Government falls short on its promise to build roads
February 29, 2008
The government has fallen short on its promise to build roads in 2007-08. The Economic Survey revealed that while the flagship Golden Quadrilateral connecting the four metros was 96% complete at this time, only 21% of the north-east and south-west corridors were finished till November 2007. This means the end-2009 completion target for the project is unlikely to be met. The port-connectivity projects, which envisage linking major ports with national highways, are also way behind schedule.
Work under the National Highways Development Project (NHDP)-III has also fared terribly with only 274 km completed by November 2007. The project envisages four and six-laning of 12,109 km of highways on the build, operate and transfer (BOT) basis. While the first phase covering 4,815 km was expected to be completed by end-2009, the National Highways Authority of India (NHAI), which spearheads the construction and upgradation, finished only 5.69% of the target.
The NHDP-III is estimated to cost Rs 80,626 crore and 30 contracts covering more than 1,900 km have been given out so far with another 3,000 km to be awarded during the current financial year.
Lackadaisical implementation notwithstanding, highway connectivity among Indian cities, however, remains a priority. The Survey has stressed the need to connect all cities by national highways in the medium term.
Source: economictimes.indiatimes.com
State government refuses to reveal land rates for Ganga Expressway
February 29, 2008
Lucknow, February 28 The state government today refused to inform the assembly the rates of compensation for land acquisition in the Ganga Expressway project.Parliamentary Affairs Minister Lalji Verma maintained that compensation will be according to the agreement between the farmers and developers.But he refused to clarify if the price offered will be the circle rate, market rate or a mutually negotiated rate.The government also refused to reply why the farmers in Agra — whose land is being acquired for the Taj Expressway Project — were being forced by the administration to accept a compensation of Rs 2-3 lakh per hectare, when the market rate was over Rs 40 lakh per hectare.Raising the issue during the Zero Hour, RLD member Dharm Singh alleged that the farmers were brutally beaten up by the police PAC when they went to meet the divisional commissioner to lodge their protest on February 24. He also alleged that the farmers are being pressurised by the local administration and police to accept the cheques.Denying any incident of lathicharge on farmers in Agra, Verma, however, did not comment on the compensation rate.Earlier, the minister had assured the assembly that work on the ambitious Rs 40,000 crore Ballia-Greater Noida Ganga Expressway will start only after getting the No Objection Certificates from different departments — environment, pollution board, forest and Archaeological Survey of India (ASI).He said the developer had been directed by the government to get the NOCs before commencing work. “The condition is there in the agreement made with the developer,” he added.The minister also contradicted the Opposition claim that over 21 lakh trees will be felled for the project. “There is no question of cutting down a large number of trees. Besides, the mega project will free over 3.40 lakh hectares of land from the grip of floods,” he underlined.Answering a question on industrial development in the state, the minister said between March 2004 and March 2007, investment amounting to Rs 5555.30 crore has been flowed in.Without giving details, he said 347 big and medium industrial units had been set up in that period.Asked how the government will meet the target of Rs 5 lakh crore investment in the next 5 yrs, he said bad law and order in the past was the chief reason behind the dismal progress of investment. Source: http://www.expressindia.com
Hit the road: Infrastructure growth is revving up
February 29, 2008
The indian infrastructure story is just waiting to unfold. It is a foregone conclusion that the need for infrastructure to facilitate economic growth in India, both immediate and long-term , is ever more pressing. The growth rates witnessed in the Indian economy today are indicative of the change to follow —infrastructure has been expanding at an accelerated pace to support the economic growth rate of 9%. India’s infrastructure development has so far been predominantly financed publicly. The urgent need of the hour is an enhanced approach that would create a balance between public and private sector roles, complemented by transparent public policies. The Government has already taken many proactive measures such as opening up a number of infrastructure sectors to private players , permitting foreign direct investment (FDI) into various sectors, introducing model concession agreements and taking up projects such as the National Maritime Development Programme and National Highway Development Project, among others. The next four to five years will witness implementation of some key infrastructure projects such as additional power generation capacity of 70,000 MW; development of 16 million hectares through irrigation works; modernisation and redevelopment of four metro and 35 non-metro airports; six-laning 6,500 km of Golden Quadrilateral and selected National Highways. Focus will be on key infrastructure sectors of highways, ports, airports, railways and power. Having been part of the Indian infrastructure history, we at GVK have always believed that the key to developing a sustainable infrastructure in India is to build for the future. India will see an investment to the tune of $500 billion in infrastructure in the next five years. Coupled with government support, this investment will fructify in the form of key infrastructure projects to strengthen India’s cities. The next four years will bring a sea change in infrastructure and as a result, in another ten years, we will see the emergence of a new India. Source: http://economictimes.indiatimes.com
Gammon Infrastructure Projects files DRHP with ROC
February 28, 2008
Gammon Infrastructure Projects Ltd (GIPL), a subsidiary of Gammon India Ltd, has filed the Red Herring Prospectus with the Registrar of Companies, Maharashtra in connection with its ‘Initial Public Offer’ of 1,65,50,000 equity shares of the face value Rs 10/- each, comprising a net issue of 1,48,95,000 equity shares to the public and a reservation of 16,55,000 equity shares for eligible employees.
The IPO is being made on 100% book building route, with the price band being Rs 167/- to Rs 200/-.
The issue will remain open from March 10, 2008 to March 13, 2008.
Gammon Infrastructure Projects Limited (“GIPL”) is an infrastructure project development company promoted by Gammon India Limited, to participate in the development of infrastructure projects on a public private partnership (“PPP”) basis.
GIPL leads Gammon’s forays into development of infrastructure projects on PPP basis across sectors such as Roads & Expressways, Ports, Hydro Power, Urban infrastructure, Airports, Special Economic Zones, Water and Wastewater management, Railways, Power Transmission lines, and Agricultural Infrastructure.
Source: equitybulls.com
LEAD ROLE OF GOVERNMENT FOR INFRASTRUCTURE DEVELOPMENT TO CONTINUE
February 28, 2008
Economic Survey 2007-08
PRESS INFORMATION BUREAU
GOVERNMENT OF
***
Lead role of Government for Infrastructure Development to Continue
Recognizing the importance of development of adequate infrastructure for sustaining the growth momentum and to ensure inclusiveness of the growth process, the Government will continue to play a lead role in infrastructure development during the Eleventh Plan. The Economic Survey 2007-08 tabled in Parliament today, states that accompanying the recent moderation in industrial growth, the growth performance of some segments of the infrastructure such as power generation and movement of railway freight and also the production of universal intermediates like steel, cement and petroleum have shown a subdued performance during April-December 2007-08 as compared to the corresponding period last year. In the power sector, though the plan capacity addition is unlikely to be achieved, the growth in capacity in the current year is distinctly higher than in the previous years. The movement of cargo handled by major ports and air cargo has showed improved performance as compared to the corresponding period last year. The highly competitive telecom sector has maintained its phenomenal growth, the Survey adds.
With the rapid growth of economy in the recent years, the importance and urgency of removing infrastructure constraints have increased. The Government has made an effort to facilitate the entry of private enterprise into this sector through changes in the legal framework. The Survey mentions that the role of private sector participation has also been facilitated by technological change that allows unbundling of infrastructure so that the public and the private sectors can take up the components according to their capacities.
The Survey states that the recent moderation in the growth in the industrial sector has raised concerns in some quarters about sustainability of high growth of the sector. To deal with the situation emerging from the slow down of some export oriented sectors of relatively low import intensity including textiles, handicrafts, leather etc. the Survey states that the Government took certain measures to tide over the situation in short run. It emphasises that, over the medium term, there is little choice but to improve productivity even if there are issues pertaining to the exchange rate of currencies of competing countries.
During the Eleventh Five Year Plan, the power sector is expected to grow at 9.5 per cent per annum. The Survey mentions that a capacity addition of 78,577 MW has been proposed for the plan period to fulfill the objective of the National Electricity Policy 2005. A number of projects envisaged for the Eleventh Plan have made steady progress and most of these are in a position to be commissioned well within the Plan period. It is expected that the total capacity addition during the current financial year would be 10,821.8 MW with thermal, hydro and nuclear accounting for 8,015 MW, 2,587 MW and 220 MW respectively. The Survey also mentioned that for development of coal based Ultra Mega Power Projects (UMPPs) each with a capacity of 4,000 MW or above, project specific shell companies have been set up as wholly owned subsidiaries of the Power Finance Corporation Limited to facilitate tie up of inputs and clearances. The bidding process in respect of Sasan, Mundra and Krishnapatnam UMPPs have been completed. For the development of hydro power potential, the Survey also states that a task force has been constituted under the Chairmanship of Minister of Power. The task force shall examine and resolve issues relating to hydro power development. To achieve the goal of electrifying all unelectrified villages and hamlets and providing access to the electricity to all households as envisaged under the Rajiv Gandhi Grameen Vidhyutikaran Yojana (RGGYY), the Government has approved its continuation during the Eleventh Five Year Plan period. With an initial outlay of Rs. 28,000 crore, about 1.15 lakh unelectrified villages and 2.34 crore rural BPL households have been envisaged to be covered in Phase-1 of the scheme.
The Survey states that improved resource management, through increased wagon load, faster turn around time and a more rational pricing policy has led to a perceptible improvement in the performance of the Railways during 2005-06 and 2006-07. During April-November 2007, the total revenue earning freight traffic grew at 8.2 per cent as compared to 9.9 per cent in the corresponding period of the last year. The Survey mentions that the Indian railways have been taking certain pro-active initiatives in the area of tariff and fare fixations and commercial practices. There has been conscious thrust on bringing in transparency, simplification and making rail tariff competitive to attract more traffic.
In Road sector, the Survey states that 7,962 kilometers of National Highways under National Highways Development Project (NHDP) with the bulk of 5,629 kilometers lying on Golden Quadrilateral (GQ) was completed till
inter-ministerial Committee to appraise and coordinate individual sub-projects under Special Accelerated Road Development Programme for the region. An investment of Rs. 3,14,152 crore has been envisaged for the roads and bridges sector during the Eleventh Five Year Plan.
Regarding Civil Aviation Sector, the Survey states that with the liberalization of Indian skies, the airlines market in
During April-October 2007, the cargo handled by major ports registered growth of 13.9 per cent against 9.5 per cent in the corresponding seven months of last year. The Survey states that there was an impressive growth of 13.9 per cent per annum in container traffic during the Five Year ending 2006-07.
The telecom sector continued to register significant growth during the year and has emerged as one of the key sector responsible for
Regarding Urban infrastructure, the Survey states that with the launching of Jawaharlal Nehru National Urban Renewal Mission (JNNURM) in 2005-06, the reform process of urban local bodies has begun. There is now a better appreciation at the state level of the importance of developing and sustaining the infrastructure through appropriate user charges. While sanctioning the projects, efforts are made to ensure public-private participation in the areas where it is feasible. An amount of Rs. 2,805 crore has been provided for the year 2007-08 for the Sub-Mission on Urban Infrastructure and Governance. 279 projects have been sanctioned at an approved cost of Rs. 25,287.08 crore for 51 cities out of the listed 63
While sanctioning these projects, highest priority has been accorded to sectors that directly benefit common man and urban poor namely, water supply, sanitation and storm water drainage. 90 projects are expected to be completed by December this year. A total investment of Rs. 3, 35,350 crore have been envisaged by the
Outlining the investment requirement for the infrastructure during Eleventh Five Year Plan period, the Survey states that to achieve the target rate of growth of 9 per cent for the Plan period, an increase of investment from around 5 per cent of GDP in 2006-07 to 9 per cent of GDP by the end of the Plan period is envisaged. The investment in physical infrastructure alone has been estimated to be about Rs. 2,002 thousand crore (at 2006-07 prices). Such a large magnitude of investment during the Plan period would need to be financed through non-debt and debt resources of the order of Rs. 1, 064 thousand crore and Rs. 996 thousand crore respectively. Keeping in view the need for financing infrastructure, the Ministry of Finance constituted a Committee in December 2006 to under the Chairmanship of Shri Deepak Parekh to identify the constraints and suggest measures for financing infrastructure. The Committee in its report submitted in last year has stated that there are macro-economic and institutional constraints in financing infrastructure. To maximize the role of public-private partnerships (PPPs), the Department of Economic Affairs has taken several major initiatives in the matters concerning PPPs including policy, schemes, programmes and capacity buildings. While encouraging PPPs constraints have been identified and several initiatives have been taken by the Government to create enabling framework for PPPs by addressing issues relating to policy and regulatory environment. To address the financing need of PPPs projects, various steps have been taken such as setting up of the India Infrastructure Finance Company Limited (IIFCL) to provide long tenor debt to infrastructure projects and launching of a Scheme for financial support to PPPs in infrastructure to provide Viability Gap Funding to PPPs projects.
The challenges in implementing the infrastructure projects are immense. The Survey states that there is need to develop appropriate mechanism for financing infrastructure, especially the development of a domestic debt market is overarching. It is also important to ensure synergy in the efforts being made to develop different types of infrastructure through effective coordination between different agencies. “These challenges are serious, but they are by no means insurmountable”, the Survey adds.
Source: pib.nic.in
TWO-LANING OF NHS ACROSS THE COUNTRY
February 28, 2008
There is no proposal of two-laning of all single-lane NHs across the country on BOT basis, which are not covered under approved phases of NHDP. However, NHDP-Phase-IV, involving upgradation of NHs to two-lane standards with paved shoulders primarily on BOT basis, is yet to be approved by the Government.
The Eleventh Five Year Plan (2007-12) endorsed by the National Development Council (NDC) during its meeting held on 19.12.2007 recommended that the targets for stretches other than NHDP have to be prioritised according to their importance to the national economy so that the available resources are not spread thinly among competing projects. The major targets for non-NHDP components include:
i. Accelerated efforts to bring NHs network to a minimum of two-lane standard within the next ten years and four-laning small segments of non-NHDP stretches.
ii. Removing existing deficiencies, like inadequate capacity, insufficient pavement thickness, etc. in the road network by strengthening the National Highway network/improving riding quality.
The condition of the National Highways (NHs) is monitored on regular basis. Further, the development and maintenance of NHs is a continuous process to keep them in traffic worthy conditions and are taken up as per the availability of funds, traffic intensity and inter-se priority.
This information was given by the Minister of State for Shipping, Road Transport and Highways, Shri K.H. Muniyappa in a written reply in the Rajya Sabha today.
Source: pib.nic.in
From April, pay toll tax to use NH 25
February 24, 2008
Lucknow, February 24 Planning to take the Lucknow-Kanpur highway? Get ready to pay for a smooth driving experience. The National Highway Authority of India (NHAI) is all set to introduce toll tax for the 48-km Lucknow-Unnao stretch on NH 25 by April this year. It will set up a toll tax booth just before Nawabganj.
NHAI officials said the recommendation in this regard has already been sent to the Ministry of Road, Transport and Highways and a notification is expected within a month.
The toll tax may be charged at reduced rates initially, they added.
“A toll plaza is generally set up at an interval of 70-80 km on the highway. But a railway overbridge in Unnao on Lucknow-Kanpur stretch is yet to be completed. So, the toll may be reduced proportionately,” said M K Jain, Project Director of NHAI.
The proposed site (near Nawabganj) for the toll plaza suggests that commuters coming from Lucknow to Unnao and Kanpur will have to pay the tax.
“Similarly, the people coming from Kanpur to Lucknow will also have to pay the toll. But, people travelling from Lucknow to Banthara or from Kanpur to Unnao would be saved from the tax,” an official said.
The proposed toll site, however, may be changed after the ROB in Unnao is completed.
While cars, jeeps and vans will have to pay a tax of around Rs 25, trucks and buses will be charged around Rs 95.
“The toll tax is calculated for 12 am to 11.59 pm for one-side trip. If a commuter has to return on the same day, he will have to shell out about one-and-a-half times of the toll rate,” a NHAI official said.
“For daily commuters, the NHAI can issue monthly passes,” he added.
According to NHAI norms, VIPs, defence vehicles, police vehicles, fire-fighting vehicles, ambulances, funeral vans, posts and telegraphs department vehicles will not have pay toll tax.
This will be the second highway after NH 2 in the state on which toll tax will be introduced.
“According to government policy, NHAI will set up toll plaza as soon a particular highway stretch is completed. And these are going to stay, so that NHAI could carry out maintenance and upgradation works effectively,” another official said.
Source: expressindia.com
Nagpur Sical Gupta road terminal project launched
February 24, 2008
Country’s leading provider of integrated multi-modal logistics solutions for bulk and containerized cargo and offshorfe logistics, Sical logistics on Sunday launched Nagpur Sical Gupta road terminal at Multi Modal International Hub Airport at Nagpur (MIHAN).
Union Minister for New and Renewable Energy, Vilas Muttemwar and State BJP President Nitin Gadkari laid the foundation stone of Rs 119.3 crore project. Chairman of Chennai-based Sical, Ashwin Muthiah and Chairman of Gupta Group of Industries, Padmesh Gupta were present on the occasion.
Speaking to reporters Muthiah and Gupta said a special purpose vehicle, Nagpur Sical Gupta Road Terminal (NSGRT), comprising Sical with 51 per cent stake, Maharashtra Airport Development Company 26 per cent and Gupta Coal with 23 per cent stake, will build, operate and manage the road terminal.
Sical MD and Group CEO, Sudhir Rangnekar said road terminal will stretch across 60 hectares of area and have parking facilities for 1150 vehicles including multi axle vehicles and cold storage. It would be completed by January 2009, he added.
NSGRT was formed in April 2007 and agreements were signed in August 2007. Rangekar said Sical was handling 22 mn tonnes of BUL and 5,00,000 teu (twenty euqal units) of containerized cargo.
Sical’s delivery network includes walk-in-berth at Chennai for ships carrying bulk cargo, a container terminal at Tuticorin.
Source: economictimes.indiatimes.com
NHAI awards 5 road projects contracts
February 24, 2008
It is reported that National Highway Authority of India has awarded 5 road projects worth INR 109.12 billion to private companies.
1. Larsen & Toubro, a highway widening project in southern India for INR 4.19 billion rupees
2. A JV company between Soma Enterprise and Isolux Corsan JV has won a road project in northern India for INR 27.5 billion
3. A JV company between IRB Infrastructure Developers and Deutsche Bank got the contract to widen a highway in western India for INR 16.94 billion
Mr Bhram Dutt secretary at transport ministry said that the projects are part of India’s INR 2.42 trillion national highway development programs.
India is seeking active private participation to build roads, airports and power plants as the government is unable to raise the funds needed to finance them on its own.
Source: steelguru.com
Mumbai sea link banks on ultra-high traffic flows
February 23, 2008
Reliance Energy has quoted a concession period that has taken even MSRDC by surprise.
The Reliance Energy-led consortium’s ambitious bid, which helped it emerge the preferred bidder for the Rs 6,000-crore Mumbai Trans Harbour Link, has set a new performance benchmark in the infrastructure business.
The consortium has offered to build the 22-km six-lane bridge, which will connect Sewri and Nhava Sheva (see map), by 2013, recover the costs from revenues and hand it back to the nodal agency, the Maharashtra State Road Development Corporation (MSRDC), in just nine years and 11 months.
In technical parlance, this is known as the concession period.
To put this in context, the Mukesh Ambani-controlled Sea King Infrastructure, which was the only other bidder, quoted a concession period of 75 years.
Significantly, in 2004, MSRDC itself estimated a 35-year concession period for the sea link project. For the Mumbai-Pune expressway, the period was 30 years.
Indeed, Parvez Umrigar, managing director of Gammon, said his construction engineering company had decided to opt out of the sea link project because of the “frightening equation of risk and return”. Umrigar declined, however, to comment on the Reliance Energy bid.
So what made the Anil Ambani-controlled Reliance Energy quote a concession period that has taken even MSRDC by surprise?
Reliance Energy declined to comment on the issue.
In its 2004 study, the MSRDC had projected a traffic of 50,000 passenger car units (PCUs) a day when the bridge was completed.
But back-of-the-envelope calculations show just to break even, the Reliance Energy consortium would need a minimum of 1,09,589 PCUs a day paying an average toll of Rs150 for around 10 years.
A passenger car unit considers one truck as 2.5 passenger cars to calculate the overall traffic.
An industry expert said the operational cost for the project will be at least Rs 500 crore over 10 years.
Besides, the usual debt-equity ratio for such infrastructure projects is 70:30. Assuming a conservative 5 per cent interest rate on the debt, the interest cost for a 15-year loan would be around Rs 3,000 crore.
If the consortium wants just a 10 per cent return on its investment, the traffic requirement on the bridge would easily be around 250,000 PCUs a day — five times the MSRDC’s traffic estimate.
MSRDC, however, said the traffic demand has changed a lot since 2004 and the figure is expected to be much higher in 2013, when the bridge is operational.
“The construction of the special economic zones (SEZs) by Reliance and the new airport in New Mumbai will increase traffic demand hugely,” said Vijay Garva, chief engineer for the link at the MSRDC. He, however, did not give any fresh traffic estimates.
The MSRDC officials added that a lot of traffic on the Mumbai-Pune route would also be diverted to the bridge. The sea link will also ease pressure on the Mumbai-Pune Expressway, National Highway-4 and Mumbai-Goa Highway, where traffic is expected to increase.
The MSRDC is asking for a Rs130-crore performance guarantee to be kept with MSRDC so that the bidder sticks to the construction time schedule of five years.
Nitin Gadkare, state BJP president and former public works minister, said Reliance Energy is obviously banking heavily on the new airport at Panvel and the SEZ.
However, the calculations may go awry if any of these projects gets delayed, he said.
Gammon India, however, is not expecting an exponential rise in the traffic from south Mumbai to Nhava Sheva, which is the gateway to traffic from Mumbai to Goa and Pune. Besides, there is already a link bridge in Vashi connecting south Mumbai to New Mumbai.
Source: business-standard.com
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