5 December, 2017
Govt. Announces the Largest Ever Outlay for Roads and Highways Construction
The govt. has announced an outlay of Rs. 6.92 trillion for building an 83,677 km road network over the next five years. The largest ever outlay for road construction comes in the backdrop of the) government implementing the goods and services tax (GST) which aims to create a common market by dismantling inter-state tariff barriers. A robust road infrastructure will help in that direction. The road construction push includes the Bharatmala Pariyojana with a Rs 5.35 trillion investment to construct 34,800km of roads. In addition, Rs1.57 trillion will be spent on the construction of 48,877km of roads by the state-run National Highway Authority of India (NHAI) and the ministry of road transport and highways. To expedite the Bharatmala projects, apart from ministry of road transport and highways and state-run firms—NHAI and National Highways and Infrastructure Development Corporation Ltd (NHIDCL)—even respective state public works departments (PWDs) will be roped in for timely execution. To fund the marquee Bharatmala scheme, Rs2.09 trillion will be raised as debt from the market, while Rs1.06 trillion in private investments is being targeted through public private partnerships. In addition, Rs2.19 trillion will be provided from Central Road Fund (CRF), Toll- Operate-Maintain-Transfer (TOT) projects and toll collections of NHAI.
The government is working on raising capital by monetizing the operational road assets of NHAI that have been built by public funding, a first in the country. The government expects a private investment potential of Rs34,000 crore from the monetization of these 82 operating highways under the TOT model.
NIIF Signs a $1 Billion Investment Agreement With Abu Dhabi Investment Authority
The government had set up The National Investment and Infrastructure Fund (NIIF) with the aim to attract investments from both domestic and international sources for infrastructure development in commercially viable projects. In furtherance with its mandate, NIIF in October this year signed an investment agreement worth $1 billion with a wholly owned unit of the Abu Dhabi Investment Authority (ADIA). As part of the partnership agreement, ADIA will become the first institutional investor in NIIF’s Master Fund and a shareholder in National Investment and Infrastructure Ltd, NIIF’s investment management company.
NIIF has the mandate to invest in areas such as energy, transportation, housing, water, waste management and other infrastructure-related sectors in India. The corpus of the fund is proposed to be around Rs40,000 crore, with the government investing 49% and the rest to be raised from third-party investors such as sovereign wealth funds, insurance and pension funds, endowments etc.
Railways Working on A Plan To Allow Private Freight Terminals On Railway Land
The Indian Railways is working on a plan to allow private freight terminals (PFTs) on railway land adjacent to stations with a view to utilising vacant land parcels better, increase public-private-partnership (PPP) investments and boost freight revenue. Commercial viability of private terminals is more near cement companies, ports and power plants which consume coal. At present, private freight terminals are built by private investors on private land and connectivity is given by the railways to the operators on lease basis. The transporter believes that PFTs on railway land would help reduce encroachment of its land apart from increasing earnings through licensing fee. Under this scheme captive warehouses will be built by investors on land adjacent to stations and railways will earn lease rentals. The transporter will also charge for the railway lines leading up to the warehouses, since commercial use of land will require.
GVK Close to Bagging Navi Mumbai Airport
GVK Power & Infrastructure Ltd is close to bagging the mandate for the mega ₹16,000 crore Navi Mumbai greenfield airport project with the Project Monitoring Committee approving its financial bid.
As per the procedure, the committee will recommend the GVK bid to the Maharashtra government and the Cabinet will provide its stamp of final approval. GMR was the other bidder. The Letter of Intent, which the GVK management is anxiously waiting to begin works, will be issued by the City and Industrial Development Corporation. The LoI has seen inordinate delay.
Significantly, couple of major pre-airport development works worth over ₹2,000 crore have been awarded. This includes site levelling, removal of a major rock, reclamation of land, changing water course and rehabilitation of people living in three villages. The rehabilitation of villagers too, is at advanced stage and expected soon. The phase one of the project is expected to be ready within 36 months of commencement of work. Reportedly, the project would be developed by MIAL and there would not be any need for a special purpose vehicle. The ₹16,000-crore PPP project will have equity of 74 per cent for MIAL, the Airports Authority of India and CIDCO 13 per cent each. The construction work at the site may commence before the end of this year.
For further information, please contact:
Vineet Aneja, Partner, Clasis Law
vineet.aneja@clasislaw.com
