Private Sector Participation In Road Sector
September 6, 2012
Response of private sector to Build-Operate-Transfer (BOT) projects in road sector was overwhelming till 2011-12, but recent response during the current financial year has been comparatively subdued.
A record length of 7957 Kms of roads was awarded for strengthening/upgradation and improvement during the financial year 2011-12. The primary reason is lack of availability of finance, many banks having reached the sectoral ceiling prescribed by the Reserve Bank of India. Infrastructure developers are finding it difficult to raise equity. Delays are also due to delay in land acquisition process and in obtaining environment and forest clearances. Such delay in the actual start of the project adds to the expense of the project cost due to cost escalation and idling of various resources like manpower, plant and machinery etc. Government has taken a number of steps to minimise procedural bottlenecks and delays.
Ministry of Road Transport and Highways has taken up the matter with all the State Governments emphasizing the need to streamline the process of land acquisition and utility shifting etc, by constituting high level committees under the Chairmanship of the Chief Secretary of the respective States.
A Committee of Secretaries has been constituted under Cabinet Secretary to address inter-ministerial and Centre – State issues such as land acquisition, utility shifting, environment approvals, and clearance of Railways Over Bridges (ROBs). Apart from the above, Confederation of Indian Industry (CII) –Ministry of Road Transport and Highways (MoRTH) Joint Task Force on Roads and Highways also meets regularly to find out ways to minimise procedural bottlenecks and delays. Regular interactions are held with the contractors, developers and financial institutions to address and resolve their concerns. Within the Government, meetings are held at the highest levels to simplify and rationalize procedures.
SOURCE :http://logisticsweek.com
347 road projects delayed due to delays in green clearances
September 6, 2012
As many as 347 road projects including those pertaining to Border Road Organisation (BRO) are awaiting green clearances, the government said today.
“A total of 347 cases including those with BRO are pending for environmental and forest clearances,” Minister of State for Road Transport and Highways Jitin Prasada told Rajya Sabha in a written reply.
However, he said the projects do not involve any cost escalation.
“Majority of the projects are being taken up on Built-Operate-Transfer (BOT) basis, which does not involve cost escalation,” Singh said.
Generally projects are started only after obtaining environment clearance, he said adding the Ministry was constantly pursuing such matters with Ministry of environment and Forests ( MoEF).
SOURCE: http://articles.economictimes.indiatimes.com
More road projects via EPC on cards
August 28, 2012
In a bid to provide much-needed impetus to the fund-starved highways sector, the road transport ministry is looking at increasing road projects to be awarded through Engineering Procurement Contract (EPC).
For the current fiscal, the target is to award around 4,000 km of road projects.
“We have to meet our target of awarding 9,500 km of road projects during the current fiscal. If the projects do not find takers on the public-private partnership (PPP) mode, we may award them on EPC, as funding them is not a problem for us,” said a top road transport ministry official, who did not want to be identified.
The official further said that there is a fund crunch for road projects in the market, as the banks have exhausted their quota for loans for road projects.
“Lot of companies, who got projects last year, are also in the process of achieving financial closure and may not be interested in our projects on offer on PPP mode,” he added.
Two PPP modes on which the projects are awarded, include Build, Operate and Transfer (BOT)-toll and BOT-annuity.
The third mode is EPC, where the project is funded by the government and the road developer is obligated to build the highway within the stipulated time.
Currently, the road transport ministry and the National Highways Authority of India (NHAI) have to achieve an award target of 9,500 km of road projects as set by the PMO.
NHAI, however, feels that awarding projects on EPC will take time and awarding projects in time, and not money, may become a problem.
SOURCE: http://www.indianexpress.comn
State Bank of India to jointly invest $150 mn in Ashoka Buildcon arm
August 21, 2012
State Bank of India’s (SBI) private equity funds with Australia’s Macquarie Group will jointly invest $150 million in Ashoka Buildcon’s subsidiary – Ashoka Concessions Ltd.
Shares of Ashoka Buildcon surged as much as 9.56 per cent in morning trade on the Bombay Stock Exchange and touched an early high of Rs 279.40. It was later trading at Rs 272, higher by 6.67 per cent at 11.53 am on BSE.
“Macquarie SBI Infrastructure Fund and SBI Macquarie Infrastructure Trust – which are PE funds managed by SBI and Macquarie – will together invest $150 million in Ashoka Concessions,” a statement said.
Commenting on the development SBI Macquarie Infrastructure Management CEO Suresh Goyal said: “We remain optimistic on the India infrastructure story of which roads sector is a critical component. This is a long term partnership and together we will look forward to talking this business to greater heights.”
Infrastructure firm Ashoka Buildcon has an unexecuted orderbook of around $1 billion and currently has a portfolio of 25 BOT road projects.
It had witnessed the first private equity placement from IDFC Private Equity in 2006.
“We are pleased to have the SBI Macquarie joint venture as an investor in our road BOT business. We are confident that this will help us strengthen our position as a leading highway developer in India,” Ashoka Managing Director Satish Parakh said.
Ernst & Young acted as the exclusive financial advisor to Ashoka for this fund raising exercise.
SOURCE: http://businesstoday.intoday.in
Road construction to move in tow with security forces
August 21, 2012
The most challenging of terrains for road construction might now turn somewhat friendlier. The government is timing implementation of road projects in the Northeast and areas hit by Left-wing extremism with the movement of security forces and on-sight monitoring in those areas. The move is aimed at building 9,000 km of roads across these areas, and the estimated funding for this is Rs 16,200 crore.
The Ministry of Road Transport and Highways is mapping the security situation in areas hit by Left-wing extremism, which account for the majority of India’s mineral wealth. “Based on the presence of security forces, we are phasing out projects, so that the machinery is kept in a place with security cover. The workers, too, return to this place in the evening,” Road Transport and Highways Secretary A K Upadhyay told Business Standard. After a particular stretch being constructed, the next 10-km stretch, for instance, would be cleared from a security point of view, and the project would move in line with the movement of security forces.
The plan would also help involve contractors unwilling to work in these areas. “As things are very unpredictable in these areas, the industry has to doubly secure its workers by raising insurance premia,” said M Murli, director general of the National Highway Builders Federation.
In Left-wing extremism-hit areas, construction of 1,200 km of highways is expected to be completed this year. Of this, 476 km have already been completed. The project is part of a development plan in 34 districts across eight states. Here, 5,477 km of highways would be built at a cost of Rs 7,300 crore.
Coordination between local security officials and the ministry has been formalised. Earlier, this level of engagement between the entities was absent, said Upadhyay. Also, projects are being awarded in smaller packets to ensure the involvement of small and local contractors.
The funds allocated for the construction of 1,500 km of roads in the Northeast and areas hit by Left-wing extremism for this financial year stand at about Rs 3,500 crore, according to data provided by the ministry.
Though the construction target for the Northeast this financial year is just 300 km, implementing projects in that region is a challenge. Last year, 150 km of roads was constructed in the region. Of the total 3,723 km of sanctioned highway construction in the region, so far, only 904 km has been completed.
That the task is difficult is evident from the fact that just four projects are being carried out by private investment through a build-operate-transfer (BOT) annuity model, and two on the BOT toll model. Eighty eight districts in the Northeast are being covered under these projects, which are mostly funded by the government. “Since the problem in the Northeast is more serious than in areas affected by Left-wing extremism, an additional director general and three chief engineers would be stationed there to monitor the developments,” Upadhyay said.
In the Left-wing extremism-hit Bastar area in Chhattisgarh, contractors are hard to find, while in the Northeast region, there are problems in land acquisition and environmental clearances, and this has led to projects being stuck.
The industry feels the challenges go beyond providing security and land acquisition. Problems like protection money and ‘development funds’ remain a reality. “There are some unwritten rules, like reservation for locals in the workforce at the site. At times, people suddenly turn up at the time of wage distribution, despite not coming for work,” said an industry player, requesting anonymity. Murli said while mobilisation of locals in Left-wing extremism-hit areas was a challenge, the weather played a crucial role in the Northeast, where construction work could only be carried out during five to six months a year.
SOURCE: http://www.business-standard.com
Cabinet approves formation of SPV for Lakhnadone-Ghansore road project
August 21, 2012
The Union Cabinet yesterday approved the formation of a 100 per cent owned Special Purpose Vehicle (SPV) for execution of the Lakhnadone-Ghansore road project in Seoni district of Madhya Pradesh on a build, operate and transfer (BOT) basis.
Rs 1,000-cr highway project in lurch as bidders back out
August 21, 2012
The state government’s ambitious Rs 1,020-crore Bagodara-Dhandhuka-Vallbhipur-Bhavnagar four-lane highway project has hit a dead end as no private company is ready to invest in the PPP project.
The Centre had cleared Rs 204 crore as viability gap funding for the project.
After the Gujarat State Road Development Corporation (GSRDC) issued tenders, 25 bidders came forward and 21 even purchased the required documents. But all of them backtracked and none filed for final bids before the deadline of March 30, 2012.
When GSRDC subsequently called a meeting of bidders to find out the reason for their lack of interest, only two turned up. From the feedback, it transpired that the bidders do not consider this road as a viable project under build-operate-transfer (BoT) basis and wanted the same on annuity basis, an official concerned with the project said.
“The GSRDC informed the state government that this happened because there is another shorter route between Ahmedabad and Bhavnagar which is being widened to 10 metres,” the official said, adding the government, however, was keen for the project and had now decided to issue fresh bids.
Meanwhile, the state government’s first-ever 10-lane expressway project between Ahmedabad-Sarkhej-Pipali-Dholera now will be extended till Bhavnagar, covering an additional 45 km of distance.
SOURCE: http://www.indianexpress.com
Supreme Infrastructure to go slow on bidding, focus on acquisitions
August 21, 2012
3i India Infrastructure Fund-backed Supreme Infrastructure is planning to go slow on bidding for new road projects and is scouting for acquisition of ongoing road projects, Vikram Sharma, managing director, Supreme Infra, told ET.
Supreme Infrastructure, a Mumbai-headquartered infrastructure developer and construction company, has a portfolio of nine road projects that the company is executing on build-operate-transfer (BOT) basis.
“We will go slow on BOT projects for the next 2-3 quarters. There are road assets available for sale and we are aggressively looking at acquisition opportunities,” Sharma said.
The company is looking for roads with projects cost ranging between Rs 300 to Rs 600 crore, he said.
On Tuesday, Supreme Infrastructure reported net profit of Rs 25.8 crore in the first quarter of 2012-13, almost flat from Rs 25.6 crore a year ago. Company’s total income rose 32% year-on-year to Rs 436 crore in the June quarter.
“Our profits have been hurt due to higher interest cost and rising prices,” Sharma said.
The company has an order book worth Rs 4,376 crore, which includes orders worth Rs 999 crore where the company has emerged lowest bidder.
SOURCE:http://articles.economictimes.indiatimes.com
Four-laning of Numaligarh-D’garh NH gets Centre’s nod
August 13, 2012
Guwahati: The Centre has approved a Rs 2,096 crore project for four-laning of the National Highway 37 from Numaligarh to Dibrugarh in upper Assam and work is expected to start by this year end .
“The approval for four-laning of the stretch has come. The Rs 2,096 crore project would be developed under the Build Operate and Transfer (BOT) Annuity method,” Assam PWD and Urban Development minister Ajanta Neog said here.
She said the National Highway Authority of India (NHAI) would undertake the 179 km project in three phases.
“The High Powered committee on Special Accelerated Road Development Programme for the North Eastern Region (SARDP-NE) had in 2011 recommended for making the project a two-lane one. However, we appealed to the Centre, including the Prime Minister, for a four-lane project,” Neog said.
Asked by when the project is likely to be completed, she said, “While details would be handed to us once NHAI finalises the tender, NHAI generally is expected to complete any projects taken by it within 30 months from the date of start of work.”
She said the four-laning of the stretch would act as a major economic boost for the upper Assam region.
Neog also said the Centre has given in-principle approval for 1,000 km of new roads under the Bharat Nirman programme of the Pradhan Mantri Gram Sadak Yojana in Assam.
“For the first phase, Rs 310 crore has been sancntioned for 426 km in various parts of the state. This will also include 90 bridges in these stretches. The rest 574 km will be taken up in the second phase,” she said.
Regarding the East West Corridor, Neog said of the 670 km taken up so far under the project, work on 400 km has been completed and the rest is expected to be ready by March 2014.
“There was some security related problem in the Dima Hasao district due to which the earlier tended had to be foreclosed. However, a new tender was later taken up and work on the 70 stretch in the district has started,” she said.
The minister said the state suffered losses to the tune of Rs 600 crore due to damaged roads, culverts and bridges during the recent floods.
“We have made a preliminary assessment of the losses suffered and sent it to the Centre,” she said.
SOURCE: http://zeenews.india.com
NCC to yank Rs500 cr off debt with BOT and realty money
August 13, 2012
Infrastructure major NCC is working on a plan to pay off part of its debt by monetising its build-own-transfer (BOT) and real estate assets by the year-end.
The company currently has a debt of about Rs2,500 crore and if its plans work out well, the debt would come down to below Rs2,000 crore, said YD Murthy, NCC’s executive vice-president (finance), in an earnings-related interaction with analysts on Thursday.
However, he did not share details of the assets to be put on the block. The debt-equity of the company is below the threshold of 1:1 and the total debt in books low compared to the peer group companies, he said.
For the first quarter to June, the company’s revenue was at Rs1,816.5 crore and Ebitda at Rs204.2 crore or 11.2% of the revenue. However, the net profit was at 1.12% or Rs20.4 crore.
The company currently has an order book of about Rs20,520 crore, including the fresh orders worth Rs2,000 crore received in the first quarter.
“Environment this fiscal has improved and we are confident of registering a growth of 10-15% for the full year. We will be also able to deliver margins of about 8-9%,” he said.
NCC is planning to participate in road projects with the government likely to award about 9,000 km of road projects for development during the year.
The company, however, is likely to see delay in declaring the commercial operations of its 1,320 mw power project coming up at Krishnapatnam.
As against scheduled commissioning by 2014, it would now happen in March 2015.
“We expect the commercial operations of 660 megawatts capacity by March 2015. There were issues due to shifting of the project from Sompeta to Krishnapatnam and fresh efforts to achieve financial closure of the project,” Murthy said.
The company was originally planning to set up its project at Sompeta in Srikakulam. However, it had run into rough weather as the villagers opposed the project in a violent protest that led to police firing and deaths of two farmers.
The project was then shifted to Krishnapatnam near Nellore and all the related contracts, including fuel supply agreements (FSAs), were adjusted in favour of the project at the new location.
While about 70% of the coal requirement for the project would be met through supplies from Mahanadi Coal Fields, the company is exploring the opportunities in Indonesia to meet the other 30% requirement.
“We are expecting an FSA with Mahanadi in the next six to nine months. When developed, the greenfield mines in Indonesia would supply about 1.77 million tonne per annum. About $2 million has been invested already. We are also in the process of identifying some more mines in Indonesia,” Murthy said.
SOURCE: http://www.dnaindia.com
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