Transcript - India Knowledge Centre

PRESENTATION ON PUBLIC PRIVATE
PARTNERSHIP (PPP) IN NATIONAL HIGHWAYS
By
SECRETARY,
DEPARTMENT OF ROAD TRANSPORT & HIGHWAYS
GOVT. OF INDIA
Conference of Chief Secretaries on PPP in Infrastructure
20th May, 2006
EXISTING ROAD NETWORK IN INDIA
Road Category
Length
(km)
Expressways
National Highways (NHs)
State Highways (SHs)
Major& other District Roads
(MDRs/ODRs)
Rural & other Roads
200
65,600
1,37,700
7,25,425
2%
4%
21%
24,62,100
73%
33,91,025
100%
TOTAL
 Roads carry 85% of passengers & 61% of freight traffic
 Less than 2 % length of NHs but carry 40% of traffic
Percentage
(%)
Major Initiatives for Highways
Development




CRF revamped to create dedicated fund
National Highways Authority of India
(NHAI) created and made functional
National Highways Development Project
(NHDP) launched
Requisite legislative and legal provisions
made for facilitating PPP in road sector
NHDP Phases I,II,III
Phase
Approved Cost
NHDP – I
Cess and Market borrowings
External Assistance
BOT/ SPV
: 18,846 (US$ 4.18 b)
:
7,862 (US$ 1.74 b)
:
3,592 (US$ 0.79 b)
30,300
[1999 Prices]
(US$ 6.73 b)
NHDP – II
Cess and Market borrowings
External Assistance
BOT/ SPV
: 23,420 (US$ 5.20 b)
: 7,609 US$ 1.69 b)
: 3,310 (US$ 0.73 b)
34,339
[2002 Prices]
(US$ 7.63 b)
NHDP – III
BOT
: 22,000 (US$ 4.88 b)
22,000
[2004 Prices]
(US$ 4.88 b)
Total
Cess and Market borrowings : 42,266 (US$ 9.39 b)
External Assistance
: 15,471 (US$ 3.43 b)
BOT/ SPV
: 28,902 (US$ 6.42 b)
86,639
(US$ 19.25 b)
Future Phases for NHDP
Mostly through Public Private Partnership
Programme
Estimate
(Rs. crore)
Balance work of GQ and NS-EW corridors (NHDP Phase-I & II) – 8774 km
52,443
Upgradation of 10,000 km of NHs (NHDP Phase-III) on BOT (Toll)
65,197
Upgradation of 20,000 km of NHs to 2-lane with paved shoulders (NHDP
Phase-IV) on BOT (Annuity)
27,800
6-laning of selected stretches [6500 km] (NHDP Phase-V) on BOT (Toll)
41,200
Development of 1,000 km Expressways (NHDP Phase-VI) on BOT (Toll)
16,680
Construction of Ring Roads, Bypasses, Grade Separators, Service Roads
etc. (NHDP Phase-VII) on BOT
16,680
Total
2,20,000
ROAD PROJECT FINANCING
•
•
•
Budget
•
Normal
•
Dedicated Fund (Cess on Petrol/Diesel)
Lending from International Institutions
•
World Bank
•
ADB
•
JBIC
Public Private Partnership
•
BOT (Toll)
•
BOT (Annuity)


SPV with equity from NHAI
Market Borrowings
INCENTIVES FOR PRIVATE SECTOR
PARTICIPATION
•
Road Sector has been declared as an Industry.
•
100% tax exemption in any consecutive 10 years out of 20 years.
•
Foreign Direct Investment (FDI) up to 100%.
•
Provision of Capital Subsidy up to 40% of the project cost to make projects
viable.
•
Provision of encumbrance free site for work, i.e. Government bears expenses
for land and pre-construction activities.
•
Easier external commercial borrowing norms
•
Exemption of Capital gains tax for the bonds issued by NHAI.
•
Duty free import of high capacity and modern construction equipments.
•
NHAI Equity upto 30%.
Potential Advantages to the Government in PPP
•
•
•
Encourage private investment in the infrastructure sector.
Reducing public direct spending.
Public budget could be used in other priority areas and projects, such as
education and social programmes.
•
Risks are allocated to the party, which is best suited to handle it.
•
Introduce innovation and increased efficiency from the private sector.
•
•
Involvement of experienced and creditworthy sponsors and commercial
lenders, guaranteeing project viability.
Tapping of advanced technologies and expertise with possible capacity
building of contractors and consultancy firms.
•
Development of local capital market.
•
Right sizing of public institutions.
•
Better road services to users and early delivery.
BOT (Toll) Projects
• Concessionaire’s Responsibilities:
•DBFO (Design, Engineering, Financing, Procurement, Construction,
Operation & Maintenance)
 Concessionaires rights
 Demand, collect and appropriate the users fees (toll)
 Concessionaire’s Risk:
Financing, Construction, Partial Traffic Risk, Operation & Maintenance.
BOT (Annuity) Project



Concessionaire’s Responsibilities :
Design,
Engineering,
Financing
Procurement,
construction and Maintenance
Concessionaire’s Risk :
Financing, Construction and Maintenance (No Traffic
risk)
Award Criteria:
Minimum Annuity Payment over Fixed Period.
Summary of BOT Toll based Projects
Category
Under Implementation
Total
Project
Cost
(Rs. crore)
[US$ b]
Grant
(Rs.
crore)
[US$ b]
No of
Contracts
Length
(in km)
NHDP Phase I
9
464
3443
[0.76]
NHDP Phase
II
16
812.86
NHDP Phase
III
17
Total
42
Completed
No of
Contracts
Length
( in km)
718.99
[0.15]
(20.88%)
6
287
5371.06
[1.19]
-103.38
[-0.02]
(-1.92%)
-
-
1090
5752
[1.27]
491.91
[0.10]
(8.55%)
1
30
2356.86
14566.06
[3.23]
1107.61
[0.24]
(7.6%)
7
317
Though allowed upto 40% the overall grant was 7.6%
Summary of BOT (Annuity) based
Projects
Category
Awarded
Total
Projec
t
Cost
(Rs.
crore)
[US$ b]
No of
Contracts
Length
(in km)
NHDP Phase I
8
476
2354
[0.54]
NHDP Phase II
4
299
12
775
Total
Annuity
(Rs. crore)
[US$ b]
Completed
No. of
Contracts
Length
( in km)
2888
[0.64]
(12.23%)
8
476
2121
[0.47]
199
[0.04]
(9.38%)
-
-
4475
[0.99]
487
[0.97]
(10.88%)
8
476
HIGHLIGHTS OF NEW MCA









Partial guarantee of traffic risk to the Concessionaire.
Concessionaire’s interest protected in competing roads.
Performance standards of the highways clearly spelt out.
Provision for change in scope, if any, required during construction
and operation period included.
Utilities to be relocated by the Concessionaire but it will be excused
from failure in case of delay by owning agencies.
Focus on road User’s safety
Users fee charges, revision thereof and concession to local traffic
clearly spelt out.
NHAI has to provide land free from all encumbrances. NHAI to bear
cost of all pre-construction activities.
Risks are allocated to the party, which is best suited to handle it.
Contd…
HIGHLIGHTS OF NEW MCA




(contd.)
Lowest subsidy/grant quoted by the bidders towards
viability gap funding or earliest premium quoted by the
bidder is the basis for award.
Force Majeure conditions and relief to the party under
such conditions clearly spelt out.
Strong dispute resolution mechanisms.
BOT bids are invited for 6 lane with 20 years concession
period. However, exist option exists for Concessionaire
and the NHAI after 8 years if not interested for 6 laning.
In such case, concession shall be terminated after four
laning with 12 years concession period.
State Support Agreement








Provide applicable permits to the Concessionaire
Assist access to infrastructure facilities and
utilities
Erect no barriers to interrupt free flow of traffic
Assist in regulation of traffic
Police assistance in the form of Highways Petrol
Parties
Not to undertake any act which violates
State to pay claims on any breach
No competing facility within 8 years
Institutional Strengthening








COI headed by PM.
COS to resolve inter-ministerial issues and problems.
Restructuring of NHAI to be a multidisciplinary body.
Planning, standardization and quality assurance (PSC)
cell
Project appraisal Group/cell headed by Financial Analyst,
and supported by Transport Economist, Transport
Planner.
Human Resource (HR) cell
Monitoring cell
Sensitization to PPP
Role of State Govt. in National
Highways BOT Project






State Support Agreement - Pre-requisite for success of PPP
Land Acquisition
Utility Shifting – Speedy action
Forest Clearance
NOC from State Pollution Control Board
Development of 2-lane Highways and levy of user fee
Infrastructure
Improvement
Jaipur- Kishangarh – Service Road
Thank You