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23 Gujarat PPP Bhattacharya

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Scheme of the PresentationScheme of the Presentation

§§ Legal framework & Institutional Setup for PPPLegal framework & Institutional Setup for PPP

§§ Bombay Motor Vehicles Tax Act, 1958 (1994 amendment)Bombay Motor Vehicles Tax Act, 1958 (1994 amendment)

§§ Road PolicyRoad Policy 19961996

§§ Gujarat Infrastructure Development Act, 1999Gujarat Infrastructure Development Act, 1999

§§ Permissible assistance under GID Act, 1999Permissible assistance under GID Act, 1999

§§ Role of GIDBRole of GIDB

§§ GGSRDCSRDC

§§ Role of GSRDCRole of GSRDC

§§ PPlanning for PPPlanning for PPP§§ PPP Project Development ProcessPPP Project Development Process

§§ AAchievements in PPP in SHchievements in PPP in SH

§§ Evolution of PPP ProjectsEvolution of PPP Projects§§ Lessons learnt on PPPLessons learnt on PPP

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Legal Framework & InstitutionalLegal Framework & Institutional

Setup for PPPSetup for PPP¤¤ 1994: Bombay Motor Vehicles Tax Act, 19581994: Bombay Motor Vehicles Tax Act, 1958

amendedamended¤¤ 1995: GIDB established through a Govt.1995: GIDB established through a Govt.

ResolutionResolution

¤¤ 1996: Road Policy covering PPP1996: Road Policy covering PPP

¤¤ 1999: GIDB backed up by legislation1999: GIDB backed up by legislation

¤¤ 1999: GSRDC set up1999: GSRDC set up

¤¤ 2006 :2006 : GujGuj. Infra. Dev. Act, 1999 amended. Infra. Dev. Act, 1999 amended

¤¤ 2006: Tolling Policy under preparation2006: Tolling Policy under preparation

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Bombay Motor Vehicles Tax Act,Bombay Motor Vehicles Tax Act,

1958 (1994 Amendment)1958 (1994 Amendment) Enabling provision on TollingEnabling provision on Tolling

Tolling permitted on Bridges and its approaches,Tolling permitted on Bridges and its approaches,section of a new road and bypassessection of a new road and bypasses

Tolling allowed forTolling allowed for

•• construction, reconstruction, improvements andconstruction, reconstruction, improvements andrepair of above facilitiesrepair of above facilities

•• or if such facility is of special service to theor if such facility is of special service to the

publicpublic

Tolling allowed for investments more than Rs. 50Tolling allowed for investments more than Rs. 50

LakhsLakhs by the State Govt. and other personby the State Govt. and other person

Tolling to cover capital outlay, returns and tollTolling to cover capital outlay, returns and toll

collection expensescollection expenses

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Road Policy 1996Road Policy 1996Support to PPP ProjectsSupport to PPP Projects

¤¤ Land Acquisition by Govt.Land Acquisition by Govt.

¤¤ RoWRoW to be provided to concessionaire freeto be provided to concessionaire freeof cost on a case to case basisof cost on a case to case basis

¤¤ Subsidizing loss of revenue due to lowSubsidizing loss of revenue due to low

traffic than projectedtraffic than projected

¤¤ Exemption from royalty on constructionExemption from royalty on construction

materialmaterial

¤¤ Allowing construction in segments & levyingAllowing construction in segments & levying

toll on completed sectionstoll on completed sections

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Gujarat InfrastructureGujarat Infrastructure

Development Act, 1999Development Act, 1999¤¤ Provides a framework for PSP in financing,Provides a framework for PSP in financing,

construction, maintenance & operation ofconstruction, maintenance & operation of

infrastructure projects including Roads, Bridgesinfrastructure projects including Roads, Bridges& Bypasses& Bypasses

¤¤ Competitive, Transparent & Fair Bidding forCompetitive, Transparent & Fair Bidding for

developer selectiondeveloper selection¤¤ Unsolicited offers to be put throughUnsolicited offers to be put through ‘‘ChallengeChallenge

BiddingBidding””

¤¤ Projects under Schedule III (Projects of SpecialProjects under Schedule III (Projects of SpecialNature) may be offered by Direct NegotiationsNature) may be offered by Direct Negotiations

¤¤ Maximum concession period of 35 yearsMaximum concession period of 35 years

¤¤ Option for extension of Concession PeriodOption for extension of Concession Period

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Gujarat InfrastructureGujarat Infrastructure

Development Act, 1999Development Act, 1999¤¤ Provides for levy of user charges forProvides for levy of user charges for

providing goods & services by a projectproviding goods & services by a project

¤¤ It has provisions on Financial SecurityIt has provisions on Financial Security

for maintenance of project, Terminationfor maintenance of project, Terminationand Project Transferand Project Transfer

¤¤ All Infrastructure projects in theAll Infrastructure projects in the

Schedule I are required to adhere toSchedule I are required to adhere to

provisions of the Act.provisions of the Act.

¤¤ 12 main nature of Concession12 main nature of Concession

Agreements have been spelt outAgreements have been spelt out

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Permissible Assistance by the StatePermissible Assistance by the State

Govt. under Gujarat InfrastructureGovt. under Gujarat Infrastructure

Development Act, 1999Development Act, 1999

¤¤ Equity participation max. 49% of the EquityEquity participation max. 49% of the Equity

¤¤ Financial Assistance max. 20% of theFinancial Assistance max. 20% of the

Project CostProject Cost¤¤ No financial assistance for Unsolicited OffersNo financial assistance for Unsolicited Offers

¤¤ Senior or subordinate loansSenior or subordinate loans

¤¤ GuaranteeGuarantee

¤¤ Conferment of right to develop any landConferment of right to develop any land

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RoleRole of GIDBof GIDB Policy, Planning, Project Development, Project ProposalPolicy, Planning, Project Development, Project Proposal

Preparation, Project Appraisal, Statutory Roles, AdvisoryPreparation, Project Appraisal, Statutory Roles, Advisory

activitiesactivities

Encompasses almost all infrastructure sectors in State list andEncompasses almost all infrastructure sectors in State list andRailways & Aviation in Central listRailways & Aviation in Central list

Planning for overall infrastructure developmentPlanning for overall infrastructure development

Planning for integrated development with interPlanning for integrated development with inter--sectoralsectoral linkageslinkages CoCo--ordinate with sector linked executing agencies andordinate with sector linked executing agencies and

DepartmentsDepartments

Project Development activitiesProject Development activities Project AppraisalProject Appraisal

Proposal development by means ofProposal development by means of conceptualisingconceptualising project,project,

Feasibility studies, Project structuring, FinancialFeasibility studies, Project structuring, Financial AnaysisAnaysis etc.etc.

Documentation of projects for bidding on PPPDocumentation of projects for bidding on PPP

Capacity Building in PPPCapacity Building in PPP

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GSRDCGSRDC

Set up as a Govt. Company under CompaniesSet up as a Govt. Company under Companies

ActAct

Administrative linkage with Roads & BuildingsAdministrative linkage with Roads & Buildings

Dept.Dept.

Board Chaired by the Minister R&BDBoard Chaired by the Minister R&BD Board has professional directorsBoard has professional directors

GSRDC articles mandates for raising financesGSRDC articles mandates for raising finances

from the market for project developmentfrom the market for project development

GSRDC to promote PPP in Road sectorGSRDC to promote PPP in Road sector

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Role of GSRDCRole of GSRDC

Project identification, development activities,Project identification, development activities,

documentation, procurement with respect todocumentation, procurement with respect to

State Highways onlyState Highways only

PrePre--construction activities like utility shiftingconstruction activities like utility shifting

and land acquisition with Dept. interventionand land acquisition with Dept. intervention

Facilitation in approvals and statutoryFacilitation in approvals and statutory

clearancesclearances

Monitoring of construction activitiesMonitoring of construction activities

Administration of contracts and ConcessionAdministration of contracts and Concession

AgreementsAgreements

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PlanPlanning for PPPning for PPP

¤¤ 1996: Road Development Plan1996: Road Development Plan UptoUpto 2010 by2010 by

Roads & Buildings Dept.Roads & Buildings Dept.¤¤ 19971997--98:Gujarat State Highway Project (World98:Gujarat State Highway Project (World

Bank Aided Programme)Bank Aided Programme)

¤¤ 19971997--99: Integrated Master Development Plan99: Integrated Master Development Plan

for Transport Sector in Gujarat by TCSfor Transport Sector in Gujarat by TCS

¤¤ 1999:Vision 2010 by GIDB1999:Vision 2010 by GIDB¤¤ 2006: Blueprint for Infra. in Gujarat2006: Blueprint for Infra. in Gujarat –– 20202020

¤¤ 2006: Updated2006: Updated SoSSoS for World Bank fundingfor World Bank funding

¤¤ 2006: Planning for SHDP in line with NHDP2006: Planning for SHDP in line with NHDP

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PPP Project DevelopmentPPP Project Development

ProcessProcessInter-sectoral & Sectoral

Planning

Inter-sectoral & SectoralPlanning

Project IdentificationProject Identification

Project conceptualization& Development

Project conceptualization& Development

Project DocumentationProject Documentation

Project Appraisal,

Approval under GID Act

Project Appraisal,

Approval under GID Act

Submission toGIDB Board

Project BiddingProject Bidding

Land Acquisition, UtilityShifting, Forest Clearance,

Environment Clearance

Land Acquisition, UtilityShifting, Forest Clearance,

Environment Clearance

Selection of DeveloperSelection of DeveloperVGF/SubsidyVGF/Subsidy

Submission to MoF, GoI &Finance. Dept., GoG forapproval of VGF/Subsidy

Submission to MoF, GoI &Finance. Dept., GoG forapproval of VGF/Subsidy

ApprovalApproval

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 Achievements Achievements in PPP Projectsin PPP Projects

onon SHsSHsOPERATIONAL PROJECTSOPERATIONAL PROJECTS

ROB near GNFC Bharuch (Two lane)ROB near GNFC Bharuch (Two lane)

IchhaporeIchhapore--HaziraHazira Road (10 km) (Four Lane)Road (10 km) (Four Lane)

Additional two lane major bridges across three rivers on NHAdditional two lane major bridges across three rivers on NH--88

ROBROB ChalthanChalthan on NHon NH--88

RajkotRajkot--AhmedabadAhmedabad (on NH(on NH--8) Road Four laning (HUDCO Financed)8) Road Four laning (HUDCO Financed)

VadodaraVadodara--HalolHalol Road (32 km) (Four lane + service roads)Road (32 km) (Four lane + service roads)

AhmedabadAhmedabad--MehsanaMehsana Road (52 km) (Four lane + service roads)Road (52 km) (Four lane + service roads)

ChhayapuriChhayapuri ROB (four lane)ROB (four lane)

HimmatnagarHimmatnagar Bypass (two lane with PSS)Bypass (two lane with PSS)

Continued….

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 Achievements Achievements in PPP Projectsin PPP Projects

onon SHsSHsPROJECTS UNDER CONSTRUCTIONPROJECTS UNDER CONSTRUCTION

KimKim--MandviMandvi Road (Two lane with PSS)Road (Two lane with PSS)

BhujBhuj--NakhtranaNakhtrana Road (Two lane with PSS)Road (Two lane with PSS)

Continued….

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 Achievements Achievements in PPP Projectsin PPP Projects

onon SHsSHsPROJECTS UNDER BIDDINGPROJECTS UNDER BIDDING

DeesaDeesa--PanthawadaPanthawada--GundariGundari Road (Two lane withRoad (Two lane with

PSS)PSS)

UNDER VGF SCHEME OF GOIUNDER VGF SCHEME OF GOI

RajkotRajkot--JamnagarJamnagar--VadinarVadinar Road (127 km) (FourRoad (127 km) (Four

Laning)Laning)

HalolHalol--GodhraGodhra--ShamajiShamaji Road (170 km) (Four Laning)Road (170 km) (Four Laning)

AhmedabadAhmedabad--ViramgamViramgam--MaliyaMaliya Road (180 km) (FourRoad (180 km) (Four

Laning)Laning)

E l ti f PPP P j tE l ti f PPP P j t

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Evolution of PPP ProjectsEvolution of PPP Projects19961996--1999:1999:

Projects are of preProjects are of pre--GSRDC and GIDB eraGSRDC and GIDB era

All projects of the first generation of BOT projectsAll projects of the first generation of BOT projects

VadodaraVadodara--HalolHalol andand AhmedabadAhmedabad--MehsanaMehsana Toll Roads awarded onToll Roads awarded on

nomination basisnomination basis –– second generation of BOT Projectssecond generation of BOT Projects

Huge secured returns in todayHuge secured returns in today’’s market conditionss market conditions

Govt. to provide support for achieving returnsGovt. to provide support for achieving returns

State Govt. participated in EquityState Govt. participated in Equity

Traffic Risk pass throughTraffic Risk pass through

Tolling prohibited within 50 km radius of the facilityTolling prohibited within 50 km radius of the facility

Restriction in developing competing routeRestriction in developing competing route

However, Performance Standards were attemptedHowever, Performance Standards were attempted

RajkotRajkot--AhmedabadAhmedabad (on NH(on NH--8A) four8A) four lanedlaned with HUDCO creditwith HUDCO credit

Not a BOT projectNot a BOT project

Only tolling and maintenance activities outsourced, all risks wiOnly tolling and maintenance activities outsourced, all risks with theth the

State Govt.State Govt.

Maintenance expenditure from State BudgetMaintenance expenditure from State Budget Continued….

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Evolution of PPP ProjectsEvolution of PPP Projects1999 onwards:1999 onwards:

Projects put are under the transparent bidding procedures of GIDProjects put are under the transparent bidding procedures of GID

Act, 1999Act, 1999

Projects are of the third generation of BOT ProjectsProjects are of the third generation of BOT Projects

Two four laning of road projects failed to secure developers asTwo four laning of road projects failed to secure developers as

subsidy was demandedsubsidy was demanded

RoBRoB projects successful on standaloneprojects successful on standalone

Development concentrated on two laning projectsDevelopment concentrated on two laning projects

First project with upfront subsidy awarded (pre VGF Scheme)First project with upfront subsidy awarded (pre VGF Scheme)

Centre announces VGF Scheme for support to PPP in InfrastructureCentre announces VGF Scheme for support to PPP in Infrastructure

projectsprojects

Four laning project development revived thanks to VGF SchemeFour laning project development revived thanks to VGF Scheme

L l PPP

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Lessons learnt on PPPLessons learnt on PPP

¤¤ On State Highways only bridges and some bypasses may becomeOn State Highways only bridges and some bypasses may becomefinancially viable on toll alonefinancially viable on toll alone

¤¤ Four lane divided facility on SH invariably requires capital subFour lane divided facility on SH invariably requires capital subsidysidy

¤¤ Even two lane roads with paved side shoulder may requireEven two lane roads with paved side shoulder may require

subsidysubsidy

¤¤ All roads cannot be developed on BOTAll roads cannot be developed on BOT

¤¤ Care in selection of road stretches for developing on PPPCare in selection of road stretches for developing on PPP

¤¤ Subsidy results in leveraging of State resourcesSubsidy results in leveraging of State resources

¤¤ Subsidy compared with industrial subsidySubsidy compared with industrial subsidy

¤¤ Subsidy is difficult to come through Finance Dept. of State GovtSubsidy is difficult to come through Finance Dept. of State Govt..

¤¤ Concession Agreement should beConcession Agreement should be standardisedstandardised

¤¤ Scope of project should be clearly defined for developing on BOTScope of project should be clearly defined for developing on BOT

¤¤ Two and three wheelers should not be tolledTwo and three wheelers should not be tolled

¤¤ Economic development due to highway development should yieldEconomic development due to highway development should yield

to revenue generationto revenue generationContinued….

L l PPPL l t PPP

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Lessons learnt on PPPLessons learnt on PPP¤¤ GID Act ensures transparent biddingGID Act ensures transparent bidding

¤¤ Tolling / User Charges appreciated only when it provides value f Tolling / User Charges appreciated only when it provides value f oror

money to the usersmoney to the users

¤¤ Local traffic needs to be carefully defined considering politicaLocal traffic needs to be carefully defined considering political andl and

revenue risks associated with itrevenue risks associated with it

¤¤ AtAt--grade junctions are in mixed traffic situation and therefore pubgrade junctions are in mixed traffic situation and therefore publiclic

pressure for construction of bumps, especially in urban areaspressure for construction of bumps, especially in urban areas

¤¤ IncreasedIncreased LoSLoS and enhanced safety at junctions by providingand enhanced safety at junctions by providing

flyovers/ grade separatorsflyovers/ grade separators

¤¤ Throughout service roads results in leakage of traffic and revenThroughout service roads results in leakage of traffic and revenueue

lossloss

¤¤ Care be taken that Design & Maintenance risks are transferred toCare be taken that Design & Maintenance risks are transferred to thethe

ConcessionaireConcessionaire

¤¤ Maintenance timing and cost are difficult to predict andMaintenance timing and cost are difficult to predict and

Concessionaire generally reluctant to be responsibleConcessionaire generally reluctant to be responsible

¤¤ Maintenance related Performance Standards are difficult toMaintenance related Performance Standards are difficult to

implement even when IC is presentimplement even when IC is present

Continued….

L l t PPPL l t PPP

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Lessons learnt on PPPLessons learnt on PPP

¤¤ Outsourcing of knowledge activities per se is not an end in itseOutsourcing of knowledge activities per se is not an end in itself lf 

¤¤ Capacity building & accountability of the implementing agency beCapacity building & accountability of the implementing agency be

ensuredensured

¤¤ Shortage of well skilled professionals in PPP domain andShortage of well skilled professionals in PPP domain andHighwaysHighways

¤¤ Reluctant participation & no commitment of the other wings ofReluctant participation & no commitment of the other wings of

Govt. in PPP processGovt. in PPP process

¤¤ At least major PreAt least major Pre--construction activities like land acquisition,construction activities like land acquisition,

forest clearance and utility shifting must be completed beforeforest clearance and utility shifting must be completed before

signing of Concession Agreementsigning of Concession Agreement

¤¤ Concession Agreement should provide flexibility in modificationConcession Agreement should provide flexibility in modification

of design during construction stageof design during construction stage

¤¤ Failures of experiments in PPP are answerable to various Govt.Failures of experiments in PPP are answerable to various Govt.

agenciesagencies

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Roads & BuildingsDepartment

www.rnbgujarat.org

Gujarat Infrastructure

Development Boardwww.gidb.org

Gujarat State Road

Development Corp.Ltd.

www.gsrdc.com

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I i i l I i U dI tit ti l I t ti U d

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Institutional Interaction UnderInstitutional Interaction Under

Rules of BusinessRules of Business Approval / Recommendation / Return

Concession Agreement & Project Proposal

Project

Bidding

Budgeting & Administrative Concession Approvals Design (Not a mandatory one)

Planning & Budgeting Vesting of land Toll Admin. (for projects under BMV Tax Act)

Land Acquisition Traffic Admin.

Safety & Protectionm

Compensation

 

Financial Approval

Budgetary provision

 Approvals of the

Dept./ Govt .

Planning

Land Acquisition&

GIDB

Govt. Agency

(GSRDC)R&B Dept

GAD

(Planning)

Finance

Department

Revenue

DepartmentHome

Department

Legal

Department

Competent

 Authori ty

(LAA)


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