Banks lend 200% of road project costs, govt worried
November 28, 2011
NEW DELHI: If you were to buy a house, banks would give you a loan of 80-85% of the value of the property. If you were to build a road, though, you could get double the project cost computed by the highways authority.
On an average, banks lend 39% more than the project cost arrived at by the National Highways Authority of India, the agency that hands out bids across the country. A key reason is the huge gap between the cost arrived at by NHAI and the estimate drawn up by developers who bag the contracts.
With private developers bidding aggressively for highway contracts and willing to fork out a significant premium (an annual amount paid upfront to National Highways Authority of India), the road transport and highways ministry decided to examine 66 projects where funding has been tied up.
Source: indiatimes.com
Milton, Ontario project affects abandoned industrial property
November 28, 2011
One of the largest road projects ever undertaken by the Town of Milton has also been the catalyst for the remediation of a brownfield site which will eventually be turned into housing.
The $49-million Main Street underpass is designed to reduce vehicle idling times and safety concerns at the point where that street crosses the heavily used four-track CP rail line.
At the same time, its construction will create an S-curve realignment of the street which means it will have a major impact on a long-abandoned industrial property on the south side.
“The project requires a deep slice though the property to allow the street to pass underneath the rail line,” says Derek Stewart, associate partner, Ecoplans Ltd.
As a result, the rail separation is intertwined with the remediation of the three-hectare industrial site, says Stewart, whose firm is the environmental consultant for both the remediation and the underpass.
McCormick Rankin Corp. is the overall detailed designer and contract administrator.
The property was the location of a zinc-oxide manufacturing plant from the early 1950s to the early 1990s and was once occupied by several buildings including the main manufacturing plant, a baghouse, a furnace production and storage building, as well as underground storage tanks.
An investigation of the site by Ecoplans, which included drilling 31 boreholes and a comprehensive sampling and analysis, showed large areas of contaminates such as heavy metals.
“Most (of the contaminants) were in the top metre and a half of soil, although some went deeper.”
A number of remedial options including encapsulation were proposed. “But the town was concerned about liability and rejected that option.”
There was also certain urgency. As the west half of the municipally owned site will be the area most directly impacted, the town decided to sever the land. It has retained ownership of the west parcel, but has sold the east half to a developer who has proposed using it for a mixed-used commercial/residential development.
So, a more traditional remediation method was chosen. Over a two-month period, Hazco Environmental Services Ltd. excavated and hauled away approximately 5,500 tonnes of hazardous soils and 28,000 tonnes of non-hazardous soils. The Hamilton-based firm also trucked in and applied 15,000 tonnes of clean backfill and then lined the property limits with a PVC geothermal membrane to prevent migration of contaminants which had been detected on adjacent properties, says Stewart.
Despite the amount of truck traffic entering the site on a daily basis, every effort was made to minimize the project’s impact.
“The streets were kept clean by the contractor using a sweeper and water truck and dust levels were controlled by the application of water using a water truck.”
Traffic control was also managed by the contractor. Site egress and exit were strictly controlled through a traffic management plan agreement with the town.
The east half of the site — the parcel which will eventually house the condominium — is now being used as a staging area by BOT Construction, the grade separation contractor.
At this point, the rail grade separation is in a very preliminary stage. BOT has moved rails to accommodate a temporary detour and is now in the process of removing the contaminated soil beneath those tracks.
It will take four years to fully complete the underpass, says John Brophy, the town’s senior manager of infrastructure. “However, after two years we will be able to direct two lanes of traffic under the rail bridge.”
The catalyst for the project is the heavy amount of road and rail traffic at the crossing. Its daily “exposure index” is 300,000. The index is the term used by the Canadian Transportation Agency to gauge road and rail traffic.
“The trigger limit when a grade separation is warranted is 200,000, so this location is warranted to be grade-separated.”
Compounding the potential safety hazards of that high traffic are poor sightlines and the fact the tracks are at an extreme angle to the road, says Brophy.
Source: dcnonl.com
Government may change way road contracts are awarded
November 21, 2011
The government may change the way it awards road projects that it finances itself, in an attempt to make the bidding process more transparent.
The highways ministry, the National Highways Authority of India (NHAI) and the Planning Commission held a series of meetings recently to consider allowing contractors to carry out engineering work as well under so-called engineering, procurement and construction (EPC) projects, two officials from NHAI and the Planning Commission said, requesting anonymity.
Contractors typically execute only procurement and construction under EPC contracts, while engineering and design are done by government-contracted consultancies.
The government’s preferred method of awarding road contracts is the build, operate and transfer (BOT) mode, under which the bid winner finances, constructs and maintains a road for a specified “concession period”. The developer collects tolls or is paid an annuity by the government for the concession period.
Projects bid out as EPC contracts are typically those deemed unattractive for the private sector because they lie in areas that are either insurgency-hit or low in traffic.
The 12th Five-Year Plan, which gets underway in 2012, allocates more than 20,000km of highways to be bid out as EPC projects.
Contractors currently make their bids on the basis of costs incurred for every material that goes into road construction. Officials said this makes it easy for them to overcharge the government.
The Planning Commission now wants to award such contracts on a turnkey basis, under which the lowest bidder will be awarded the contract and will be responsible for building the road and maintaining it for a specified period, said the NHAI official mentioned above.
Analysts said handing over engineering work to private contractors may lead to fresh problems for the government.
As all roads constructed as EPC projects are handed over to the government a few years after construction, contractors could cut corners on engineering work, said Parvesh Minocha, managing director of Feedback Infrastructure Services, an infrastructure services company.
Minocha said that as concession tenures for BOT contracts are much longer, contractors deliver high-quality engineering and design works on such contracts.
To make EPC projects more attractive for contractors, the government should package smaller and less-profitable stretches of two-laned roads or service roads to be given on EPC contracts with lucrative expressways or highways to be given on BOT contracts, Minocha said.
Source: www.livemint.com
Annual National Conference on Road Infrastructure in India 2011
November 10, 2011
The theme of the conference is Planning, Designing, Modernization & Investment for Indian Roads to match International standards.
Updated program and more details or logon to http://ibkmedia.com/events/index.php?event_id=3
The Road Infrastructure In India 2011 conference provides an excellent platform for decision makers from the government and service/technology providers to come and interact. The conference through its technical sessions will discuss and deliberate the key issues in the Indian Road sector:
Topics
- Challenges in land acquisition for road construction in India
- Challenges in Public Private Participation (PPP) – Build Operate and Transfer (BOT) toll mode or BOT (Annuity) mode
- Current Scenario on Roads in Karnataka State (State Initiatives in PPP)
- Output and Performance Based Road Contracts – An alternate PPP Contracting Model
- Challenges to build 20 km of road per day under the five year plan (2017-22)
- Advance Technology Electronic Toll Collection (ETC)
- Role of IT in Road Construction
- Traffic Management by Designing of roads, Flyovers
- Updates on NHDP-iv, or NHAI
- Opportunities & Challenge PMGSY in Next 3-4 year’s
- PPP of Special Purpose Vehicle (SPV) Projects for Port & rail Connectivity
- Challenges in Achieving high Return on Investment (ROI) through PPP
- New technology & Equipments for road Construction
- Ecological Road construction
- Challenges in construction and maintenance of roads in India
- Challenges for Sustainable Rural Road Development
Confirm speakers for the conference
- Shri Nitin R.Gokarn, Joint Secretary, Ministry of Road Transport & Highways
- Mr. Sudhir Hosingh, CEO-Roads, Reliance Infrastructure Limited
- Prof M.N.Sree Hari, Advisor to Gov. Karnataka T.T & Infrastructure
- Mr. Satish Pendse, President – Highbar Technologies Limited -Hindustan Construction Company
- Mr. Alon Globus, Director, i-Tec-India
- Mr. N.K.Sinha, Chairman International Road federation Indian Chapter
- Shri Sudhir Thakre, Secretary, PMGSY
- Shri Ajay Saxsena, PPP Expert, Asian Development Bank (ADB)
- Mr. N.N.Kumar, Dy. Chairman, JNPT
- Mr. Rajesh Rohatgi, Sr. Transport Specialist, World Bank
- Mr. Brijesh Koshal, MD, Daiwa Capital Market
- Mr. Kamal Bali, President & CEO, LeeBoy India Construction Equipment (P) Ltd
- Mr. Sachin Bhatia, CEO, Metro Infrasys p Ltd.
- Ms. Archana, Prof. RV College of Engineering
- Dr. S. L Dhingra, Chair Professor, IIT Mumbai etc.
Date & Venue for Road Infrastructure In India 2011 Conference
Day: Tuesday, 06th December 2011
Timings: 9.30 AM onwards
Venue : Hotel, JW Marriott Juhu Tara Road Mumbai
In addition to the above around 150 high profile delegates comprising decision makers from central, state governments and Private professionals, consultants, Road Developers, national & international funding organizations, Technology & Equipment suppliers, Contractors, service providers, research & academic institutes will discuss, deliberate and share their knowledge and experiences.
For more Information, You can email to [email protected]
We are sure that the participation of delegates from your organization will not only update them on the current issues, emerging business opportunities in Road Sector in India but also provide them the ample opportunities to meet with the national and international experts to discuss, share and learn from their the experiences.
Looking forward to receive you at the Road Infrastructure In India 2011 conference.
Source: http://ibkmedia.com
New Land Acquisition bill to raise land acquisition costs for road projects
October 31, 2011
The new Land Acquisition and Rehbliltation Bill is expected to increase the government’s spending on land acquisition by up to 30 per cent from the current level of about 8-11 per cent as the road projects are not exempt from the provisions under the resettlement and rehabilitaion part of the Bill.
NHAI spends about Rs. 25,000 crore every year on land acquisition and other related activities.
Land acquisition has always been a major roadblock for road projects. As per norms, NHAI has to acquire 80 per cent of the land for the private developers building roads under the Build operate transfer or BOT route. Most of the delays in road projects have been primarily due to land problems and the new Bill, sources say, is expected to make things worse for the road sector.
Hassles in acquiring land for road projects have been the reason for delays in 30 per cent of road projects. In 2010, after aggressive measures by the then road Minister Kamal Nath, NHAI had managed to acquire 8,533 hectares against 6,000 hectares acquired in 2009. But clearly 2011 is expected to be a bad year.
In fact, NHAI’s land acquisition record has been abysmal in states like Goa, Kerala, West Bengal, Tamil Nadu and Haryana with barely an inch of land being acquired in Goa for road projects. With the new Bill soon becoming an Act, it could be a tough road ahead for the road sector.
Source: profit.ndtv.com
Experts push PPP to fund GCC transport solutions
October 24, 2011
CPCS vice president Sean McDonnell speaks on ‘Investment opportunities and PPP in the transport and railway sectors’ as Yusuf Saeed, Anil Bhandari, Khalid al-Ghalib and Moazzam Mekkan look on. PICTURE: Jayan Orma |
By Ramesh Mathew/Staff Reporter
GCC states have been urged to avail of an array of options to finance their massive rail, port and road infrastructure projects.
At a session on ‘Investment opportunities and private-public-partnership (PPP) in the transport and railway sectors’, experts asked government planners and decision makers to identify potential investment opportunities for the private sector.
The speakers also deliberated on the roles to be played by financial institutions and multilateral development institutions, which they said could co-ordinate various segments involved in developing major projects.
Speaking on the modes for financing projects, some of the speakers also made presentations on the successful PPP projects, implemented in different countries.
Initiating the discussions, International Financial Corporation (Dubai) Infrastructure Advisory Services manager Moazzam Mekan said there is a great level of misunderstanding among governments and people on the issue of private participation in the execution of mega projects.
The senior infrastructure policy professional said private participation in projects simply means transferring risk element in a major ‘build operate and transfer’ (BOT) project by government to private entrepreneurs.
“No private investor willingly bears the risk to get involved in the development of a public utility unless he is convinced of reasonably good returns on its completion,” said Mekan. This could perhaps be one of the main reasons why PPP projects are still in the infancy even today in most GCC states, he said.
For successful implementation of PPP projects, the speaker argued for the participation of different players at different levels of building and operating.
The GCC states has at hand rail, port and other transport infrastructure projects worth $142bn to be executed over the next decade, said Qatar National Bank senior manager (syndications) Yusuf Saeed.
Of these, the GCC railway network alone would cost approximately $25bn and the first phase of Qatar’s Metro and GCC line network would cost approximately $35bn.
Financing options that Saeed mooted included deficit financing, direct borrowing, GCC syndicated lending, GCC bonds, equity reserves, project specific borrowing, government grants, joint ventures, and private participation.
The QNB official said along with the international banks, inquiries could also be entertained from the regional banks and local banks as well depending on the size of the projects. The speaker also felt that infrastructure funds have a major role to play in coming years.
National Commercial Bank of Saudi Arabia senior executive vice president (Corporate Banking) Alsharif Khalid al-Ghalib shared the concerns of Mekan on the issue of PPP as a mode of financing the key projects.
Insisting that the entire GCC is fast emerging as the global transport hub with a series of economic activities, the speaker said the six GCC states together have close to 30mn vehicles on their roads.
Highlighting the necessity of strengthening the public transport network through the GCC rail and building of major highways, al-Ghalib said PPP is still to make any headway in the region.
He cited the formation of government-backed financial bodies on the lines of the KSA’s Public Investment Fund (PIF) to finance major transport projects.
The official said there is so much for the GCC to learn from the successful PPP experiences in Europe in recent years, especially in the transport sector. Out of the over 30bn PPP investments made by the European companies in 2008, more than 20% were to strengthen the transportation networks elsewhere, he said.
Canada Pacific Consulting Services vice president Sean McDonnel and Dubai-based Ab International CEO Anil Bhandari made presentations on the PPP projects in railway in Canada, Hong Kong and Nigeria.
The success of the railway projects in Nigeria including the three-lane mass transit metro in Abuja showed how the best could be derived from the available choices and resources, said Bhandari.
The $3.3bn 1315 Lagos-Kano line is one of such successful examples of the private participation that GCC states could try to emulate, said Bhandari.
McDonnel said the Canada Pacific Railway Company is carrying approximately 1.6bn passengers a year in their Hong Kong Metro project and the stakeholders are getting sufficient returns on their investments, said McDonnel.
Source: www.gulf-times.com
Centre avoids Mayawati, rolls out roads on its own
October 24, 2011
NEW DELHI: With the Mayawati government refusing to play ball with the Centre on road development, the highways ministry is increasingly taking a short-cut. The ministry has been pushing for more projects under the engineering-procurement-construction model, under which it can get to work right away without state support. With elections ahead, it is becoming the road most taken.
The UP government has not yet signed the umbrella state support agreement (SSA) to facilitate highway development work, citing a “conflict of interest” with state highways. Under SSA, the state gives a commitment to maintain the law and order situation and to refrain from constructing any competing road.
NHAI has already invited tenders for pre-qualification for two EPC contracts in Sonia Gandhi’s constituency – Rae Bareli to Banda (140km) costing Rs 525 crore and Rae Bareli to Tanda (165km) costing Rs 692 crore. In these cases, the contractor will have to complete the projects within a stipulated timeframe and will also be responsible for their maintenance for at least one year.
Sources said there was a proposal to develop two more stretches under the same model, considering the slow progress any national highway development work has shown under the Mayawati regime. The NHAI, however, has favoured a build-operate-and-transfer (BOT-annuity) model for these stretches. “This is a tactical move and suits both Congress and NHAI. Since state support is crucial for annuity projects, the blame of any failure to take up the work will go to the state government or the contractor. On the other hand, this suits NHAI since it cannot escape accountability if any EPC contract gets delayed in such a VIP constituency,” said an industry insider.
NHAI has floated a tender for the two-laning project with paved shoulder for Rae Bareli-Jaunpur section of NH-231 (165.5km) on BOT (annuity) mode with an investment of Rs 626 crore. Two more projects will be taken up soon.
Under the new EPC model that is being used for two projects, NHAI will pay the entire amount to the contractor during construction period on a turnkey basis. In the case of BOT (annuity), the contractor raises investment for the project and the government pays back the principal amount with interest in instalments to the contractor.
“Since the SSA has not been signed with UP, we can’t delay the development work of highways in the state. We are hopeful of the state signing the agreement soon or at least extending support for early completion of these projects. We don’t see any reason why the state would not cooperate with the land acquisition process when the Centre is bearing the entire cost,” said a senior NHAI official.
Prior to Kamal Nath’s taking over as highways minister, the Centre used to sign SSA for each individual project. Nath had come out with the umbrella agreement plan to get it signed for all NH projects at one go. But UP had opposed this since it planned to build its own expressways including the Ganga expressway. Citing “conflict of interest”, the state government told the Planning Commission that a parallel NH would wean away traffic from state highways.
Source: timesofindia.indiatimes.com
Rs 8kcr highway projects on anvil
September 12, 2011
NEW DELHI: The ministry of road transport and highways (MoRTH) has asked the National Highways Authority of India (NHAI) to award 3,000 km of roads on a cash contract basis during the current fiscal year to step up road construction.This would mean that projects worth Rs 7,500 crore-Rs 8,000 crore would be up for grabs for private road developers in the next few months. So far, NHAI has been awarding projects either through the BOT (toll) or BOT (annuity) mode, but this is the first time the authority has been asked to award large stretches under the cash contract scheme.While toll road projects have been mostly bagged by big players in the sector, cash contract projects may help small and medium-level players. “The focus of cash contract works will be more in the hinterland areas, which have remained untouched. These stretches have less traffic, and hence are not viable to collect toll,” said an NHAI official.The cost of construction is estimated to be in the range of Rs 2.5 crore and Rs 3 crore per km. The ministry is also considering whether these projects can be rolled out without acquiring additional land by using space available along the existing roads. Under this scheme, only extended two-lane roads would be built.Officials said this method would help expedite project execution. They said Uttar Pradesh, which is going for election early next year, is likely to get a bulk of such projects. Since the projects would be funded by the NHAI or the ministry, the Union government will have greater control over these projects that could help complete the work on time.In the first phase of this scheme, the highways ministry has started floating tenders for 540 km of highways in UP. Some officials in the ministry say the timeframe of one year for the maintenance of these roads by private contractors may lead to poor quality, and they want this to be extended to three to five years.
Source: http://articles.timesofindia.indiatimes.com
Mumbai transport infra upgrade to cost Rs 2,70,000 cr: CM
August 29, 2011
Maharashtra Chief Minister Prithviraj Chavan on Thursday said the state government would have to spend Rs 2,70,000 crore to beef up Mumbai’s transport infrastructure over the next 20 years to keep pace with rising demand. The state government’s 2031 plan based on a feasibility study by the Mumbai Metropolitan Region Development Authority (MMRDA) includes metrorail, mono rail, sea link and water transport. Chavan was addressing a gathering at a conference on “Infrastructure Development in Mumbai Region” organised by the Indian Merchant’s Chamber here. “The estimated investment of $50 billion ( Rs 2,70,000 crore) is based on a comprehensive transportation study conducted by MMRDA. The total cost of the infrastructure projects comprising metrorail and monorail, currently undertaken by MMRDA is over Rs 26,000 crore,” said Chavan. The study focuses on infrastructure in the Mumbai Metropolitan Region (MMR). Out of the total projects planned, 80 per cent will be used for transportation that includes 450 km of road, 250 km of suburban railway and another 1,700 km of roads. Chavan said the Coastal Road Project, one of the most ambitious project in Maharashtra, is also on the anvil. Chavan said Relief and Rehabilitation (R&R) was the most important challenge for infrastructure projects. He said 40,000 families had been rehabilitated under various projects of MMRDA. Apart from environment issues, Chavan said financial restructuring was a problem, especially with issues like Viability Gap Funding (VGP) involved. “The strength of the city is its human resources. For maintaining their quality of life, a good transportation system is of utmost necessity.” Throwing light on some of the prominent infrastructure projects, Metropolitan Commissioner of Mumbai Rahul Asthana said the Mumbai Trans Harbour Link (MTHL) flagship project, which was bid unsuccessfully twice, would be put for bid again in May 2012. The contract would be awarded by a estimated cost of Rs 10,000 crore. “MMRDA plans to compensate the build operate transfer (BOT) operator of the proposed MTHL project in case of low toll collection against the projections. However, in case of higher toll collection, the BOT operator needs to share benefits with MMRDA. Besides, MMRDA proposes to provide long tenure soft loan to BOT operator and also compensate L2 and L3 bidders for the cost of bidding. This is to encourage more players to participate in the bidding process.” Chavan said the Mumbai Metro Rail project, having nine lines will be implemented in three phases at a cost of Rs 47,000 crore. The first phase of the project in he Versova-Andheri-Ghatkopar corridor, is expected to be completed by the third quarter of 2012, at a cost of Rs 2,356 crore. The Metro Line 2, Charkop-Bandra-Mankhurd, which entails an investment of Rs 7,660 crore, has achieved financial closure on March 14. The civil work is expected to begin from October. Metro III is now extended upto airport from Colaba where the entire stretch will be underground and would cost Rs 18,000 crore. Source: business-standard.com |
Smooth rides in store: Jaya promises better roads in 3 yrs
August 29, 2011
CHENNAI: The government is planning to spend Rs 2,400 crore on upgrading roads over the next three years.
Chief minister J Jayalalithaa told the assembly on Friday that the state would convert 963km of state highways into double-lane roads and 3,700km of major district roads to intermediate-lane roads. “Give us time and see the changes in three years,” she said to thunderous applause from the treasury benches.
The government will take up major road projects under a Build Operate and Transfer (BOT) basis with private participation. In the second phase of the Tamil Nadu Road Sector project, 2,500km of roads under the highways department will be improved at a cost of Rs 5,000 crore, Jayalalithaa said. Financial support will come from the World Bank, she said.
Source: timesofindia.indiatimes.com