Speedier exits for highway developers in offing

August 13, 2012

There is good news for highway developers such as L&T, Reliance and GMR with the National Highways Authority of India (NHAI) formulating a plan to speed up the exit of contractors, who take up projects under the build-operate-transfer (BOT) route.

The move follows a virtual standstill in the award of new contracts as developers are strained for equity and are unable to raise fresh resources to take up new road stretches. Apart from a weak equity markets preventing public offers, such as those by IL&FS Transportation Networks a few years ago, even private equity funding has dried up in recent months because of the global economic environment and the resultant slowdown in India.

Since 2009, the rules allow developers to exit two years after a project is completed. Developers of around a 100 projects, which run into thousands of crores, do not have this option for projects bagged before 2009.

The new plan is to permit exit immediately after construction is completed in all BOT projects, helping developers unlock value from these projects where cash flow has begun. Last month, the NHAI board decided to amend the rules but a final decision will be taken by an inter-ministerial group.

NHAI feels once they are also allowed to 100% divestment of their stake in the already completed projects, these companies will have more equity available with them. As they exit from the project, firms of similar net worth specializing in operation and maintenance would take over the project for rest of the concession period.

Officials said several international majors such as Macquarie and Morgan Stanley have evinced interest in running projects after taking them over from the developer. In addition, NHAI has sounded out Indian banks to scout for other potential investors, although the sale needs to be approved by the highway authority. The developers are, of course, cheering the move. “Why should companies be made to stick to a project for 15-20 years when they can take up new projects? Allowing them to exit from completed projects will improve investment scenario,” O B Raju, managing director (highways) of GMR said.

Raising the concern of private equity drying up, Singh in his letter has said shares of many highway developer companies those case out with IPOs four-five years back are going to the market at “steep discounts.”

SOURCE: http://timesofindia.indiatimes.com

Written by ITW Editor · Filed Under Larsen & Toubro Ltd. (L&T), News

Government Approves Rs 6,429 Cr Road Projects in 4 states including J&K

July 23, 2012

The government has approved eight highways projects worth Rs 6,429 crore in four states including the strategic Z-Morh tunnel in Jammu & Kashmir connecting Leh to Srinagar.

“Public Private Partnership Appraisal Committee in its meeting last night has approved eight highways projects in four states – Jammu & Kashmir, Rajasthan, Karnataka and Uttar Pradesh, mostly to be built under build, operate and transfer (BOT) toll mode,” a Highways Ministry official told PTI.

These eight projects include 6.5 km long Z- Morh tunnel on Srinagar–Leh highway, the fourth strategic tunnel in Jammu & Kashmir to be built at a cost of Rs 773 crore, he said.

The tunnel would provide all-weather connectivity to the people of the Ladakh region, he added.

The other approved projects include three highway schemes in Rajasthan including Rs 668-crore Rajsamand-Bhilwara, Rs 530-crore Rajasthan border-Salasar project and Rs 332-crore Jodhpur-Pali highways scheme.

The official said of the remaining four projects, three schemes — Rs 1,282-crore Chakari-Allahabad, Rs 909-crore Hadia-Varanasi and Rs 605-crore Kashipur-Sitarganj – for widening of roads are in Uttar Pradesh.

Besides, the PPEAC also approved four-laning of Hubri-Hospet 77 km stretch in Karnataka to be built at a cost of Rs 1,330 crore.

SOURCE: http://www.business-standard.com

Written by ITW Editor · Filed Under News

Government Set to Award 3,000 km Road Projects under EPC this fiscal

July 23, 2012

To accelerate highway building process, Road Transport Ministry is all set to bid out at least 3,000 km of projects this fiscal and 20,000 km by 2017 under EPC mode that minimises risk to developers.

Finding that 20,000 km of National Highways of the total about 74,000 km are single, low density traffic lanes, not viable on PPP (public private partnership) basis, the government is ready with the final draft of EPC (engineering, procurement and construction) that would be sent to the Cabinet by the month-end.

“We are ready to award over 3,000 km on EPC mode this fiscal to accelerate the road building process. The Ministry has decided for upgradation of 20,000 km highways to two-lane standards on EPC basis during the XIIth Five-Year Plan (2012-17), a Road Transport and Highways Ministry official said.

EPC mode would not only minimise time and cost overruns but would also result in increased bidding by developers, the official added.

In EPC projects, the government pays the developer for constructing the highway while the toll revenues accrue to the government.

The other two modes through which the highways projects are bid are build operate transfer (BOT-toll) and BOT-annuity. and EPC. In the BOT mode, the developer has to operate the highway for several years.

The model draft for EPC said, “Experience also suggests that annuity based projects are comparatively expensive, while conventional contracts (BOT) are prone to time and cost overruns. It has, therefore, been decided to adopt the EPC mode of construction.”

The draft quoted a sample analysis of 20 NH projects executed on item-rate contracts that took, on an average, 61 months to complete as against 29 months taken by projects executed through PPP which generally adopted the EPC mode for project execution.

“Further, these projects had cost overruns of an average 48% (ranging from 25 to 183%) besides large volumes of foregone toll revenues on account of delayed completion,” the draft said.

With a view to enabling a transparent, fair and competitive roll out of highway projects, the model draft incorporates international best practices and provides a sound contractual framework that specifies the allocation of risks and rewards, equity of obligations between Government and the Contractor, precision and predictability of costs etc, the draft added.

On selection of contractor, the draft said it will be based on open competitive bidding and “the bidder who seeks the lowest payment should win the contract.”

On defect liability period, it said that same has been made two years from the earlier specified one year to “in order to provide additional comfort to the Government.”

The draft has been finalised by an inter-ministerial panel against the backdrop of differences between the Road Transport Ministry and the Planning Commission over some issues including the defect liability period.

Road Transport Secretary A K Upadhyay last week said that the Ministry after obtaining stakeholders comments on draft EPC would send it for Cabinet nod by July 30.

The EPC mode is expected to accelerate the pace of awards as the National Highways Authority of India (NHAI), which has not awarded a single project in the last quarter.

Last month, Prime Minister Manmohan Singh had set a target of award of 9,500 km of road projects in FY13 for the Ministry.

SOURCE: http://business-standard.com

Written by ITW Editor · Filed Under News

Gammon, IL&FS in race for Rae Bareli-Jaunpur road project

July 23, 2012

Nine firms, including Gammon, IL&FS, Sadbhav Engineering, are in the race to develop the highway connecting Rae Bareli with Jaunpur.

Rae Bareli, in UP, is the constituency of the UPA chief, Ms Sonia Gandhi.

The Rs 570-crore project requires a National Highways Authority of India Board approval as bidders have sought more annuity than what was internally estimated by the Government.

This significance in the backdrop of recent concerns when there was a bleak response for projects. The length of the project is 166.40 km and the concession period is 17 years including the construction time of 24 months.

The project will be implemented on a build-operate-transfer (BOT)-annuity mode.

The project covers the districts of Rae Bareilly, Pratapgarh and Jaunpur.

PROJECTS UP FOR GRABS

Developers can look forward to bid for some large projects.

The Public Private Partnership Appraisal Committee (PPPAC) has approved the Z-Morh Tunnel in Jammu and Kashmir (Rs 2,773 crore), as also the following road projects: Chakeri-Allahbad (Rs 1,283 crore), Hubli-Hopet (Rs 1,330 crore), Rajsamand-Bhilwara (Rs 668 crore), Handia-Varanasi (Rs 909 crore), Kasgipur-Sitarganj (Rs 606 crore) and Jodhpur-Pali (Rs 333 crore). All the projects will be undertaken on a build-operate-transfer (toll) mode except the J&K project, which will be bid out on BOT (annuity) model. Under the latter, mode, the Government pays a certain amount twice a year to the bid winner to develop and operate the project.

The developers compete on the level of annuity they want during the concession period; and developers do not get to keep the toll revenues.

In BOT-toll mode, the developers get to keep the toll revenues for the concession period.

SOURCE: http://www.thehindubusinessline.com

Written by ITW Editor · Filed Under News

3i completes Rs 200 cr deal in Supreme’s BOT road projects

July 10, 2012

Supreme Infrastructure today said it has completed the Rs 200-croe deal with 3i India Infrastructure Fund for a minority stake in its portfolio of road BOT companies.

“3i India Infrastructure Fund has completed its Rs 200 crore investment for a minority stake in a portfolio of our road BOT companies,” Supreme Infrastructure said in a statement. The transaction was signed and announced on January 30 and Ernst & Young was appointed as the financial advisor to the deal for this fund raise, it said.
Supreme Infra is focused on roads, bridges, power, water, railways and civil construction and infrastructure.

The company’s current order book stands at Rs 5,800 crore of which unexecuted order book is Rs 3,900 crore.

SOURCE: http://ibnlive.in.com

Written by ITW Editor · Filed Under News, Supreme Infrastructure India Ltd.

Supreme Infra – Commencement of Tolling operations for Patiala Nabha Malerkotla (PNM) Road Project

July 4, 2012

Supreme Infrastructure India Ltd has informed BSE that the Company”s subsidiary Supreme Infra Projects Private Limited (SIPPL) has completed the construction of the Patiala Nabha Malerkotla(PNM) Road project on a DBFOT basis. The Company has commenced tolling operations on June 24, 2012. The Project was awarded by Punjab Industrial Development Board (PIDB) and in August 2011 was taken over by SIPPL from the original concessionaire. The sixe or this project was Rs. 94 cr. The concession period is 13.5 years. The total length of the road is approximately 56 kms. The EPC work was executed by Supreme Infrastructure India Ltd.

With this, the Company has achieved operational status of its 2nd Road BOT Project in India and its 1st Road BOT project in Punjab outside Maharashtra.

SOURCE:http://www.moneycontrol.com

Written by ITW Editor · Filed Under News, Supreme Infrastructure India Ltd.

RInfra’s Haryana road project becomes operational

July 4, 2012

Reliance Infrastructure (RInfra) today said its Rs 800 crore road project in Haryana for widening of Gurgaon-Faridabad-Ballabhgarh-Sohna road has become operational.

The project was executed by the company through its special purpose vehicle GF Toll Road Private Ltd, the company said in a statement.

The project is RInfra SPV’s first state road project, executed on BOT and has a concession period of 17 years, during which time the road will be operated and maintained by RInfra’s SPV, it added.

The project involved four laning of Gurgaon-Faridabad stretch and two laning of Ballabhgarh-Sohna road, it said.

Commenting on the development, the Reliance Infrastructure CEO, Mr Lalit Jalan, said: “This will increase commuting convenience and connect centers of tourism, International airport, industrial zones and places of economic importance.”

The project includes 14 lanes toll plaza at Gurgaon Faridabad road and six lanes toll plaza at crusher zone. Also, two toll plazas of six lanes each are located on Ballabhgarh Sohna stretch, the company said.

“With current order book of eleven road projects, we will generate from next financial year revenues of Rs 1,200 crore a year with 15 per cent y-o-y growth rate,” Mr Jalan said.

SOURCE: http://www.thehindubusinessline.com

Written by ITW Editor · Filed Under News

Road development, a major achievement in Rajasthan

June 28, 2012

Roads make a vital contribution to India’s economy and to infrastrutural development overall, and, the state of Rajasthan has not lagged behind in this endeavor, implementing various development projects worth Rs.4549 crore to improve over 30,000-kilometers of roads.

The Rajasthan Government’s commitment towards infrastructure development took shape with the setting up of the Road Infrastructure Development Company of Rajasthan (RIDCOR).

This project involves improvement and maintenance of 1053 kilometers of road across 13 districts of the state, at an investment of Rs.12 billon.

Under the Ashok Gehlot regime, road connectivity in Rajasthan has improved considerably.

In the last 36 months, the state government has activated projects of road repair, renewal and re-carpeting. It has upgraded and strengthened highways and other main district roads at a cost of Rs.750 crores.

The state government has also sanctioned the construction of 2420 km of roads at a cost of Rs.517 crores.

Under the Mahanarega Scheme, more than 2900 villages with population of 250 to 500 will be developed and get their roads connected to the nearest roadways bus service.

In first phase (2012-13), 3302 kilometers of road will be developed. A sum of Rs.832 crores has been given to NABARD for the completion of this work.

Roads of the remaining 1400 villages will also be developed with the help of the World Bank.

At least 16 mega highway projects are under construction, the objective being to connect important roads in the state.

Under this scheme, 2631 kilometers of roads will be developed and re carpeting at a cost of Rs.3590 crore. About 28 main roads are to be developed under PPP/BOT/BGF scheme.

Plans include developing roads between Jaipur and Falodi via the Jobner-Kuchaman-Nagore stretch (a distance of 360 kilometers).

Work on the Kotputli-Neem ka Thana-Sikar-Kuchman road corridor of 193 km is also expected to be developed soon at a cost of Rs.285 crores.

The Bharatpur-Alwar-Bahrod-Narnoul road corridor of 167 km will be developed at a cost of 249 crore rupees.

The state government also plans to connect 610 important religious places with the main roads (1156 km).

Development of these identified corridors will also include development and support environmental, community, social, educational and tourism initiatives along the road projects. Improvement works of these corridors have been divided into many packages for implementation.

Having good road infrastructure can make the roadways better and transport system would become faster, because roads and transport are interrelated for the development.

A massive development plan has been undertaken by the department of the transport to strengthen its infrastructure in the state.

The government has also been trying to raise public awareness about safe road travel.

Road development in the state is expected to highlight the Gehlot regime’s move to the high growth path. (ANI)

SOURCE:http://www.newstrackindia.com

Written by ITW Editor · Filed Under News

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 Investment and Finance, News

NHAI forced to stop toll collection at Kumbalam

June 13, 2011

KOCHI: Amidst strong protests from the local people and other organisations, the National Highways Authority of India (NHAI) had to stop the toll collection at the Kumbalam Toll Plaza on NH-47, on Saturday.

Following protests, the authorities have decided to convene a meeting of ministers, MLAs and the representatives of various organisations on Sunday to discuss the issue. Activists of various political parties and organisations, under the aegis of the National Highway Protection Council, took out marches to the Toll Plaza at Kumbalam on Saturday morning. Some of them picketed the toll booth.

The agitators and the local people tore away the flex board put up by the NHAI displaying the toll rates.

The agitators prevented the motorists from paying the toll. As the protests grew, the officials closed the toll counters for the day.

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Written by ITW Editor · Filed Under News

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