IRB withdraws from Mumbai Trans Harbour Link Project
August 5, 2013
By ET Bureau |
Maharashtra’s ambitious Rs.9630 crore Mumbai Trans Harbour Link (MTHL) project will have one less bidder as IRB infrastructure developers’ ltd has decided to withdraw from the bidding process. IRB has written a letter to the MMRDA and the Chief Minister of Maharashtra saying they have decided to withdraw from the MTHL project because of bad experience on some other infrastructure projects in the state.In the letter Virendra Mhaiskar Chairman IRB has said, “We deeply regret to inform you that we are unable to participate in the bidding process of the project and the reasons are beyond the boundaries of this project. Unfortunately the experience that we have had in one of the infrastructure projects in Maharashtra in the city of Kolhapur has shattered our confidence to invest in the urban infrastructure projects especially in the state of Maharashtra.”
The central government has sanctioned the Viability Gap Funding (VGF) of Rs.1920 crore for the Rs.9630 crore MTHL which will connect South Mumbai to Navi Mumbai directly. Many Indian and international companies participated in the pre-qualification bids for the MTHL. The Mumbai Metropolitan Region Development Authority (MMRDA) had shortlisted 5 consortia M/s. CINTRA – SOMA -SREI, M/s. Gammon-OHL Concessions-G.S. Engineering, M/s. GMR-L & T Ltd-Samsung, M/s.IRB-Hyundai and M/s.Tata Realty and Infrastructure Limited-Autostrade-Vinci Concessions.
The MTHL is expected to carry more than 62,000 passenger car units in the year 2019 and an annual growth of about 5% is estimated. MMRDA has also undertaken a few additional corridors to facilitate the anticipated traffic dispersal.
Agreement signed to form National Capital Region Transport Corporation
August 5, 2013
By PTI |
Urban Development (UD) Secretary Sudhir Krishna said the RRTS corridors which are expected to be built in five years, once the construction work starts, would “completely transform the National Capital Region”.
Speaking to reporters after signing of memorandum and articles of association of NCRTC, he said the Union cabinet had on July 7, approved the formation of the corporation.
He said that the new body would have a share capital of Rs 100 crore of which the UD and Railway ministries would contribute 22.5 per cent each, the NCR Planning Board 5 per cent, while Delhi, Haryana, Rajasthan and Uttar Pradesh governments would put in another 12.5 per cent each.
The funding pattern of the three rail-based corridors, however, would be chalked out separately, keeping in mind factors like the territory that a line covers in various states.
Speaking further, Krishna said that since the financing requirements of the projects are to a tune of Rs 72,000 crore, the resources of state and central governments would not be sufficient. He advocated methods like allowing additional Floor Area Ratio (FAR), levy of impact fee and loans from domestic sources for raising of finances.
National Capital Region Transport Corporation created, travel time set to shrink By PTI |
August 5, 2013
By PTI |
The NCR states today signed an agreement with ministries of Urban Development and Railways and the NCR Planning Board for the creation of the NCRTC.
Officials told PTI that as per the proposal for the three RRTS corridors, Delhi-Alwar is the longest at 180 km and would traverse 19 stations in a travel time of 117 minutes.
The corridor from Delhi to Panipat is 111 km and 12 stations long and the travel time is 74 minutes. The 90-km- long Delhi-Meerut route has 17 stations and a proposed travel time of 62 minutes.
Speaking to reporters after signing memorandum and articles of association of NCRTC, Urban Development Secretary Sudhir Krishna said the RRTS corridors were expected to be built within a timeline of five years once the construction work starts and would “completely transform the NCR”.
He said that the union cabinet had on July 7, approved the formation of the NCRTC which would have a share capital of Rs 100 crore.
The Urban Development and Railway ministries would contribute 22.5 per cent each to the share capital while the NCR Planning Board would add 5 per cent. The NCR states of Delhi, Haryana, Rajasthan and Uttar Pradesh would put in another 12.5 per cent each, he said.
Krishna said that the three rail-based corridors would cost an estimated Rs 72,000 crore but funding pattern of each line would be chalked out separately, keeping in mind factors like the territory that a line covers in various states.
He said since the financing requirements of the projects are huge the resources of state and central governments would not be sufficient. He advocated methods like allowing additional Floor Area Ratio (FAR), levy of impact fee and loans from domestic sources for raising of finances.
Road construction takes twice time in NE: Union Transport secretary
August 5, 2013
By PTI |
Road, Transport and Highways Minister Oscar Fernandes and senior officials from the ministry today held a review meeting of the road projects in North East with chief ministers and representatives of the states from the region.
“Land acquisition and forest clearance are the main issues in implementing the projects. We have the money, but we are getting stuck at implementation,” Chhibber said.
“Many state PWDs are not up to the mark in implementing the projects. Pre-construction activities are taking too much time in this region,” he added.
The Ministry is implementing an ambitious Special Accelerated Road Development Programme (SARDP-NE) to develop road network in this region, aiming to provide connectivity to all the district headquarters.
The two-phased programme, including Arunachal Package, covers about 10,141 km.
The phase A of SARDP-NE, including Arunachal Package, covers 6,418 km and is estimated to incur an investment of Rs 33,688 crore during the 12th Five-Year Plan. The phase B is in conceptual stage.
Out of that, 2,000 km is planned for the current fiscal at an investment of Rs 3,100 crore, Chhibber said.
So far, about 1,000 km have been completed and the entire project is targeted for completion by June, 2016.
The project is being executed by the state PWDs, Border Roads Organisation, National Highways Authority of India and the Ministry of Road Transport and Highways.
Highway Ministry to pump in Rs 33, 688 crore for development 6,418km of highways in Northeast
August 5, 2013
By Bikash Singh, ET Bureau |
Union Minister for Road Transport and Highways Oscar Fernandes who was in Guwahati on Friday reviewed the progress of National Highway works said around 2000km of roads are sanctioned for this year. This will come up with an investment of Rs 3100km.
Fernandes said that a high-level meeting chaired by Prime Minister Dr Manmohan Singh was held on July 18 last to review the status of development projects in the region and discussed steps to accelerate the same.
Secretary to the Ministry of Road Transport and Highways Vijay Chibber also announced that the ministry has also decided to carry out feasibility of Imphal bypass and explore the possibility of highway between Chumukedima near Dimapur in Nagaland and Maram in Manipur. It was also decided to undertake 100 km length road construction to connect Sittwe port in Myanmar.
The ministry has decided for developing 130 km stretch of Agartala Sabroom section of NH-44 to two lane standards this will provide connectivity to Chittagong port through Bangladesh. It was also decided to construct alternative highway to Gangtok.Chibber added time taken for road construction in Northeast India is twice higher than the national average. “Pre construction activity consumes lot of time. Law acquisition is a problem here. State PWD and BRO are not fully geared up.
World Bank debars Indian firm for corruption in road project
August 5, 2013
The decision follows a World Bank investigation and review of poorly performing road construction contractsunder the bank-financed project, for which CES was the supervision consultant, the bank said in a statement on Friday.
Consulting Engineering Services (CES) will not qualify for any contract financed by the World Bank Group during the five-year debarment, which came into effect on Friday.
“The debarment is part of a Negotiated Resolution Agreement between the World Bank and CES that addresses misconduct that occurred under CES’s former ownership and former management. The settlement resolves an investigation into allegations that CES defrauded the Highway Project and received bribes from construction contractors on the Project,” the statement said.
CES has agreed not to contest that its engineers approved forged and falsified invoices to support advance claims for payment under the contracts, in part in exchange for receiving improper cash payments and other things of value for their personal benefit.
The company also agreed not to contest the fact that the bid submitted by its former management and former owners for the supervision contract contained falsified credentials of its proposed staff.
In addition to conducting its own internal investigation, CES has fully cooperated with the World Bank Integrity team and has begun reforming its corporate compliance program.
“This case demonstrates the World Bank’s strong commitment to manage corruption risks and the progressive shift we are making in promoting corporate compliance,” said Leonard McCarthy, World Bank Integrity Vice President. “Companies, like CES, who, when notified of misconduct, self-investigate and take actions against wrongdoers offer a good example.”
The debarment may be converted to conditional non-debarment at the end of the first 24 months if CES fulfils its obligations under the agreement, the World Bank said.
Road Ministry sets target to complete Rs 34K Cr projects in NE by 2016
August 5, 2013
By PTI |
NEW DELHI: Government has set a target to complete Rs 33,688 crore projects under Special Accelerated Road Development Programme by June 2016 to improve infrastructure in the country’s North Eastern region.
“The phase A of SARDP-NE including Arunachal Package covers 6,418 km at an estimated cost of Rs 33,688 crore… The project is targeted for completion by June, 2016,” according to the Road Transport and Highways (RTH) Ministry.
The projects are being executed by the States Public Work Departments, Border Roads Organisation (BRO), National Highways Authority of India (NHAI) and the Ministry of Road Transport and Highways.
SARDP is Special Accelerated Road Development Programme. So far, about 1,180 km have been completed, as per the Ministry, which said it targets to award projects in a total length of about 2,000 km and achieve completion in 550 km length during 2013-14.
The Phase B of the SARDP is at a conceptual stage, as per the Ministry.
The programme envisages providing road connectivity to all the district headquarters in the north eastern region by minimum 2-lane highway standards apart from providing road connectivity to backward and remote areas, areas of strategic importance and neighbouring countries.
RTH Minister Oscar Fernandes and Secretary Vijay Chhiber last week reviewed the progress of projects in presence of Chief Ministers of the states. They asked officials to expedite progress and find ways to speed up implementation of the projects.
The Minister said the government was serious about developing infrastructure and would carry out feasibility study for the newly declared NH-127 B. This will connect Srirampur to Phulbari via Dhubri including construction of a bridge over river Brahmaputra.
It will also invite Request for Qualification (RFQ) for widening NH-37 between Numaligarh – Jorhat – Demow – Dibrugarh to 4-lane standards on BOT ( Annuity) basis besides work on other projects. Chhibber emphasised that government is committed to accelerated development of infrastructure in the country in general and in the North East Region in particular. The developments come in the wake of Prime Minister Manmohan Singh reviewing infrastructure projects in the North East Region in a meeting held on July 18. An Empowered Group of Ministers and a committee under the chairmanship of Cabinet Secretary have also been constituted to quickly find solutions for outstanding issues impeding the progress of projects.
Source-http://economictimes.indiatimes.com
NHAI taking developers to task over execution of road projects
August 3, 2013
Developers who can’t get projects moving in four months face cancellation which would mean having to forego their initial deposits
Ragini Verma
The executing agency for building highways has issued notices to 37 project developers that were awarded projects in 2011 and 2012, but have not deposited the performance security. Photo: Mint
New Delhi: The National Highways Authority of India (NHAI) is taking developers to task for not executing road projects owing to procedural delays, the inability to raise funds, and a loss of interest amid sluggish economic growth.
Developers who can’t get their projects moving in four months face cancellation, according to a senior NHAI official who didn’t want to be named. This would mean having to forego their initial deposits, an expert said.
The executing agency for building highways has issued notices to 37 project developers that were awarded projects in 2011 and 2012, but have not deposited the performance security. This is usually deposited within 90 days of signing the concession agreement and is 5% of the total project cost.
“We issued the notice to developers of pending projects. They have been awarded projects back in 2011-12, but have not submitted the performance security, pending which NHAI cannot work on getting required clearances,” said the agency official. “Performance security is a sign of the developer’s commitment for executing the project and providing funds for it.”
The developers have been asked to reply to the notices by 14 November. They will have to either pay the performance security or relinquish the project, the official said.
The developers say the projects have got bogged down over difficulties in raising funds, which worsen because of difficulties in land acquisition, even though the stipulation that all the land has to be acquired before the project can start has been eased.
“Most developers are struggling to get finance from the banks. Banks are not able to finance in the current environment and are reluctant. Also, some banks are still insistent on 100% land acquisition for loan sanction, in spite of the land requirement being changed back to 80%,” said M. Murali, director general, National Highways Builders Federation.
“The other problem is that even when NHAI gets us 80% land for the project, many times it is not a continuous stretch. It is staggered, hence making it difficult for the developer to start work.”
But these delays can also be due to developers losing interest in a project because they don’t consider it viable any more.
“Most likely the developers are having second thoughts whether to continue in the projects or not,” said Pranavant, a director at Deloitte Touche Tohmatsu India Pvt. Ltd, a consulting firm.
“Most developers after emerging the preferred bidder do further due diligence. If they then find that the modified traffic and revenue projection is not in line with their earlier estimates, they are likely to rethink,” he said. “They may also be having problems arranging for other equity holders, and financing by banks is a major issue, too.”
Developers should be prepared to forego the bid security if they fail to deposit the performance security in time, said Pranavant. NHAI could also bar a firm from participating in future bids, he said.
Developers may not be too keen to take up a project because they’ve bid too high, given the state of the economy. Growth slowed to a 10-year low of 5% in the year ended March. It’s expected to accelerate, but rising inflation and a weakening rupee don’t augur well.
“Realizing that they (developers) overbid definitely may be one of the reasons because the situation of the economy has changed drastically,” Murali said. “Bids were made keeping in mind a higher rate of growth and a low interest rate environment, both of which have changed with the economy slowing down considerably and the interest costs going up.”
Earlier this year, GMR Infrastructure Ltd and GVK Power and Infrastructure Ltd walked out of their agreements with NHAI to execute two projects worth nearly Rs.10,000 crore.
GMR is currently in negotiations with NHAI for a financial restructuring of premium payments. The matter has been referred to the finance ministry.
The ministry of road transport and highways awarded 7,400km of highway projects in 2011-12, but was only able to award 1,115km against a target of 9,500km in 2012-13.
Source-http://www.livemint.com/
Roads: Opportunity for new players?
August 3, 2013
The need of the hour is positive policy making from government while private sector should contribute by innovation and informed risk taking, writes Sudhir Hoshing.
Indian roads sector is undergoing an evolutionary phase where the government is putting forth several public-private partnership (PPP) models (such as BOT, EPC, OMT, etc) in order to attract the interest of private players for efficient and effective development of the backbone of the nation’s economy. In terms of number of projects, roads and highways are emerging as the favoured destinations for PPP with 53 per cent projects in PPP from road sector.
Sector challenges
The sector, however, witnessed several constraints and financial stress due to inordinate delays in land acquisition, long-winding processes for obtaining statutory clearances, revenue leakage due to toll non-compliance, economic slowdown, etc. These problems led to investors shying away from bidding for any new projects in 2012-13.
The average number of bidders in 2012-13 was five, with 13 projects attracting no bidder at all. This is clearly a drastic drop over the average of 20 bidders during 2011-12. Given drying up of equity markets and lenders apprehensive to lend to the sector, weaker players will find it tough to raise funds. Out of the 32 national highway projects awarded during 2011-12, 18 projects have not succeeded in obtaining the financial closure. The number of projects failing to achieve financial closure further shoots up to over 30 considering projects awarded in 2012-13 as well.
Government response
The government began deliberating on various measures to revive the waning investor interest and put the sector back on the growth path. Alternative sources of project funding are being explored by the government including, but not limited to:
100 per cent government funding through EPC contract, since there are very few takers for BOT projects due to equity crunch.
Encouraging credit enhancement schemes being introduced by companies like IIFCL: Under such schemes, the institution provides partial credit guarantee to enhance the ratings of the project bond thereby enabling channelisation of long term funds from fairly untapped sources such as insurance companies and pension funds etc.
Exploring funding through Infrastructure Debt Funds: The IDF would seek to raise debt capital from domestic as well as foreign resources and invest in projects under the PPP model that have completed a year of operations.
In addition to the above, the government considered a slew of measures to revive the sector, such as:
Grant of partial COD if 75 per cent construction is complete and balance is stuck due to land acquisition issues: Provisional Completion Certificate shall be issued by Independent Engineer/ NHAI for the portion completed and the concessionaire shall be permitted to do partial tolling on the completed portion.
Linkage of NHAI-estimated Total Project Cost to Wholesale Price Index: Usually there is a variation between government’s project cost estimates and developer’s estimates due to cost and time over runs between the initial bid and award stage. This would substantially reduce with the inflation-indexed mechanism being considered by NHAI to appraise Total Project Cost (TPC). NHAI guarantees 90 per cent payment of debt to the lenders in case of termination but it recognises only its own TPC. So, banks have greater risk in lending for a project where the TPC is higher than the NHAI estimate. Termination payment in inflation-indexed mechanism would however be inflation-adjusted, thereby adequately addressing the risk of lenders.
Delinking environment and forest clearances: Proposals of over 20 highway projects, which had already been recommended for environmental clearance last year, are stuck because forest or tree cutting clearances had not come through. Construction work can now begin on these stretches and NHAI can start allowing commercial operations date for four-to-six laning projects, a move that will allow developers to start collecting tolls. Extension of time required to achieve financial closure: The concessionaire is liable to gather its funds for the project within 180 days of the date of awarding the project. If it fails, it can request for a grace period of 120 days more after paying a penalty. However, beyond that, if the firm is unable to submit its sources of funds, the project stands cancelled. It is then either rebid or awarded to the second lowest bidder. NHAI has in some instances allowed the concessionaire more than 300 days for financial closure, where the project was stuck due to reasons beyond the control of the concessionaire. For example, in case of Kota-Jhalawar highway project in Rajasthan which was stuck due to delay in securing statutory clearances, NHAI extended the deadline for financial closure beyond 300 days.
Consideration of loans extended to highways sector as secured loans: The finance ministry has urged the Reserve Bank of India to consider a change in its stance that treats loans to road projects as unsecured, as this makes banks wary of lending.
Early exit options for highway builders after completion of construction: Under the norms in place since November 2009, developers must hold at least 26 per cent of equity up to two years after the COD. The ministry is examining the possibility of easing such restrictions and consequently freeing up equity capital of the developer locked in operational projects. While the move is intended to clear ground for new investors in the funds-starved sector, the departments of economic affairs and expenditure of the finance ministry feel that non-serious investors wanting to make quick capital gains could misuse the proposed facility.
Consolidation phase & opportunities ahead
Of late, the sector seems to be headed towards consolidation with several developers looking to divest their stake in BOT projects. GMR recently sold 74 per cent stake in its subsidiary, GMR Jadcherla Expressways. SBI Macquarie, Uniquest Infra Ventures (Malaysian government sovereign wealth fund Khazanah Nasional Berhad and IDFC JV) are noted to have expressed interest in many road projects. Such secondary market deals would offer a good proposition to buyers having adequate funds to take on the projects. Availability of 50 road projects worth Rs 50,000 crore totalling 5,000 km are on the block in the secondary market with no takers for most of these projects.
Further, as per announcement on Budget 2013, most of the proposed 3,000 km of highways would be awarded on EPC basis. There are many regional players who have expertise in EPC but they shy away from BOT projects as they are not in a position to block their investment for 20 to 30 years and face traffic risk. These regional players will look for EPC opportunity in the areas where they already have their resources mobilised. Thus, they could benefit from EPC projects of size less than Rs 500 crore, where they could earn good returns due to regional presence. The ministry is looking to award projects on Operate, Maintain and Transfer (OMT) basis. A model concession agreement for operation and maintenance of national highways through private players on OMT basis has already been approved. The OMT model is very similar to the Build, Operate and Transfer model except that in case of the former, instead of construction, operation and maintenance, the private entity’s responsibility stands confined to just operation and maintenance of highways.
However, the recent OMT projects that were out for bidding had capex ranging from Rs 50 crore to Rs 100 crore and equity commitment of at least 33 per cent stake during the entire concession period keeps small players, having the requisite expertise, from participating in such projects. This means that pure service providers without balance sheet strength will not be able to participate in such projects, especially given shorter concession period.
Overall, the opportunities are difficult to identify and serious players who can withstand the challenges will be able to survive. The need of the hour is positive policy making from government while private sector should contribute by innovation and informed risk taking.
Source-http://infrastructuretoday.co.in
“BOT + EPC” mode to help Chongqing high-speed road traveling light
August 3, 2013
Analysis Daily by Trainee reporter Li Li
Chongqing Daily News By enabling BOT (build – operate – transfer) + EPC (Design – Procurement – Construction general contracting) the new model will be completed by the end of the Chengdu-Chongqing section of double track the actual investment ratio estimates savings of nearly 100 million yuan. Days ago Chongqing Expressway Group held a news conference that the city one thousand kilometers of new highway 20 projects 17 projects using ‘BOT + EPC’ construction management. Currently, Chongqing Expressway Group is to participate in building a new one thousand kilometers of highway projects 15, of which 12 projects nearly 700 kilometers enabled ‘BOT + EPC’ the new model, the introduction of capital of about 71 million, reducing the Group’s direct debt of about 51 billion yuan (including interest on bank loans and produce.
Currently, the city has started a new 1,000 km highway construction, 20 projects involving 1,036 km, estimated investment of 104.3 billion yuan(http://www.best-news.us/). To raise funds for construction, to avoid the drawbacks of the traditional model, Chongqing Expressway Group vigorously BOT + EPC model, including the Chengdu-Chongqing Pipeline , Manley, Wanda, Feng Zhong, Zhong Wan, copper Wing, South Road, Jiang Qi, Yu Guangzhou, Liang Zhong, unitary along the other 12 projects, nearly 700 kilometers, have adopted such a model.
Chongqing Expressway Group Vice President Du Guoping said, BOT + EPC mode has the advantage lies in the integration of resources, in order to reduce the links and reduce costs, thereby improving efficiency. Du Guoping said: ‘The traditional model, the final estimate of the actual investment is often exceeded 10% 15%, while the new model to take BOT + EPC will reduce investment, such as Chongqing, Chengdu-Chongqing Pipeline segment, the investment budget for the more than 8.5 billion yuan, the actual investment will save about 100 million yuan. ‘
BOT model to the traditional sub-project bidding and contract segment, change management, and other aspects and more, and through BOT + EPC mode, reducing the tender and change link. But also in the new model, the material scale of centralized procurement, the cost is greatly reduced. Chengdu-Chongqing section of double track as the general contractor in charge, China Railway Construction Corporation Limited Chengyu double-track project construction headquarters chief engineer Zheng Gang have the final say, he said, ‘In the past a small number of retail price to buy is now in large quantities, is taking the wholesale price. ‘
Chongqing Jiaotong University, Associate Professor Huangxian Gui said, BOT + EPC mode is the current international and domestic construction projects are being implemented organization and implementation of the new model(Finance News http://www.best-news.us/). This model reflects the ‘saving design is the biggest savings,’ the idea of the model for promoting highway engineering Survey design and construction of the strategic restructuring of enterprises, foster internationally competitive large construction companies, the implementation of ‘going out’ strategy is important.
Source-http://www.best-news.us/
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