till the results are announced. 

As the commission usually releases the schedule about 2 months ahead of final voting, the highway authority expects that the pace of handing out contracts will be affected in March, with elections scheduled in April and May. Overall awards are expected to decline to 9,000-9,500 km in the year through March 2024 from 12,375 km in the last fiscal year as a result of the code of conduct.

 

INDIA'S KERALA STATE PLANS PPP DEVELOPMENTS ALONGSIDE BACKWATERS 

The waterways authority in India’s Kerala state is planning tourism and inland water transport projects in the public-Private partnership model. These will include passenger terminals, boats and ferries, hotels and resorts. The state government will seek proposals from the private sector to implement their ideas for developing the entire stretch along the 616 km West Coast Canal. 

The length has been divided into 13 sections and the state has approved INR 3 Bn (USD 36 Mn) for initiating the land acquisition. The backwater regions of Kerala are one of India’s most popular tourist destinations and are especially popular for its houseboat cruises. The scenic backwaters of the state comprise serene stretches of lakes, canals and lagoons parallel to the Arabian Sea coast.

 

December 2023 

INDIA'S ASSAM STATE TO BUILD RIVER TERMINALS AS PPPs 

Assam state in India will look to develop at least 2 river terminals via the public-private partnership model. Assam aims to first make a terminal operational in Guwahati on the banks of the Brahmaputra River. The state government has recently established the Assam Inland Waterways Company, with the new body mandated to oversee the transportation of cargo via inland waterways, operations of ferries and other riverine vessels, as well as to promote PPPs for cruise tourism.

 

BHUTAN PLANNING TO BOOST TRADE INFRA WITH INDIA 

Bhutan’s King has disclosed a proposal to develop a “mega city” near the country’s border with India. The project will be located in the Gelephu Special Administration Region (SAR), spread over 1,000 sqkm. It is aimed at spurring regional integration with the Indian state of Assam and leveraging connectivity between South Asia and Southeast Asia. It will be part of a special economic zone and will include an international airport. The SAR will implement its own systems and laws and invite skilled workers and foreign direct investment. 

The two countries are also planning railway links of a combined 76 km. The Indian Railways has completed its initial engineering-and-traffic survey for a 58 km track linking Kokrajhar in Assam to Gelephu in Bhutan.

 

NHAI COLLABORATES WITH SPV TO DEVELOP USD 84 Mn LOGISTICS PARK AT NAGPUR

The National Highways Authority of India (NHAI) has signed an agreement with DC Multi Modal Park (Nagpur) Limited, an SPV of Delta Bulk Shipping India Pvt Ltd, for the development of Multi Modal Logistics Park (MMLP) at Nagpur. The MMLP will be developed in an area of 150 acres under the public-private partnership (PPP) model at an estimated cost of INR 6.73 Bn. This project is poised to be the first MMLP in Maharashtra under the PM Gati Shakti National Master Plan, making it a significant milestone in the country's development. 

The MMLP will be developed in 3 phases. The phase-I with an investment of INR 1.37 Bn is expected to be completed in 2 years. MMLP will cater to about 9.47 Mn metric tonnes (MMT) of cargo in the horizon period of 45 years and will give huge boost to the industrial zones in the catchment region such as Nagpur, Wardha, Chandrapur and Gondiya. It will create a lot of employment opportunities and bring in economic development in the region. A government SPV, Nagpur MMLP Pvt Ltd is formed between National Highways Logistics Management Limited (NHLML), a 100% owned company of NHAI and Jawaharlal Nehru Port Authority (JNPA). JNPA has provided land for development of MMLP and NHLML is providing the external rail, road connectivity as well as water and power supply. 

 

INDIA'S PPP APPRAISAL PANEL CLEARS PORT’S OUTER HARBOUR PROJECT 

India's Public-Private-Partnership Appraisal Committee (PPPAC) has greenlighted the development of an outer harbour container terminal at VO Chidambaranar Port in Tamil Nadu’s Thoothukudi district. The project, which will cost an estimated INR 70.6 Bn (USD 847 Mn), will be capable of processing 4 Mn twenty-foot equivalent units. PPPAC  has also given an in-principle clearance for viability funding of INR 19.5 Bn. The port authority will call for bids to build and operate the terminal as a 45-year concession. 

 

List of key transactions - Transport and Urban Infra - India Q4 2023




Source: YOG INFRA analysis

 

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