Transport Infrastructure Projects Attract Big Investors

July 4, 2011

VietNamNet Bridge – A series of transport infrastructure projects managed by the Ministry of Transport have received rapid-fire investment registrations from both domestic and foreign investors.

The unusually high number of investors, who have registered to become the investors of the Ninh Binh-Thanh Hoa road, and Nghi Son-Bai Vot road, the parts of the North-South Expressway, has made the expressway project become the “hottest project” nowadays.

With the total investment capital of 59 trillion dong, the Ninh Binh-Thanh Hoa will have the length of 126.7 kilometers and six lanes, while Nghi Son-Bai Vot stretch of roads, will have the length of 92.7 kilometers and 4-6 lanes

In the period from March 2011 to June 2011 alone, the Ministry of Transport received the registrations from five investors and joint venture investors, including the foreign well known corporations in infrastructure like South Korean Keangnam Vina and Posco, Chinese Asian Investment Fund, and the Thai Bangkok Transport Public Company.

Meanwhile, to date, three Vietnamese independent investors have also registered the investments in the two projects, namely Xuan Truong Construction Company and Xuan Thanh Investment and Development Joint Stock Company, a subsidiary of Mai Linh Group.

There is a surprise that the La Son-Tuy Loan highway, the project which has been considered as less attractive, has also received the investment registrations from the joint venture of seven Vietnamese and South Korean investors, headed by Shinhan E&C, who plan to invest under the mode of BOT (build-operation-transfer).

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Written by ITW Editor · Filed Under BOT, Infrastructure, Projects

L&T arm signs Rs 26bn concession agreement with NHAI

June 27, 2011

The agreement with NHAI is for the four-laning of a 244-km stretch on the NH 14 between Beawar and Pindwara in Rajasthan.

Larsen & Toubro Ltd. said on Wednesday that its subsidiary L&T Infrastructure Development Projects Ltd. (L&TIDPL) has signed a Concession Agreement worth Rs. 26bn with the NHAI.

The agreement with NHAI is for the four-laning of a 244-km stretch on the NH 14 between Beawar and Pindwara in Rajasthan.

The project will be undertaken on BOT DBFO (design, built, finance and operate) basis, with a concession period of 23 years.

The estimated project cost is Rs. 26bn, and the project is scheduled to be completed within a period of 30 months.

The Concessionaire (L&T BPP Tollway Pvt. Ltd – a SPV of L&TIDPL) is entitled to collect toll from the users of the highway during the concession period on completion of the four-laning of the road.

The project corridor is one of the main evacuation routes for traffic from Kandla and Mundra ports, destined to hinterlands spread out in Northern India, extending to Rajasthan, Haryana, Delhi, Punjab and beyond.

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Written by ITW Editor · Filed Under BOT, Investment and Finance, News, NHAI

Delhi-Gurgaon Expressway: Job Unfinished

November 16, 2010

These days driving on the Delhi Gurgaon Expressway in Peak Hours, perhaps you are asking yourself, what must be the traffic condition at toll plaza and at entry road to my office? How much time is needed? Will the traffic move fast or slow? It’s been more than 2 years since the highway became operational but the degree of difficulty in driving on this has increased sharply in recent months as more and more sections are
becoming congested.

Delhi Gurgaon Expressway

When Delhi Gurgaon Expressway was conceived by NHAI, the main objective was to provide high-speed connectivity between Delhi and the commercial hub, Gurgaon. However, today instead of providing speed connectivity it has become a subject of argument between, NHAI, Concessionaire and planning authorities of Haryana and New Delhi.

January 2008 marked the completion of the much-awaited Delhi Gurgaon Expressway but due to lack of proper planning, poor traffic forecasting, unplanned traffic management, poor urban design and lack of traffic enforcement it became a nightmare for the users. Further the increased traffic added to the mess in management of the highway and concessioner faced a huge challenge in starting the operations.

It is very sad to see this highway in such a sorry state of affairs where the issues are not addressed by the stakeholders but just being passed on to each other. Today, contrary to high expectations, this highway is just another ordinary road and is not able to give a nice driving experience to the road users and leave a good impression on the users.

The aesthetic perception for highway user is very bad indeed which conjures up images of choked Hero Honda road with overflowing drain water, poor service roads, narrow entries and exists, poor landscaping and toll plaza lanes welcoming commuters with choked lanes and driver criss crossing the lanes. This highway in the National Capital Region of India is far from creating an impression on any visitor from abroad who touches it when he enters the city and suburbs. It is a far away from the natural landscape and aesthetic quality which we can see internationally in all highways. Concessionaire was given the design with which he has to construct and operate now.

Expert highway planners and traffic engineers were not able to envisage for amenities required for the highway. The high cost of right-of-way acquisition generally prohibited the creation of buffer zones between highway and neighbourhood. Bridges, overpasses, skyways, fencing, sound barriers and interchanges that are a basic necessity on this stretch were not envisaged and now after development these are being accommodated in an unplanned manner. These unplanned and graceless structures are not well designed and lacks the aesthetic appearance.

The biggest challenge on this highway in the coming years would be circulation of traffic. Traffic planning and enforcement has not been addressed adequately leaving concessionaire of the highway helpless. For more than 50 villages on both sides of the road, this is another massive freeway which is used without payment of any toll, without any policy and without any documented right since they were overlooked at the planning stage. Today the challenge for the office going people is not just to drive on this but taking the entries and exits on this as well. All entries and exists are narrow and curvy lacking center lines and ample shoulders. At peak hours it takes more than 40 minutes which is almost double the time for crossing the highway. Prime commercial areas and prime residential localities of Gurgaon close to these exits and entries are facing the
heat of this oversight.

Since it began operation, safety has been a big issue and it has also achieved the notoriety of being called “The Killer Highway”. There are only limited over-bridges along the entire stretch to cater to the communities living on either side of the heavily populated areas through which the expressway runs. Right from fencing to over-bridges, everything is being implemented on a need basis now. Few issues are still un-addressed like movement of two-wheelers which is almost equal to the existing traffic on the expressway and effort has not been made even to count them so that some planning can be done for accommodating them on this highway. Half completed service roads and poor signages have also added risk to the users on the highway.

This development is not without its drawbacks – traffic congestion is a serious issue, especially at the toll plaza. During peak hours, it can easily take up to 15 minutes to cross the toll plaza which would have taken a minute to cross if managed properly. The highway operations staff needs lot of training in highway management and operations. The benefits that construction of this expressway offered in terms of employment and connectivity is outweighed by traffic congestion. The toll plaza at the Delhi-Gurgaon border has also proved inadequate in handling the increasing traffic, leading to traffic jams during peak hours. Though the plaza is tag enabled, only 35-40 percent of the traffic that passes through avails of this facility and that too with lot of mess.

From dense fog in winters to scorching heat waves in summers, from over loaded truck on the main highway to two wheelers zipping from all directions, from the encroached service roads in Haryana to un- authorized parking on service roads, from high speed to bad traffic etiquettes on Expressway, from Cash Users in Tag Lanes to Blacklisted Tag users, from lack of Basic Amenities to power failures in highway lighting, from lack
of VMS signages to stray animals on Highway, there are lot of issues that need to be addressed in Highway Management.

Highways are not only meant for driving. Internationally highways are meant to give a pleasant experience to the users where they feel safe to drive and reach their family and home in time. Aesthetics of expressway in terms of median, edges, lighting and road furniture is developed in such a fashion that it adds to the driving experience. The idea is to choose pleasing aesthetic solution which appeals to the users without compromising the safety issues of the highways.

To conclude, the Delhi Gurgaon Expressway has not only made developed localities of Gurgaon more accessible, it has also facilitated development of new localities. Master Plan 2021 has opened many sectors for development which benefitted with better connectivity after completion of this expressway. However, the quality of services on the Delhi-Gurgaon expressway might get worse if not addressed on time. Gurgaon is already booming and it needs improved connectivity and a sharp reduction in travel time, both within the city as well as to and from the national capital. All stake holders and people involved in this project need to sit together and seriously deliberate to address all outstanding issues. A time bound plan for addressing these issues can be done only by a truly innovative way of thinking about the freeway in the urban environment.

All said and done, much work still remains to be done……

Sachin Sharma
Executive President -Infrastructure
Bajaj Hindusthan Ltd
www.bajajhindusthan.com

Written by ITW Editor · Filed Under BOT, Expressway, Gurgaon, Highway, NHAI, Sachin Sharma, Toll Plaza, Tolling

PWD Haryana invites bids for road project

November 9, 2010

The Public Works Department (PWD), Haryana, proposes to take up four-laning of a road project on DBFOT basis.

The PWD has invited tenders from interested parties for the development of Rai Malikpur (Rajasthan border)-Narnaul-Mahendragarh-Dadri-Bhiwani-Kharak corridor. The project spanning 151 km is to cost Rs 1,201.70 crore. The last date of submission of bids is 1 December 2010.

Written by ITW Editor · Filed Under BOT, Haryana, PWD

HCC ties up funds for projects in Bengal

November 9, 2010

Hindustan Construction Company (HCC) has mopped up funds for three road projects in West Bengal. Together, the projects entail a cost of Rs 3,300 crore and have a debt component of Rs 1,600 crore.

Yes Bank is the sole debt arranger and syndicator of the debt. Other financial institutions are India Infrastructure Finance, Dena Bank , Syndicate Bank and Oriental Bank of Commerce. The total loan tenure is 12 years and the interest rate is 10.8 per cent.

The projects include four-laning of Baharampur-Farakka section on NH-34, covering a distance of 103 km; development of existing two lanes into four lanes between Farakka and Raiganj (103 km) and between Raiganj and Dalkhola (50 km), also on NH-34. HCC has acquired the required land and work will commence in November 2010.

The projects that will be executed on DBFOT basis are to be completed by mid-2013.

Written by ITW Editor · Filed Under BOT, NHAI, NHDP

Etawah-Chakeri section to be six-laned

November 9, 2010

The NHAI proposes to upgrade a road project in Uttar Pradesh.

The Authority intends to take up six-laning of the Etawah-Chakeri (Kanpur) section of NH-2 from Km
323.475 to Km 483.687 under NHDP Phase V. The project is expected to cost Rs 1,698.50 crore.

RFQs have been invited from prospective entities, with last date of submission being 10 December 2010.

Written by ITW Editor · Filed Under BOT, NHAI, NHDP

Bids invited for road project in Chhattisgarh

November 9, 2010

The NHAI proposes to develop a highway in Chhattisgarh on BOT (Toll) basis under DBFOT pattern under NHDP Phase IV.

The Authority has invited bids for four-laning of Orissa Border-Aurang section from Km 88/000 to Km 239/000 of NH-6. The road having a length of 150 km is to cost Rs 1,260 crore. The bids have to be submitted by 7 December 2010.

Written by ITW Editor · Filed Under BOT, NHAI, NHDP

Road Ministry adopts new technology standard for electronic toll collection

July 29, 2010

RFID technology: The Chairman, Expert Committee on Electronic Toll Collection Technology, Mr Nandan Nilekani, submitting the report to the Minister for Road Transport and Highways, Mr Kamal Nath, in the Capital on Friday.

Toll booths on National Highways will adopt the passive RFID technology standard – ISO 18000 6C — for electronic toll collection (ETC) system, based on the recommendation of a committee set up for this purpose, headed by Mr Nandan Nilekani, Chairman, Unique Identification Authority of India (UIDAI). The recommendations have been adopted by the Highways Ministry.

In the ETC system, vehicles will have tags on their windscreens – where amounts can be pre-loaded (just like prepaid SIM cards for phones) – and when the vehicles pass through NH toll lanes with tag readers, the toll amount would automatically get debited. This will pave the way for setting up of ETC system across the NH network.

EARLIER ATTEMPTS
Since last four years or so, attempts of National Highways Authority of India (NHAI) to adopt any technology standard for this project had been thwarted by companies which had competing technology of ETC. This standard was chosen because of many factors. For instance, for vehicle owners, the cost of adopting this technology will be much lower compared to other standards; it has been used in many countries in the last one decade. Also, there are multiple vendors such as Neology, Intermac, Motorola, Sirit, Alien and Invango, who operate in this space.

For the system to work, the user vehicles need to buy tags and have them attached to the windscreen; the toll booths require a tag reader; and a central toll clearing house has to be set up which will take care of all reconciliations between various road developers. For instance, between two points of travel, a commercial vehicle might cross five tolling booths – two of which are operated by the NHAI and three by three different private concessionaires. The clearing house operator will ensure that the amount debited from the vehicles’ on board unit (tag) at each of these toll plazas is credited into the concerned owner/operator of the highway stretch on a real time basis. As more vehicles adopt the ETC, the toll revenue leakage can be contained to a large extent.

COST
“There are about 147 toll booths on the NH network, out of which about 100-odd are operated by NHAI and remaining by private developers,” Mr V.L. Patankar, Member-Technical, NHAI, said. Each reader will cost about Rs 2 lakh. Each NH toll booth will have at least two lanes (one on each side) with tag readers. NHAI or the operating concessionaire is likely to bear the cost of setting up tag readers at its toll plazas though the Union Highway Minister, Mr Kamal Nath, said he expects the system to be “self-financing”. It is also not clear as to who will fund the clearing house operator. At present, two NH stretches have ETC options –Delhi-Gurgaon Expressway and Bangalore-Electronic City elevated highway.

THE WAY FORWARD

The committee has recommended that a system integrator for ETC design and implementation be there, and hiring of a consultant for the financial bidding and vendor selection. An authority has to be set up to operate central system. Also, the committee has said that a high penalty system should be worked out to handle violators – vehicles who try to pass through the plaza without enough funds.

The National Institute for Smart Government – an eGovernance Innovation Library in IIT Delhi – is likely to help the Road Transport Ministry in the initiative.

TIMELINE/OTHER APPLICATIONS

Mr Nath said the process of setting up the ETC systems should be initiated in 18 months. He added that he will talk to SIAM to ensure that vehicles are sold with pre-fitted tags. Mr Nilekani added that with ETC in place, the card can by used by various other operators such as parking owners, state highway concessionaires, etc., for payments. Mr Nilekani also said that a public portal should provide data on vehicle traffic on highways and toll plazas.

Download ETC Report

Source:
[email protected]
thehindu.co.in

Written by ITW Editor · Filed Under BOT, ETC, NHAI, Projects, Tolling

Variable Message System – The Applicability

May 24, 2010

Mr. Makkimane Ramu

Variable message system is actually “Advance Traveler’s Information System”

The concession agreement condition specifies, that the concessionaire should made available “Variable Message” as detailed below:

“Variable message signs shall be provided at minimum of six locations to guide and forewarn the users of the traffic and weather condition on highways. These messages can be varied from the control centers based on data received through surveillance system, highway patrolling censors etc. the locations shall be decided for their maximum utilities to the users”

Although in the concession agreement it is termed as “Variable message” it commonly known as “Advance traveler’s information Systems “in other parts of the world

In this connection I would like state that in any contract the concessionaire has about 65 km length of road in his control

Hence how he can give provide desired information which should include the following

Pre-trip travel information
En route driver information
Route guidance
Traffic control information
Smooth and uninterrupted traffic flow
Enhance road safety
Real time information and guidance to users
Emergency assistance round the clock
Alerts for abnormal road and weather conditions
Reduced journey time and inconvenience

Some of the typical messages to be displayed are indicated below:

Accident Ahead, Road Closed, Take Diversion;
Accident Ahead’ followed by some typical messages like Expect Delays’, Merge Right’, Merge Left’, ‘All Traffic Exit’ can be displayed.
Maximum Speed:—————kmph
Construction Work, Road Closed;
Signal Ahead;
Sharp Curve Ahead;
Congestion Ahead;
Bad weather conditions like ‘Heave Fog Ahead’, ‘Poor Visibility Ahead;
Trucks use Left Lane;
Watch for Stopped Traffic;
Watch your speed;
Watch for Falling Rocks: (In the case of landslide prone areas);
Two lane bi-directional carriageways);
No Mobile When Mobile; etc

Hence it is necessary the concessionaire should be able to share information with adjacent Projects to inform the user actual happenings which will help them to any immediate action.

At the present any Concessionaire has only about 65 KM of project. Any information generated within the project length is of little us to the user as thereafter there may be some hazards which the user will never know

In the event if the concessionaire shares “sensors” & related information with other concessionaires (adjacent) than the “variable Message” displayed will be of real use not only the road user but also the every Concessionaire as the “overloaded” trucks can easily be caught

M S V Ramu
Profession – Contracts Manager
E-mail : [email protected]

Written by ITW Editor · Filed Under BOT, Projects, Tolling

Now that the Toll Industry has had a few years of maturity. What is the summary of expections from Toll Collection System from a concessionaire’s point of view.

May 10, 2010

(This needs an in-depth analysis on broad parameters. However I have tried to analyze few problems associated with toll roads.)

M S V Ramu
Profession – Contract Manager
Date: May 4, 2010
E-mail: [email protected]

Introduction: with a need a build good infrastructure and lack funds available to finance these Highway project government has undertaken to built highway on Public Private Partnership either toll based or annuity based.
The private developers who bids and undertake constructions of Highway on toll basis needs to implement a through pertinent “risk” management system with the help of the government to mitigate all the risks that come with development.

To understand the various consequence of “tolled” roads there needs to through study to undertaken which is not my purview at the moment. Hence I dwell over some of these consequences based my exposer these projects.

Toll based Highways:
The idea of “Toll based” highways was imported into India from experiences of others countries like Europe, Malaysia or North America. The model “Concession Agreement” was drafted by the Government to suit India needs.

The toll categories of roads are those wherein there are sufficient traffic which can be tolled by the Concessionaire and recoup the investment made him and also make profit. In the event there are not enough tollable traffic to recoup the investment made, it will be offered on annuity basis or with VGP (Viability gap funding) by the government.

The tolled based roads wherein the Government grants private developer specific rights to design, finance, construct operate and maintain the roads. The developer called “Concessionaire” develops covers the investment costs and carry commercial risks since he relays on operation revenue from the tolls remunerated. At the end of the concessional period the road reverted back to government at no extra charges. However if the estimated revenue does not materialize during Concession period the Concessionaire may have to negotiate the concession period (as in other countries) which is yet to happen in India as we are just starting!

In south America there is method of bidding known as “Least Present Value” wherein the winning bidder is the one who asks for “smallest Net Present Value” and period of the concession period ends when the present value of revenue equal to winning bid. This model has not been tried in India.

Risk management in “Toll based” Concession

In the present circumstances the Concessionaire undertakes risks to constructs road which is generally divides normally into three parts:

Certainty – decision maker know exactly the outcome
Uncertainty – here the decision maker does not know the risks due to non availability of any data
Risks – are those which can be determined by statistical terms and can be analyzed but it differs from uncertainty

In risk management all the risks are quantified and analyzed and decision taken by the Concessionaire to mitigate the same by way of disciplined approach to critical situation

Developmental risk involves “Land Acquisitions” needed for the project. This is one of the biggest risk faced by the Indian developers as most of the times project gets delayed due non-availability of Land. NHAI does not meet the contractual requirements specified in the Concession agreement thereby causing unnecessary hardship to concessionaire. This risk falls under “uncertainty” which can not be quantified

Financial Risk: Soon after award of Project, the Concessionaire needs to raise the necessary capital required for execution project

There are two major risks involved:

Ability to raise the finance and make financial close as required by the Concession agreement.
High interest rate during the currency of concession period (due to floating interest charged by lenders) – mitigation of this risk in extremely important).

Construction risks

Whether the construction undertaken by the Concessionaire himself or by other contractor there are many risk involved

Poor performance of the contractor
Different site condition which normally experience contractor many not have thought off which is problematic and end up in high cost due additional items of work to be executed.
High price escalation of all the inputs of construction – Example: steel pricing going through roof last year.

All above risk has to be born by the Concessionaire which needs proper approach in the initial stages itself

Operational risks

Operation risk involves mainly the following

State support agreement – needs to signed by the concerned state and they shall support the collection of tolls which important to the concessionaire. NHAI who are promoters of the project should take full responsibility in getting the agreement signed with Concessionaire as Concessionaire can not exert any pressure on the states

Toll Level: the estimated toll level uncertainty during pre-bidding stages can lead to inaccuracies in revenue estimation which the Concessionaire has based his bid. Hence this risk needs to shared by the NHAI

The traffic volume projected in financial model may not materialize as it completely depends on economic growth projected during pre-bidding stage

Any fall in traffic volume will automatically bring down the IRR value projected. Expert estimate that 10% drop in volume of traffic will result in reduction of 1-7% – 1.9% percent reduction in IRR.

Toll collection
The Concession agreement does give any standard specification for the installation of tolling equipment. This has resulted in haphazard manner the tolling equipment being installed by the different Concessionaire. This needs to change. For example a RFID card issued at New Delhi should also hold good down south. By such an arrangement the road user can travel effortlessly any ware in India.

The technology used by the Concessionaire needs to be streamlined on all India basis for all Concessionaire.

Toll fee: The price escalation of “toll/Fee” charged by the Concessionaire is based on all India WPI index. This is incorrect as in some states it may be very high. In my opinion there should be “Toll Regulator” on all India basis to regulate toll based on each state WPI or any other base model

HTMS: Here there is no comprehensive approach. For example the “variable message system” is limited to one project length only! This also needs an all India approach.

Suggestion: at the moment there are so many “Toll” based road are in operation and also on the horizon. All the toll based roads owners are “Special purposed vehicle” promoted by the concessionaire.

So why not a “over the counter” stock listing be arranged of these SPV and listed in Stock exchanges which can also traded in F&O section. I am sure this arrangement will automatically will mitigate many risks and also give scope for improvement in roads as the Concessionaire would like increase the traffic by enhancing the many amenities for road users.

Thanks for taking time for reading this articles.

Written by ITW Editor · Filed Under BOT, Construction, Expressway, Highway, Infrastructure, Investment and Finance, NHAI, NHDP, Projects, Tolling

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