FEASIBILITY REPORT
G.T. Road Expressway from Shahdara to
Kala Shah Kaku (Rachna Town) September 2014
Lahore Development Authority GOVERNMENT OF PUNJAB
Executive Summary
The city of Lahore, with a population of nearly 10 million, is expected to grow at a rate of
3.5% per year. At this growth rate, Lahore’s population is expected to double every 20 years,
putting immense pressure on infrastructure and services. Such a rapid increase in the city’s
population will require large investments in the transportation infrastructure.
A well-functioning and extensive road network is an essential requirement for any
metropolitan area. A city that is lacking in a proper transport infrastructure subtracts greatly
from its residents’ quality of life. Frequent traffic jams, hours lost driving and a lack of
connectivity to other areas of the city add to citizens’ frustrations and worries. Thus, to
prevent such issues, it is essential that the city be provided with an extensive transport
infrastructure.
The government of Punjab envisions the construction of a signal free corridor on G.T. Road,
which serves as the main northern entrance to the city. The road will be 5.8 km long with 4.9
km elevated and another 0.9 km at grade level. The project will originate near the Ravi
Bridge and end at Rachna Town.
The total construction cost of the project over 2 years (with escalation) is estimated to be Rs.
6.99 billion, of which Rs. 4.63 billion is sought for private funding while remaining Rs. 2.36
billion is proposed to be borne by the Metro Bus Authority to offset the cost of integrating
dedicated Metro Bus Service corridor into the project. Cost of land acquisition and relocation
shall be borne by the government. The total cost of the project, inclusive of all contingent
charges, escalations, relocation of utilities and land costs is estimated to be Rs. 8.24 billion.
The expressway will be a dual carriage, 3-lane road and will include 2 priority lanes for the
Metro Bus service, which shall extend the Metro Bus network up to Kala Shah Kaku.
Average annual daily traffic (AADT) in the corridor is expected to be 31,970, out of which
18,288 will be cars. In order to make the feasibility robust, only 75% of this traffic count has
been assumed (adjustment for seasonal variation), which corresponds to AADT of 23,976
vehicles. All analysis has been done on base toll rate of Rs. 30 for cars, Rs. 75 for buses
(2.5x) and Rs. 180 (6x) for articulated trucks. Analysis indicates that the private partner can
expect a Net Present Value (NPV) of Rs. 8.44 billion which results in an equity IRR of
22.55% (at 30% equity).
Contents
Part 1: Introduction ................................................................................................................................. 7
1.1: PPP Policy of Government .......................................................................................................... 7
1.2: Transport Infrastructure in Lahore ............................................................................................... 8
1.3: Project Overview ....................................................................................................................... 11
1.3.1: Project Alignment ............................................................................................................... 11
1.3.2: Localities served ................................................................................................................. 11
1.3.3: Metro Bus ........................................................................................................................... 12
1.3.4: Project Breakup & Costs: .................................................................................................... 12
Part 2: Objectives and scope of the study ............................................................................................. 16
2.1: Methodology .............................................................................................................................. 16
Part 3: Situation Analysis ...................................................................................................................... 17
3.1: Current Traffic Situation ............................................................................................................ 17
3.2: Traffic Count & Expected Growth Rates: ................................................................................. 19
Part 4: Technical Details ....................................................................................................................... 22
4.1 Project Specifications .................................................................................................................. 22
Part 5: Financial Analysis: .................................................................................................................... 26
5.1: Overview of financing options................................................................................................... 26
5.1.1: Build Operate Transfer (BOT) ............................................................................................ 26
5.1.2: BOT with government support ........................................................................................... 27
5.1.3: Build Lease Transfer (BLT) ................................................................................................ 27
5.1.4: Deferred Payment ............................................................................................................... 28
5.2: Project Financials ....................................................................................................................... 28
5.3: Options Analysis ........................................................................................................................ 32
5.3.1: Build Operate Transfer (BOT) ............................................................................................ 32
5.3.2: BOT with Government Support (Project Cost Sharing) ..................................................... 32
5.3.3: BOT with Government Support Sensitivity Analysis ......................................................... 33
5.3.4: Build Lease Transfer (BLT) ................................................................................................ 34
5.3.5: Deferred Payment ............................................................................................................... 34
5.4: Recommendation ....................................................................................................................... 35
Part 6: Economic Analysis .................................................................................................................... 36
6.1: Vehicle Operating Costs ............................................................................................................ 36
6.2: Value of Travel Time ................................................................................................................. 38
6.3: Total Project Benefits ................................................................................................................ 41
Part 7: Risk and Mitigation ................................................................................................................... 43
7.1: Risk management ....................................................................................................................... 43
7.1.1: Risk management in toll roads ............................................................................................ 43
7.1.2 Risk responsibilities ............................................................................................................. 43
7.1.4: Risk register ........................................................................................................................ 47
Annexure 1: PPP Process ...................................................................................................................... 51
Annexure 2: Sensitivity Analysis of Equity and Toll Rate on Equity IRR ........................................... 52
Annexure 3: Sensitivity Analysis of Equity and Toll Rate on NPV ..................................................... 53
List of Tables
Table 1: Cost Details ................................................................................................................ 13
Table 2: Cost breakdown ......................................................................................................... 14 Table 3: GT Road Expressway Traffic Count ......................................................................... 19 Table 4: Adjusted traffic count ................................................................................................ 20 Table 5: Expected Traffic Growth Rates ................................................................................. 21 Table 6: Project costs and assumptions ................................................................................... 30 Table 7: Toll structure .............................................................................................................. 31 Table 8: BOT Summary ........................................................................................................... 32 Table 9: BOT with Government Support................................................................................. 33 Table 10: Sensitivity analysis of equity IRR with Class I Vehicle Count and base toll rate ... 33 Table 11: Sensitivity analysis of equity IRR with construction cost and base toll rate ........... 34 Table 12: Deferred Payment .................................................................................................... 35 Table 13: Vehicle Operating Cost (Rs. Per KM) ..................................................................... 37 Table 14: Annual Vehicle Operating Cost Savings ................................................................. 38 Table 15: Value of Travel Time (Rs. Per Hour) ...................................................................... 40 Table 16: Annual Vehicle Travel Time Savings ...................................................................... 41 Table 17: Total Economic Savings .......................................................................................... 42 Table 18: Risk Responsibilities ............................................................................................... 43 Table 19: Impact year & growth rate assumption .................................................................... 44 Table 20: Risk Matrix .............................................................................................................. 46 Table 21: Risk Register ............................................................................................................ 49
List of Figures
Figure 1: Map of Lahore and surrounding areas ------------------------------------------------------ 8 Figure 2: Lahore Map ------------------------------------------------------------------------------------- 9 Figure 3: International road density comparisons ---------------------------------------------------10 Figure 4: Project map ------------------------------------------------------------------------------------11 Figure 5: Traffic Visuals --------------------------------------------------------------------------------17 Figure 6: Vehicle growth --------------------------------------------------------------------------------19 Figure 7: Cross section of G.T. Road Expressway --------------------------------------------------22 Figure 8: Cross section of G.T. Road Expressway flyover at Imamia Phattak ------------------23
7
Part 1: Introduction
1.1: PPP Policy of Government
First legislation to facilitate public private partnership in Punjab was enacted in 2010 by the
name of Punjab Public-Partnership for Infrastructure Act 2010. This was later amended in
2014 and renamed to Punjab Public Private Partnership Act 2014 (“PPP Act”). The first
schedule of the PPP Act provides for a list of 17 sectors identified for public private
partnership, such as housing, land reclamation, information technology, infrastructure and
mining.
The PPP Act establishes a mechanism for government and private investor cooperation. The
PPP Act enables government agencies to provide support in multiple forms to make projects
feasible for private investors, including provision of administrative support through
facilitation of approvals of various documents and licenses. Additionally, the government
may become an equity partner by providing various inputs including land to the project. The
provision of utilities such as gas pipelines is also considered to be government support. In the
proposed arrangement, government support is extended in the form of partial financing of the
project, land and relocation of utilities.
Under the PPP Act, the government establishes a clear process for approval of a PPP project.
Diagram 1 in Annexure 1 summarizes this process. This process starts with submission of
PPP proposal by a government agency to PPP Cell, which then reviews it before presenting it
before the PPP Steering Committee for approval. This feasibility report has been prepared as
part of the documents to be submitted to the PPP Cell for consideration of the project.
8
1.2: Transport Infrastructure in Lahore
Lahore city is the provincial capital of the Punjab and is also its largest city with a population
of nearly 10 million. The city is the center of commerce, arts and manufacturing in the
province, and is home to the provincial government and all attendant agencies. The city also
has its own stock exchange which acts as a conduit for investments in the province. All major
companies and organization have their offices located in the city. The city’s GDP (Purchasing
Power Parity), according to a report by PricewaterhouseCoopers (PWC)1 was $45 billion in
2008, making it the second largest city in Pakistan economy wise.
Figure 1: Map of Lahore and surrounding areas
The city is spread over an area of 404 km2, while the district covers an area of 1,772 km2. The
city is divided into 9 administrative areas called towns. The City District Government is
responsible for the administration of these towns, except for the Cantonment areas, which are
directly administered by Cantonment Boards. Lahore’s road network has primarily developed
9
haphazardly along the old pre-partition routes without further planning. The partial Ring Road
is one of the few large projects that have been planned and implemented over the past two
decades to alleviate the traffic problems in the city.
Figure 2: Lahore Map
Pakistan, compared to developed countries, has very low road density, as can be seen in the
figure above. Compared to a developed city such as London, where the city’s road
infrastructure covers a length of 14,728 km for a total population of 8.3 million people2, the
road infrastructure of Lahore is considerably less extensive. London’s residents have 1.79 m
of road length per resident while the average road length available in Lahore is 0.07 m per
resident.
2. Road Lengths in Great Britain. (2013, June 5). UK Government. Retrieved September 3, 2014.
https://www.gov.uk/government/statistics/road-lengths-in-great-britain-2013
10
Figure 3: International road density comparisons
While traffic studies and master plans have been prepared, most of the city’s road
development has not been in line with such plans, largely due to paucity of funds and
frequent regime changes. The outcome is a city growing in an unbalanced manner, with
executing agencies having to follow the city’s growth rather than lead it.
11
1.3: Project Overview
1.3.1: Project Alignment
This project envisages construction of an expressway and extension of Metro Bus Service
from Shahdara Mor to Kala Shah Kaku.
Figure 4: Project map
The alignment starts at the toll plaza just after crossing River Ravi, traverses through
Shahdara Mor (intersection leading to Jaranwala and Sheikhupura in the west and Old Ravi
Bridge in the east), moves across Shadarah Town, crosses Railway Line at Imamia Phattak,
moves along various settlements / towns along N-5 to reach Kala Shah Kaku Interchange that
leads to Gujranwala / Gujrat in the north and Motorway M-2 in the west.
1.3.2: Localities served
The project will service a number of heavily populated areas. The following is a list of
localities and areas that will benefit in terms of reduced travel time from the construction of
the G.T. Road Expressway:
12
Shahdara Town Kala Shah Kaku
Imamia Colony Ferozwala
Rachna Town Aziz Colony
Taiba Town Rasool Park
Ring Road Pukhpura
Ali Park Rehman City
1.3.3: Metro Bus
As discussed earlier, this route serves as an important entry to Lahore and is used by a large
number of commuters on a daily basis. Keeping in view the importance of this route, it has
been proposed that this project should be used to extend the Metro Bus service up to Kala
Shah Kaku. The Metro Bus will provide the citizens of the area with a high-quality, reliable
form of public transport, something that has been lacking in the area. The extension will
increase the connectivity of the suburbs of Lahore with the main city and will also provide
the commuters with a faster means of travel. However such extension adversely affects the
commercial viability of the project on a pure BOT basis as it creates a competitive route for
the tollable public transport. As a result of this, the project has been conceived with
government financing for this enhancement of scope.
1.3.4: Project Breakup & Costs:
Initially the whole project consisted of an expressway from Shahdarah junction to Kala Shah
Kaku. However, in order to keep the project affordable, the project has been divided into two
phases:
1. Shahdarah - Rachna Town 0 - 5.8 km
2. Rachna Town to Kala Shah Kaku 5.8 - 10 km
13
This document deals with the first phase of the project i.e. from Shahdarah junction to
Rachna Town.
The first phase consists of a 5.8 km long signal-free corridor starting from Shahdara and
ending near Kala Shah Kaku on the G.T. Road. 4.9 km of the project will be elevated and
placed on embankments retained on RCC walls while the remaining 0.9 km will be at grade
level. The project will include a flyover bridge, underpass and roundabout at Shahdara Mor.
Another flyover will be constructed near Imamia Mor over the railway line. Additionally, the
project will include 5 vehicular underpasses and 4 pedestrian underpasses, allowing residents
of nearby areas to cross the expressway unhindered.
The project construction cost is expected to cost Rs. 6.5 billion (excluding contingencies,
escalation, consultancies, etc.). This cost includes the cost of 3 lane dual carriage way and the
cost of 2 lanes of metro. The breakdown of the construction costs is given below (without
escalation):
Description Cost (PKR million) Earthwork 360 Sub-base and Base Courses 1,627 Surfacing 472 Structures
RCC Retaining Walls 1,559 Shahdara Mor Interchange 430
Imamia Flyover 135 Heavy Vehicular Underpasses 61 Light Vehicular Underpasses 54
Pedestrian Underpasses 52 Culverts 416
Drainage & Erosion Control Works 495 Electric Works (Road Lightening) 44 Ancillary Works 276 Expressway Toll Plaza 100 MBS Stations 421 Cost of Construction 6,509
Table 1: Cost Details
14
Because development of the infrastructure for Metro Bus service comes under the domain of
Metro Bus Authority, it is proposed that MBA should bear the costs associated with the
structures and lanes associated with Metro Bus. For this purpose, the following methodology
was adopted to segregate the cost of Metro Bus from the project.
The costs of structures exclusively related to Metro Bus were included in the Metro Bus cost
i.e. pedestrian structures and bus stations. One sixth of the cost of earthwork, sub base and
surfacing was included in the cost of the Metro Bus as it consists of 2 out of the 12 lanes of
the project. A quarter of the remaining construction cost has also been allocated to the Metro
Bus.
Based on this formula, the contribution of the Metro Bus Authority (including contingencies)
is estimated to be Rs. 2.36 billion. Remaining cost of the project is Rs. 4.35 billion, which is
intended to be attracted from private investors.
Following table summarizes this cost breakdown (without escalation).
Government Metro Bus Authority PPP
Description PKR
(millions) Description
PKR (millions)
Description PKR
(millions)
Land Accusation
1,205 Bus Stations 421
Facility Relocation
50 Pedestrian Bridges
52
Construction Cost (25%)
2,290 Construction cost (75%)
4,218
Contingencies 68 Contingencies 126
Total 1,255 Total 2,358 Total 4,345
+ overheads
Table 2: Cost breakdown
15
Land required for the project has been valued at Rs. 1.2 billion, while relocation of utilities
near the project site will require another Rs. 50 million. It has been assumed that routine
maintenance costs will take up assumed 1.0% of construction cost per annum. Periodic
maintenance will take the shape of resurfacing and road overlays to be done every 10 years.
At current rates, cost of period maintenance is estimated to be Rs. 468 million, which will
escalate to Rs. 835 million in the tenth year and Rs. 1.5 billion in the 21st year.
16
Part 2: Objectives and scope of the study
The objective of this feasibility study is to assess the financial viability of constructing the
G.T. Road Expressway. The study has been designed and constructed with the specific aim of
demonstrating that this project is viable enough to attract interest from potential investors.
2.1: Methodology
During the course of the project, data was collected from the following sources:
o Primary Sources:
o AAA Engineering Consultants conducted a number of studies including a
technical study of the project, project design, geotechnical studies and a traffic
study.
o For accurate land cost evaluation, prices were collected from various real
estate agents and dealers.
o Consultations and focus groups between various implementing agencies were
held to vet and refine the final product.
o Secondary Sources:
o Various secondary sources such as JICA’s 2010 traffic study and Lahore
Master Plan 2021 were used during the course of writing this report.
17
Part 3: Situation Analysis
3.1: Current Traffic Situation
There are three main bridges from where traffic enters into / exits from Lahore namely (a)
Shahdara Bridge on National Highway N-5, (b) Saggian Bridge on Link to Lahore –
Sheikhupura Road and (c) Babu Sabu on Lahore Islamabad Motorway. The Ravi Bridge at
Shahdarah is the busiest of all of three bridges because it receives traffic to/from the National
Highway N-5, the Lahore Islamabad Motorway M-2 and Faisalabad – Pindi Bhattian
Motorway M-3.
Currently this road section faces severe traffic congestion, stemming primarily from the
presence of local traffic of Shahdara Town. Matters get even worse at Shahdara Mor and
Imamia Phattak because Shadara Mor lacks traffic signals and the old railway crossing
creates a bottleneck at Imamia Phattak .
Figure 5: Traffic Visuals
18
The situation is further aggravated because of residential and commercial localities on both
sides of the road. Other main residential colonies and localities contributing traffic on this
road are as follows:
Aziz colony ShahdraBagh
Barkat Town Mehmood Colony
Imamia colony Peoples colony
Rachna Town Ali Park
Jameel Park Taiba Town
Rasool Park Ferozwala
Al-Rehman Garden Pukhpura
Rana Town Sher e Bangla Labour Colony
Rehman City Al-Rehman Town
This situation is expected to deteriorate in the coming years. Some of the colonies that
contribute to the traffic on this route are not fully developed. As these localities develop with
time, the traffic volume on this route will increase. This traffic count is also expected to rise
sharply in the future as the population of the city and the number of vehicles in the city
increase. The figure below depicts the sharp increase in the number of vehicles in the city
over the years.
19
Figure 6: Vehicle growth
Assuming that the pattern of population of growth and number of vehicles continues, this
main entry route of Lahore will see an exponential increase in the traffic count.
3.2: Traffic Count & Expected Growth Rates:
Currently, the average annual daily traffic in the project area is 33,336 vehicles. The
following table provides a breakdown of vehicular traffic in the project area:
Category % of Total
Traffic Volume Traffic Volume
Class 1 - Cars / Jeeps 57.20% 18,288
Class 2 - Wagons / Pickups 25.64% 9,294
Class 3 - Coasters/ Mini Buses/trucks 3.93% 1,423
Class 4 - Buses 2.36% 857
Class 5 - Rigid Trucks (2 & 3-Axle) 9.58% 3,064
Class 6 - Articulated Trucks 0.56% 178
Class 7 - Tractor Trolley 0.73% 232
Total Count 33,336 Table 3: GT Road Expressway Traffic Count
As can be seen from Table, the majority of traffic comprises of Category 1 (Cars/Jeeps).
After completion of this route and the extension of Metro Bus service, tollable traffic in Class
2, 3 and 4 is expected to reduce as commuters shift from other sources of public transport to
20
Metro Bus service (which shall not be tolled). Traffic study indicates that each day 19,752
passengers commute within the project area, out of which 4,373 use LTC buses on routes
49/49A while the remaining use a mix of public transport of non-tollable vehicles like
Qingqis and tollable ones from Class 2, 3 and 4. All such commuters will be fully served by
the Metro Bus service. To make the feasibility more robust, we assume that all such
commuters use tollable public transport vehicles and will completely switch to Metro Bus
service. In such case, the traffic count impact of Metro Bus will be as follows:
Category Reduction Traffic Volume
Class 1 - Cars / Jeeps 0 18,288
Class 2 - Wagons / Pickups 1,097 8,197
Class 3 - Coasters/ Mini Buses/trucks 168 1,255
Class 4 - Buses 101 756
Class 5 - Rigid Trucks (2 & 3-Axle) 0 3,064
Class 6 - Articulated Trucks 0 178
Class 7 - Tractor Trolley 0 232
Total Count 1,366 31,970 Table 4: Adjusted traffic count
In order to further strengthen the feasibility, this expected traffic count is assumed to be 75%
of the Metro Bus-adjusted AADT. This was done to account for seasonal variation in traffic,
impact of toll, etc. The financial analysis for the project thus has been done on AADT of
23,976.
The proposed public-private partnership agreement further protects the private partner’s
investment from construction of competing routes (such as the Eastern Bypass) to the extent
that such construction causes traffic to fall below the projected levels. In such case, the
government will be required to monetarily compensate the private investor on a quarterly
basis for the lost toll revenue, as established by electronic tolling records. The expected
traffic growth rates in the project area are given on the following page:
21
Year
0 1 2 3 4 5 6 7 8 9 10 11 12
Class 1 - Cars / Jeeps
4.98% 4.54% 4.54% 4.54% 4.54% 4.54% 4.30% 4.30% 4.30% 4.30% 4.30% 4.10% 4.10%
Class 2 - Wagons / Pickups
4.98% 4.54% 4.54% 4.54% 4.54% 4.54% 4.30% 4.30% 4.30% 4.30% 4.30% 4.10% 4.10% Class 3 - Coasters/ Mini Buses/trucks
4.75% 4.40% 4.40% 4.40% 4.40% 4.40% 4.21% 4.21% 4.21% 4.21% 4.21% 4.03% 4.03%
Class 4 - Buses
4.75% 4.40% 4.40% 4.40% 4.40% 4.40% 4.21% 4.21% 4.21% 4.21% 4.21% 4.03% 4.03%
Class 5 - Rigid Trucks (2 & 3-Axle)
4.69% 4.42% 4.42% 4.42% 4.42% 4.42% 4.30% 4.30% 4.30% 4.30% 4.30% 4.19% 4.19%
Class 6 - Articulated Trucks
4.69% 4.42% 4.42% 4.42% 4.42% 4.42% 4.30% 4.30% 4.30% 4.30% 4.30% 4.19% 4.19%
Class 7 - Tractor Trolley
4.69% 4.42% 4.42% 4.42% 4.42% 4.42% 4.30% 4.30% 4.30% 4.30% 4.30% 4.19% 4.19%
Year
13 14 15 16 17 18 19 20 21 22 23 24 Class 1 - Cars / Jeeps
4.10% 4.10% 4.10% 3.92% 3.92% 3.92% 3.92% 3.92% 3.77% 3.77% 3.77% 3.77%
Class 2 - Wagons / Pickups
4.10% 4.10% 4.10% 3.92% 3.92% 3.92% 3.92% 3.92% 3.77% 3.77% 3.77% 3.77% Class 3 - Coasters/ Mini Buses/trucks
4.03% 4.03% 4.03% 3.86% 3.86% 3.86% 3.86% 3.86% 3.78% 3.78% 3.78% 3.78%
Class 4 - Buses
4.03% 4.03% 4.03% 3.86% 3.86% 3.86% 3.86% 3.86% 3.78% 3.78% 3.78% 3.78% Class 5 - Rigid Trucks (2 & 3-Axle)
4.19% 4.19% 4.19% 4.10% 4.10% 4.10% 4.10% 4.10% 4.09% 4.09% 4.09% 4.09%
Class 6 - Articulated Trucks
4.19% 4.19% 4.19% 4.10% 4.10% 4.10% 4.10% 4.10% 4.09% 4.09% 4.09% 4.09% Class 7 - Tractor Trolley
4.19% 4.19% 4.19% 4.10% 4.10% 4.10% 4.10% 4.10% 4.09% 4.09% 4.09% 4.09%
Table 5: Expected Traffic Growth Rates
22
Part 4: Technical Details
4.1 Project Specifications
The G.T. Road Expressway is being constructed to provide a signal free corridor between Shahdara Town and Kala Shah Kaku (Rachna Town). Cross sections and technical specifications of the project are given below:
Figure 7: Cross section of G.T. Road Expressway
23
Figure 8: Cross section of G.T. Road Expressway flyover at Imamia Phattak
24
Following are detailed technical specifications of the project:
Design life Bridges and structures 50 years Pavement structures 10 years Electric Lighting System 15 years
Design speed (max) Flat terrain 100 km/h Horizontal curvature (min)
Flat terrain 435 m
Maximum super elevation
6.00%
Transverse slope (Camber)
Pavement 2.00% Shoulders 4.00%
Stopping sight distance (min)
Flat terrain 185 m
Passing sight distance (min)
Flat terrain 670 m
Gradient (max) Flat terrain 3.00% Length of vertical curve (min)
Flat terrain 60 m
Width of pavement on either sides
10.50 m
Width of pavement on either sides (MBS)
8.20 m
Width of service lane & parking area on either side
11.10 m
Width of inner shoulder on either side
0.60 m
Width of outer shoulder on either side
0.60 m
Pavement and shoulder
Sub grade MDD: 95% Granular sub base course Thickness: 30 cm
Compaction: 98% Aggregate base course Thickness: 30 cm
Compaction: 100% Asphalt base course Thickness: 13 cm Asphalt wearing course Thickness: 05 cm
Embankment height Varies Embankment side slope
Fill 1:5 to 1:3 Cut 1:4 to 1:1
Right of Way (“ROW”) (min)
Flat terrain ±220 ft
25
Pipe culverts diameter in meters (min)
For drainage 0.90 m
Slab culverts span in meters (min)
For cross drainage 1.00 m
Side drains width To be provided as per site conditions
Pavement design (As per AASHTO)
Lane distribution factor 0.5 Directional split 1 Design CBR (Sub-grade) 8 Resilient modulus (Sub-grade)
9669 psi
Reliability 90% Standard Deviation 0.45 Standard Normal Deviate -1.282 Initial Serviceability index 4.2 Terminal Serviceability Index 2.5 Drainage Co-efficient 1
Reflectors (cat’s eyes)
Distance: 10 m c/c Placement: i) Centerline of right and left and right carriageway ii) 4 inches from right edge of each carriageway iii) 4 inches from left edge of each carriageway) Specification: W1 – 120 mm
Paint L1 – broken guide line – white (Centreline of each carriageway) L4 – continuous edge line – yellow (4 inches from edges on either sides of each carriageway
Structural design criteria
Codes and standards Key code is AASHTO and supporting codes are West Pakistan Code of Practices for Highway Bridges (WPCHB), Pakistan Building Code, ASTM standards, American Concrete Institute (ACI).
Live load for all road structures
Class AA 70 ton tank (Military loading) & Class A.
26
Part 5: Financial Analysis:
5.1: Overview of financing options
The project has been evaluated on the basis of four different financing modes. Of these, 3 are
in PPP mode while 1 is in regular procurement mode. The PPP modes are:
1) Build Operate Transfer (BOT)
2) Build Lease Transfer (BLT)
3) BOT with government support
a. Viability Gap Funding
b. Project Cost Sharing
The fourth financing model is known as a deferred payment model and is not considered to
be a PPP model. The four models are described in the following paragraphs.
5.1.1: Build Operate Transfer (BOT)
Under a BOT agreement, the party that is awarded the contract, commonly referred as the
Concessionaire, is responsible for financing, constructing and operating the project. Revenues
accruing from operations of the facility are completely at the disposal of the Concessionaire
and it is expected that the Concessionaire will recover his/her investment through the
collection of tolls. At the end of the stipulated time period, ownership of the project is handed
over to the government. All revenue risks of the project are assumed by the Concessionaire.
27
5.1.2: BOT with government support
For projects that are not financially viable solely on a BOT basis, the government may
intervene by subsidizing the project to make it more attractive for investors. Government
support may come in two forms:
1) Viability Gap Funding
2) Project Cost Sharing
In the first option, the project operates as a BOT, however since the revenue is not enough to
make the project financially feasible, the government provides a fixed annuity cover as an
additional income stream in order to maintain IRR at a specified level. In case the toll
revenue performs better than projected, the government annuity is adjusted accordingly.
In the second option, the government bears a one-time cost to reduce the project cost to a
level that is feasible at the projected toll income. This second approach is more desirable for
the government as VGF results in inflated payments that incorporate debt servicing and
return on private investor’s equity.
5.1.3: Build Lease Transfer (BLT)
Under this agreement, the Concessionaire agrees to build and finance the project and at the
end of the construction period leases out the project to the government. Depending on the
terms of contract, the cost of operations and maintenance of the project are borne either by
the government or the Concessionaire. The Concessionaire is paid an annuity by the
government, which can either be fixed or variable depending on the terms of contract. Income
stream of the investor is from annuity payment by the government. In this case the
28
government bears the risk of revenue shortfall. At the end of the lease period, the project is
handed over to the government, conferring all the rights and privileges that come with
ownership.
5.1.4: Deferred Payment
Under a deferred payment agreement, the government hires a contractor to undertake a
project and pays the contractor the cost of the project in installments spread over a number of
years. The sole responsibility of the contractor is to construct the project according to
specification. In addition to the contractor’s profits, the contractor is likely to require interest
payments on contractor’s balance on construction costs.
5.2: Project Financials
As an investment destination, Pakistan has a relatively high risk-profile, especially for long-
term projects. With an economy that is struggling to take off and a political system that has
yet to cement its gains, companies operating in this environment require a larger return on
their investments to offset the higher perceived risk. Only projects that demonstrate an IRR of
at least 18% are expected to ignite investor interest, keeping in view that interest rates on
safer long-term investment/high quality bonds are currently at 10%.
In fact, a number of infrastructure projects are already being constructed under BOT basis at
equity IRR of 18% or above. The rehabilitation of the M-9 Karachi-Hyderabad Motorway is
being done at a cost of Rs. 27 billion with a project NPV of Rs. 18 billion and project IRR of
21%. The project has been awarded to M/s Binapuri Holdings of Malaysia.
29
Similarly, the Benazir airport link roads extension contract has been awarded to the Frontier
Woks Organization (FWO) with a project NPV of Rs. 2.6 billion and IRR of 17.55%. The
total cost of the project is Rs. 7.8 billion3.
3 Pakistan's PPP Program. (2013, November 11). IPDF (Infrastructure Project Financing Development Facility) Retrieved September 3, 2014. http://www.unescap.org/sites/default/files/3-Pakistan.pdf
30
The following table provides an overview of project costs and assumptions:
Assumption Value
Project Costs
Construction Costs Construction cost (private investor) 4,218,961,414 Construction cost (Metro Bus) 2,290,283,051 Land acquisition 1,205,785,147 Relocation of facilities 50,000,000 Operational insurance 0.2% of Construction Cost Contingency cost 3% of Construction Cost Design and consultancy fees 1% of Construction Cost Total project cost* 8,241,896,862
Operational costs
Operating expenses (Includes Operational Insurance)
1% of yearly revenues
Maintenance costs 0.3% of Construction Cost per annum Overlay cost (Every 10 years) 467,897,993 (PV)
837,934,043 (Y11) 1,590,648,986 (Y21) Construction time 1 year Financial close 1 year
Financial Assumptions Prevailing Interest Rate 1 year KIBOR + 4% Debt:Equity Ratio 70:30 Loan Term 7 years Grace Period 2 Years Project Discount Rate 10% Prevailing Corporate Tax Rate 33%
Table 6: Project costs and assumptions
*The total project cost includes 2-year construction with escalation of 6% and the cost of land accusation and facility relocation, however the feasibility has been developed on the assumption that the government will bear these costs
A financial model was built to evaluate this project’s viability, and the above assumptions
along with the following toll structure for different classes of vehicles were entered into it.
Findings for BOT, BOT with government support (project cost sharing) and deferred
payment are provided in the next section.
31
Vehicle Class Structure Toll (Rs.)
Class 1 - Cars/Jeeps 1 X 30
Class 2 - Wagons/Pickups 2 X 60
Class 3 - Coasters/Trucks 2.33 X 70
Class 4 - Buses 2.5 X 75
Class 5 - Rigid Trucks 5 X 150
Class 6 - Articulated Trucks 6 X 180
Class 7 - Tractor Trolleys 4 X 120
Table 7: Toll structure
32
5.3: Options Analysis
The project has been evaluated on a number of different models. The results of each are
presented below.
5.3.1: Build Operate Transfer (BOT)
Project Financials
Toll (Rs.) 30
Debt : Equity Debt - Rs. 4,890 million
Equity - Rs. 2,096 million
Net Present Value (NPV) Rs. 6,830 million
Project IRR 16.51%
Equity IRR 17.66%
Table 8: BOT Summary
Under the BOT agreement, the project has a comparatively low project IRR of 16.52% (in
comparison to the market desire of 18% IRR). The project NPV would be Rs. 6,838,040,065
over 25 years at a 10% discount rate.
5.3.2: BOT with Government Support (Project Cost Sharing)
In order to make the project viable for the private investor, government support is proposed in
the form of partial financing of the project to the extent of offsetting the cost of integrating
dedicated Metro Bus Service corridor into the project. This cost amounts to Rs. 2.35 billion
and is proposed to be borne by the Metro Bus Authority. The remaining scope of work with
total project management overheads is estimated to cost Rs. 4.63 billion and is sought through
private finance.
33
Project Financials
Toll (Rs.) 30
Debt : Equity Debt - Rs. 3,476 million
Equity - Rs. 1,490 million
Net Present Value (NPV) Rs. 8,444 million
Project IRR 20.02%
Equity IRR 22.55%
Table 9: BOT with Government Support
Under the BOT agreement with government support, the project is extremely viable at toll rate
of Rs. 30 for Class 1 vehicles. The project NPV is expected to be Rs. 8,444 million with equity
IRR of 22.55%.
5.3.3: BOT with Government Support Sensitivity Analysis
To further establish the viability of the project a sensitivity analysis on equity IRR was
performed for traffic volume, toll rate and construction cost. Detailed tables of sensitivity
analysis are given below. Equity IRR was observed for changes in traffic volume and
construction at ±10% and ±20% from the base value.
Change in Class I Vehicle Count
Class 1 Toll Rate
- -20% -10% - 10% 20%
5 #NUM! 1.05% 1.61% 2.14% 2.64%
10 7.14% 7.77% 8.38% 8.96% 9.52%
15 11.47% 12.20% 12.90% 13.58% 14.23%
20 14.96% 15.77% 16.56% 17.31% 18.04%
25 17.94% 18.84% 19.72% 20.56% 21.38%
30 20.64% 21.62% 22.55% 23.46% 24.36%
Table 10: Sensitivity analysis of equity IRR with Class I Vehicle Count and base toll rate
34
Changes in Construction Cost
Class 1 Toll Rate
-20% -10% - 10% 20%
5 3.15% 2.33% 1.61% 0.98% #NUM!
10 10.45% 9.33% 8.38% 7.55% 6.81%
15 15.43% 14.06% 12.90% 11.89% 11.01%
20 19.53% 17.91% 16.56% 15.38% 14.37%
25 23.04% 21.25% 19.72% 18.39% 17.24%
30 26.28% 24.23% 22.55% 21.11% 19.85%
35 29.39% 27.07% 25.17% 23.58% 22.22% Table 11: Sensitivity analysis of equity IRR with construction cost and base toll rate
5.3.4: Build Lease Transfer (BLT)
Under this contract, the government pays an annuity of Rs. 1.66 billion per year for a period of
7 years beyond the construction of the project (2 years). The annuity has been worked out with
a target of 18% equity IRR (as substantiated in Section 5.2). The government will reimburse
the Concessionaire for the cost of operations, debt servicing and equity return. Naturally, this
mode is not desirable, but might need to be adopted in case the investor environment is risk
averse. Ring Road is an example in which this mode was approved due to low confidence in
traffic count.
5.3.5: Deferred Payment
Under the deferred payment model, the government will take over the facility at the end of
construction and pay the contracting party the cost of construction along with the industry
acceptable contractor profit of 18%. The period of agreement is expected to be four (4) years
and the contracting party will be paid annual payment of Rs. 1.96 billion for four (4) years.
Details of the deferred payment are given below:
35
Present Value Year 1 Year 2 Year 3 Year 4
Instalment 1.4 1.4 1.4 1.4
Construction Expense 2.37 2.6 . .
Contractor Cash Flow -.97 -1.21 1.4 1.4
Contractor Cash Balance -.97 -2.18 -.78 .62
Total Annuity 6.136 1.53 1.53 1.53 1.53
Total Annuity Net of Toll 4.810 1.53 1.53 .92 .82 Table 12: Deferred Payment
5.4: Recommendation
Given the above analysis and project parameters, the project is viable on BOT with
government support in the form of project cost sharing for a period of 25 years. Under this
option the government finances the Metro Bus component of the project.
36
Part 6: Economic Analysis
For economic analysis, we take into account the explicit, as well as implicit costs and benefits
of the project. This gives us a holistic view of the overall impacts of the project on economy
and society. In case of infrastructure projects, such as this, even if a project is not financially
viable it might still be justified due its economic benefits.
For this particular project, the main implicit benefits will accrue in the form of fuel savings,
time savings, increased property prices and increased commercial activity. Implicit costs that
will reduce due to faster travel time will be environment damage, noise pollution and air
pollution. In this document, we will focus on the implicit benefits of the project.
6.1: Vehicle Operating Costs
To arrive at VOC/km, the physical values of fuel consumption, engine oil consumption, tyre
wear, maintenance cost, depreciation, interest and wages etc. at various speeds as applicable to
the existing situation and after completion of the proposed road are required. Limitations in
estimating these parameters make the results inaccurate. The Pakistan Transport Plan Study
undertaken by JICA in 2006 provides an estimate for VOC values for different vehicle classes
at different speeds for different road surface conditions. VOC has been calculated with project
and without the project. An operating speed of 30kph and 60kph has been adopted to calculate
VOC for without the project and with the project conditions respectively. Tables below
summarize the VOC per km:
37
Vehicle Class
Tractor Trolley
Car/Taxi/ Pickup Jeep Wagon Mini
Bus Bus 2-Axle Truck
3-Axle Truck
4-Axle Truck
5-Axle Truck
Without Project
13.96 11.63 12.79 27.86 44.58 55.73 22.66 24.93 26.06 27.16
With Project
10.78 8.98 9.88 21.48 34.36 42.95 16.94 18.6 19.48 20.33
Table 13: Vehicle Operating Cost (Rs. Per KM)
As a result of project implementation, major economic benefits are expected to accrue from
the VOC savings. Based on the graphs and tables given above, vehicle operating cost per
kilometer by type of vehicle under “without” and “with project” conditions have been worked
out and multiplied with the average annual daily traffic likely to use the road and distance
travelled in a year both under “without” and “with project” conditions.
The difference of the annual vehicle operating costs under without and with project conditions
represents benefits on account of savings in vehicle operating costs. These are given in Table
on next page.
38
Years Without Project With Project VOC Saving (Million Rs.)
0 123 150 27
1 128 156 28
2 134 163 29
3 140 171 31
4 146 178 32
5 153 186 34
6 159 194 35
7 166 203 37
8 173 211 38
9 181 220 40
10 189 230 41
11 196 239 43
12 204 249 45
13 213 260 47
14 222 270 49
15 231 281 51
16 240 293 53
17 249 304 55
18 259 316 57
19 269 329 59
20 280 342 62
21 291 355 64
22 302 369 67
23 314 383 69
24 326 398 72 Table 14: Annual Vehicle Operating Cost Savings
6.2: Value of Travel Time
Parameters considered for working out value of travel time for various classes of vehicles are:
Average annual income per passenger
Annual working hours
Number of occupants/vehicle
Based on the above parameters, economic value of travel time expressed in Rs. per hour has
been worked out for occupants of all vehicular classes. Various assumptions regarding
monthly income, working hours etc. made in this regard which are given on next page. Same
as VOC calculations, operating speeds of 30kph and 60kph have been adopted to calculate
39
Travel Time Value for “without the project” and “with the project” conditions respectively.
Basic parameters required for valuing total travel time savings for various types of passenger
vehicles have already been determined above. These have been related to the operating speeds
both under without and with project conditions. Value of travel time per kilometer for various
types of vehicles have been calculated under without & with project conditions by dividing
value of time per hour by the respective speeds.
Annual value of travel time (AVTT) is a function of VTT per km, AADT and annual distance
covered at various speeds. Based on these parameters worked out earlier, the estimated AVTT
both for conditions have thus been worked out. The difference of the AVTT under without and
with project conditions represents benefits on account of savings in travel time value, as shown
in table below.
40
Description Car Mini Van
Medium Bus
Bus Tractor Trolley
Jeep 2-Axle Truck
3-Axle Truck
4-Axle Truck
Articulated
Truck
Average Income of Passenger (Rs. /Month)
24,000 10,000 13,000 9,200 16,000 45,000 20,000 21,500 22,000 23,000
Average Income of Passenger (Rs. /Annum) 288,000 120,000 156,000 110,400 192,000 540,000 24,000 258,000 264,000 276,000
Working Hours /Annum 2,496 2,496 2,496 2,496 2,496 2,496 2,496 2,496 2,496 2,496
Rate of passenger Rs. /Hour 115.38 48.08 62.50 44.23 76.92 216.35 96.15 103.37 105.77 110.58
No. of Occupants 2.60 14.00 25.00 40.00 2.50 1.50 2.60 2.60 2.60 2.60
Travel Time Value of occupants (Rs. /Hour) 300.00 673.08 1,562.50 1,769.23 192.31 324.52 250.00 268.75 275.00 287.50
Table 15: Value of Travel Time (Rs. Per Hour)
41
Years Without Project With Project VOC Saving (Million Rs.)
0 141 314 173
1 147 329 181
2 154 343 189
3 161 359 198
4 168 375 207
5 176 392 216
6 184 409 225
7 192 427 235
8 200 445 245
9 208 464 256
10 217 484 267
11 226 504 278
12 236 525 289
13 245 546 301
14 255 568 313
15 266 592 326
16 276 615 339
17 287 639 352
18 298 664 366
19 310 690 380
20 322 718 395
21 334 745 410
22 347 773 426
23 360 802 442
24 374 833 459 Table 16: Annual Vehicle Travel Time Savings
6.3: Total Project Benefits
Total benefits consisting of savings in vehicle operating costs and savings in travel times are detailed in Table.
42
Years VOC VTT VOC Saving (Million Rs.)
0 141 314 173
1 147 329 181
2 154 343 189
3 161 359 198
4 168 375 207
5 176 392 216
6 184 409 225
7 192 427 235
8 200 445 245
9 208 464 256
10 217 484 267
11 226 504 278
12 236 525 289
13 245 546 301
14 255 568 313
15 266 592 326
16 276 615 339
17 287 639 352
18 298 664 366
19 310 690 380
20 322 718 395
21 334 745 410
22 347 773 426
23 360 802 442
24 374 833 459 Table 17: Total Economic Savings
43
Part 7: Risk and Mitigation
7.1: Risk management
Risk management is a structured and disciplined approach that aligns strategy, processes,
people, technology and knowledge with the purpose of evaluating and managing the
uncertainties of a commercial venture such as this.
7.1.1: Risk management in toll roads
Successful PPP project depends upon fair distribution of risks and responsibilities between
public and private entity, keeping in view each entity's ability to manage them effectively.
The private sector is generally better at managing commercial risks and responsibilities, such
as those associated with construction, operation and financing. The main risks facing this
project include preconstruction, construction, toll revenue, force majeure and political.
7.1.2 Risk responsibilities
The following table shows the different risk categories and the responsible entities for the
construction of the roadway:
Category LDA Private Partner Sponsor risk Environment risk Political risk Force majeure risk Operating risk Design risk Traffic toll risk Completion risk Financial close Private party defaults Competing route Contractual disagreement Below average O&M Hand back Cost overrun risk
Table 18: Risk Responsibilities
44
7.1.2.1. Competing Routes
Government will bear the risk associated with the decrease in traffic due to creation of a
competing route for the period of the concession. For GT Road Expressway, the government
will pay adequate monetary compensation on a monthly basis for the difference between
actual traffic and expected traffic. The expected traffic is taken as the lower of (a) last
electronically counted traffic multiplied with a growth rate, or (b) the traffic count projected
for the year in the traffic model provided in the bid. In case of (a), the growth rate will be
derived form the average of the last three electronically counted traffic counts, or in case the
competing route is built within 3 years of operation, a constant value of 6%. For better
understanding a hypothetical situation is explained as follows:
Assume a competing route is completed at end of Year 6 and the traffic count falls below the
projected traffic in Year 7. In this case the government will pay monetary compensation from
Year 7 till Year 25. The annuity will be calculated separately for all class of vehicles. We
take the example of Class 1 vehicles only.
In Year 7, we only have electronically recorded non-affected data for Years 3-6, so there is
no way of knowing what the non-affected traffic count would have been in Year 7 except
through extrapolation. We have the following electronic vehicle count:
Year 1 2 3 4 5 6 7*
Class 1: Cars/ Jeeps
- - 14,990 15,671 16,334 17,086 16,054*
* Reduced traffic count due to competing route
Table 19: Impact year & growth rate assumption
45
We use the counts to generate growth rates for each year:
Growth Rate - - - 4.54% 4.24% 4.30% ?
We then take the average of the last three years of observed traffic count growth, which
comes to 4.36%. This growth rate is applied to traffic count of Year 6, i.e. 17,086, giving us
an expected traffic count of 17,872.
This expected traffic count is compared to the projected traffic provided in the bid. Assuming
the model submitted provided a fixed growth rate of 5% on a base value of 14,000 for Year 1,
the projected traffic for Year 7 would be 18,761.
Comparing the expected traffic count calculated from observed electronic count and growth
rate with the projected traffic count, the lower of the two will be used to calculate monetary
compensation. In this case it is the former count of 17,872.
Assuming the toll structure indicated a toll of Rs. 40 for Year 7, the monetary compensation
will be (17,872 – 16,054) x 40 = Rs. 72,720 daily, Rs. 2,181,600 monthly, or Rs. 796,284,000
yearly.
Calculation of monetary compensation of subsequent years will similarly be difference of
expected traffic growth (or projected traffic, whichever is lower) and electronic count of
traffic for the affected year. The numbers for the next five years will be as follows:
Year 7 8 9 10 11 12
Traffic Projection (Bid) 18,761 19,699 20,684 21,719 22,805 23,945
[n] 1 2 3 4 5 6
Traffic Compounding Factor (to multiply with Expected
Traffic Count [1])
1.04360 1.0436 1.04362 1.04363 1.04364 1.04365
=1 =1.0436 = 1.0891 = 1.1366 = 1.1861 = 1.2379
Expected Traffic Count [n] 17,872 18,651 19,464 20,313 21,198 22,123
46
7.1.2.2. Competing Routes
Similar to the revenue risk associated with the construction of competing route, the risk of
forced reduction of toll, either through government action or as a result of judicial
intervention, is borne by the government. In such a case the government will provide
monetary compensation in the amount of the difference between the toll rate for the year as
provided in the bid against the reduced or non-escalated toll rates applied to the electronically
counted traffic, or the traffic projection, whichever is lower.
7.1.3: Risk matrix
Lahore Development Authority (LDA) has developed a risk matrix to plot major risks faced
by the government agency and the private partner. The matrix determines likelihood of the
risk and matches it with the impact which gives a score e.g. a risk with low likelihood and
minor impact would score two.
G.T. Road Expressway Heat Map
Lik
elih
ood
Cer
tain
5
Lik
ely
4
Mod
erat
e
3
Unl
ikel
y
2
Rar
e 1
1 2 3 4 5
Insignificant Minor Moderate Major Catastrophic
Table 20: Risk Matrix
47
7.1.4: Risk register
The following is the risk register specifying some of the major risk’s faced in successful
planning of the project with their risk score and mitigation strategies:
Category Risk Implication Likelihood Impact Score Risk Mitigation
Sponsor risk LDA may scrap the
project. | ||||
Rare-Major
Termination payments in-case of LDA
scrapping the project.
(Clause 18.9 / Annexure L)
Environment risk
Adverse impact on surrounding environment.
|| ||||| Unlikely-Moderate
Environment Impact Assessment to identify
all risks in advance.
(Clause 3.3, Clause 25.8)
Political risk
Change in government may put the project in
jeopardy.
||| |||| Moderate-
Major
Termination payments in-case of LDA
scrapping the project.
(Clause 18.9 / Annexure L)
Cost overrun risk
Project cost increases beyond reasonable limits.
|| ||| Unlikely-Moderate
Private Partner to bear complete project costs.
(Clause 8.2.4)
Design risk Over or under design of the
project. || |||
Unlikely-Moderate
Project design to be finalized in mutual
agreement of Concessionaire and
LDA.
(Clause 8.2)
Traffic count
Decrease in minimum number
of traffic in the first year.
|| ||| Unlikely-Moderate
Traffic count as per the Traffic Survey by Private Partner.
(Clause 4.10.1)
(Clause 10.1 / Annexure G)
Financial close
Private partner fails to complete within the specified time
||| |||| Moderate-
Major
Penalty on Financial Bid Bond for delay in completing financial close. (Clause 13.1)
48
Private party defaults
Private partner is unable to continue due to insolvency
||| |||| Moderate-
Major
LDA invokes Step In Clause and pays private
partner 80% of the book value of the project as per the
concession agreement.
(Clause 18.8.3)
Competing route Traffic reduced due
to competing route || ||||
Unlikely-Moderate
LDA would guarantee that no competing route
is built within three kilometres river
segment
(Clause 7.4)
Completion risk
Completion of project is delayed, inconvenience to
citizens.
|| |||| Unlikely-
Major
Penalty clauses for time over run in the
concession agreement.
(Clause 10.10.2)
Below average O&M
Substandard road during O&M period
/ operations are stalled
||| ||| Moderate-Moderate
Operations Bond as per the concession
agreement worth 5% of projected annual toll
revenues.
(Clause 11.4)
Low quality facilities
transferred
Sub standard road and other facilities are transferred to
LDA upon completion of
contract.
||| |||| Moderate-
Major
Transfer Bond as per the concession
agreement before twenty four months of
expiry of contract.
(Clause 19.2)
Force majeure risk
Project is abandoned.
|| ||||| Unlikely-
Major
Force majeure clauses in the concession agreement. Fifty
percent of the cost is compensated by LDA
after revenue adjustments.
(Section 15)
Metro Bus grant usage
Funds allocated for extension of MBS
are misappropriated || |||||
Moderate-Major
Funds are transferred to Escrow Account, usage
is limited to construction of Works
and funds are disbursed after verification of
works by Independent Engineer (Section
13.3)
49
Contractual disagreement
Dispute between LDA and private
partner || ||||
Unlikely-Major
Disputes would be handled through Panel of Experts/ Arbitrators as per the concession
agreement.
(Clause 21.2)
Table 21: Risk Register
50
Annexure
51
Annexure 1: PPP Process
52
Annexure 2: Sensitivity Analysis of Equity and Toll Rate on Equity IRR
Project Equity
Equity IRR 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Project Tolls
5 #NUM! #NUM! 1.32% 1.61% 1.90% 2.18% 2.47% 2.74% 3.02% 3.28% 3.54%
10 7.94% 8.10% 8.24% 8.38% 8.51% 8.63% 8.75% 8.85% 8.95% 9.03% 9.09%
15 12.99% 12.96% 12.93% 12.90% 12.87% 12.83% 12.79% 12.74% 12.68% 12.59% 12.51%
20 17.33% 17.04% 16.78% 16.56% 16.33% 16.13% 15.93% 15.71% 15.51% 15.32% 15.15%
25 21.38% 20.73% 20.19% 19.72% 19.29% 18.88% 18.51% 18.18% 17.88% 17.61% 17.36%
30 25.38% 24.24% 23.33% 22.55% 21.88% 21.32% 20.82% 20.38% 19.99% 19.63% 19.31%
35 29.43% 27.59% 26.23% 25.17% 24.31% 23.58% 22.95% 22.40% 21.92% 21.48% 21.09%
40 33.46% 30.86% 29.06% 27.70% 26.61% 25.72% 24.96% 24.30% 23.72% 23.20% 22.74%
45 37.71% 34.16% 31.85% 30.16% 28.84% 27.76% 26.86% 26.09% 25.42% 24.82% 24.29%
50 42.24% 37.52% 34.63% 32.57% 31.00% 29.74% 28.70% 27.81% 27.04% 26.36% 25.76%
55 47.07% 40.96% 37.40% 34.96% 33.12% 31.67% 30.47% 29.47% 28.60% 27.84% 27.17%
53
Annexure 3: Sensitivity Analysis of Equity and Toll Rate on NPV
Project Equity
Project NPV 7,844,573,491 0% 10% 20% 30% 40%
Project Tolls
5 (2,825,493,899) (2,825,493,899) (2,825,493,899) (2,825,493,899) (2,825,493,899)
10 (421,672,061) (424,435,286) (427,198,511) (430,998,424) (437,427,427)
15 1,906,254,323 1,895,608,443 1,883,786,262 1,871,964,081 1,859,403,865
20 4,173,471,021 4,154,355,522 4,135,240,023 4,115,995,734 4,087,496,762
25 6,386,668,918 6,358,169,946 6,329,670,974 6,298,690,967 6,258,509,354
30 8,571,845,186 8,535,518,622 8,495,337,009 8,444,025,445 8,390,299,914
35 10,732,164,663 10,680,470,273 10,626,744,742 10,573,019,212 10,519,293,681
40 12,863,189,570 12,809,464,040 12,755,738,509 12,702,012,978 12,648,287,448
45 14,992,183,337 14,938,457,806 14,884,732,275 14,831,006,745 14,777,281,214
50 17,121,177,103 17,067,451,573 17,013,726,042 16,960,000,511 16,906,274,981
55 19,250,170,870 19,196,445,339 19,142,719,808 19,088,994,278 19,035,268,747