Kelkar panel ppp niif etc

PPP AND KELKAR COMMITTEE

By: Harveer [email protected]

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HARVEERSIR for GSSCORE

Around 900 PPP projects are in various stages of development across the country

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THE DRAWBACKS WITH PPPIssue of Risk AllocationLack of an Independent Regulator

Lack of Renegotiation toolsFunding RequirementClearances hurdles in project completion

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HARVEERSIR for GSSCOREKELKAR COMMITTEE RECOMMENDATION Revival of a defunct proposal to establish 3P

India. Rational allocation of risks . set up independent regulators for PPP

projects amendment to the Prevention

of Corruption Act (POCA) to clarify the difference between cases of graft and genuine errors in decision-making.

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3 P INDIA 3P India will take over work of PPP Cell of finance ministry

3P India will set weekly targets and have professionals in its fold

It will not have a regulatory role.

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It has rejected the Swiss Challenge model for PPP projects because of lack of transparency.

Small projects should not be built with PPP

Issue Zero Coupon Bonds for easy credit availability.

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Review all MCAs for each sector be reviewed to capture the interests of all participating stakeholders — users, project proponents, concessionaires, lenders and markets

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ROADS: Increase concession period for

BOT projects. Introduce hybrid models, Relax exit norms Dispose pending cases between

developers and NHAI Shift to electronic tolling in time-bound

manner

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PORTSMove from pre-TAMP (tariff authority for major ports) to current-TAMP

Strengthen and accelerate environmental clearance

Provide support infrastructure (including land, reliable access to utilities, dredging, rail, roads) to developer

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RAILWAYTake up simpler projects first to build credibility

Such projects can be brownfield — monetisation of existing stations — or, greenfield —development of new stations

Set up regulatory authority to settle technical issues such as track-access charges

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POWERNot many power projects are under PPP.

But the sector has a far-reaching impact on infrastructure PPPs

Immediately address power sector finances as they are hurting bank loans

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AIRPORTS Prepare a policy that addresses

the expected growth parameters of the sector and promotes PPPs

Concession agreement should stipulate important commercial parameters like return on equity, treatment of land for non-commercial purposes

Develop brownfield and greenfield airports with defined structure, revenue sharing mechanisms

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ROADCAG KelkarInconsistency in adopting carrying capacity/tollable traffic as yardstick for determining the Concession Period by NHAI resulted in fixing higher concession period and higher toll burden on road users Projects were approved despite the known late realization of minimum threshold traffic The Total Project Cost (TPC) worked out by the concessionaires was higher as compared to TPC worked out by the NHAI. In 25 projects, TPC worked out by concessionaire was higher by 50%

In the case of BOT toll projects, focus on projects with longer concession period. NHAI, concessionaire can opt for revenue share on a case to case basis In case of projects that are not viable on BOT toll basis, options to fund through hybrid models, grant of VGF, part annuity, O&M grants, and debt instruments, maybe explored. The concessioning authority may undertake detailed project development activities including demand assessment, soliciting stakeholder views on project structure and financial viability analysis to estimate a shadow bid, which could be used to compare actual bids received

NIIF

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NIIF The Government has established the National

Investment and Infrastructure Fund (NIIF) with the aim to attract investment from both domestic and international sources for infrastructure development in commercially viable projects.

NIIF Limited has been incorporated as a company under the Companies Act, 2013, duly authorized to act as investment manager of National Investment and Infrastructure Fund.

The establishment activities of the NIIF are underway and steps are being taken to operationalize the initiatives with different investors including RUSNANO, Abu Dhabi Investment Authority(ADIA) and Qatar Investment Authority(QIA).

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FUNCTIONS OF NIIF Fund raising through suitable instruments including

off-shore credit enhanced bonds, and attracting anchor investors to participate as partners in NIIF;

Servicing of the investors of NIIF. Considering and approving candidate

companies/institutions/ projects (including state entities) for investments and periodic monitoring of investments.

Investing in the corpus created by Asset Management Companies (AMCs) for investing in private equity.

Preparing a shelf of infrastructure projects and providing advisory services.

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FUNCTIONS…. provides equity / quasi-equity support to those Non

Banking Financial Companies (NBFCs)/Financial Institutions (FIs) that are engaged mainly in infrastructure financing. These institutions will be able to leverage this equity support and provide debt to the projects selected.

Invest in funds engaged mainly in infrastructure sectors and managed by Asset Management Companies (AMCs) for equity / quasi-equity funding of listed / unlisted companies.

provides Equity/ quasi-equity support / debt to projects, to commercially viable projects, both greenfield and brownfield, including stalled projects.

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The proposed NIIF entity will be located in Mumbai and it will be run by a governance council with “world class governance standards.

PROJECT RISK VERSUS FINANCIAL CHALLENGES FOR PUBLIC PRIVATE PARTNERSHIP (PPP)

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HARVEERSIR for GSSCOREHYBRID ANNUITY MODEL FOR HIGHWAY PROJECTS the government will provide 40 per cent of the project cost to the developer to start work while the remaining investment has to be made by the developer.

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PRESENT MODELSPPP Annuity: Project completion, transferred back to the govt.

PPP Toll : High Financial Burden on Private Company

EPC : High Financial Burden on Govt

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Earlier MCAs provides an alternative model in the form of Design, Build, Operate and Transfer (DBOT) where the project is financed only to the extent of a certain percentage of the cost by the private investor.

This investment is recovered through annuity payments to be made by the government/Authority over a specified period commencing from the date of commissioning of the project,

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IN HYBRID MODELhybrid annuity means the first

40% payment is made as fixed amount in five equal installments

whereas the remaining 60% is paid as variable annuity amount after the completion of the project depending upon the value of assets created

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BENEFITSIt gives enough liquidity to the

developer and the financial risk is shared by the government.

While the private partner continues to bear the construction and maintenance risks as in the case of BOT (toll) model, he is required only to partly bear the financing risk.

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stranded road projects worth Rs.25,000 crore.

The government aims to complete construction of 6,325 km of highways in FY16, as against 4,410 km in FY15.

The rate of completion improved to 16 km per day from 12 km per day in FY15. The required rate is 17 km per day in FY16.

Companies such as Isolux Corsán of Spain and I Squared Capital New York are scouting for road assets in India

MARITIME SUMMIT 2016

By : Harveer Singh


MARITIME INDIA SUMMIT 2016 Maritime India Summit 2016 (MIS 2016) is a

maiden flagship initiative of Ministry of Shipping, Government of India.

It provided a unique global platform for investors to explore potential business opportunities in the Indian Maritime Sector.

It showcase about 250 projects with an investment potential of US $6 billion.

It is an attempt to to attract investment and is being partnered by South Korea which is known for its ship-building capacities. /

Harveersir


MIS SHOWCASED Shipbuilding, Ship Repair and Ship Recycling Port Modernization and New Port Development Port-based Industrial Development, Port-based

Smart Cities and Maritime Cluster Development Hinterland Connectivity Projects and Multi-Modal

Logistics Hubs Inland Waterways and Coastal Shipping for Cargo

and Passenger movement Dredging Lighthouse Tourism and Cruise Shipping Renewable Energy Projects in Ports Other Maritime Sector related services (Financing,

Legal, Design etc.)/

Harveersir


/Harveersir


BACKGROUND India has vast coast line of 7500 km

offers vast investment opportunities High logistics costs make Indian exports

uncompetitive. 95 per cent of India's trading by volume

and 70 per cent by value is done through maritime transport.

India has 12 major and 187 non-major ports. Cargo traffic, which recorded 1,052 million metric tonnes (MMT) in 2015, is expected to reach 1,758 MMT by 2017.

/Harveersir


BLUE REVOLUTION It would be an Umbrella program.Envisages Integrated Development and

Management of Fisheries’.The outlay is of Rs. 3000 crore. It will cover inland fisheries,

aquaculture, marine fisheries including deep sea fishing, mari-culture and all activities undertaken by the National Fisheries Development Board (NFDB) towards realizing “Blue Revolution”


SAGARMALA PROJECT A National Perspective Plan (NPP) will

identify projects including integrated development of ports and efficient evacuation to and from hinterland.

National Sagarmala Apex Committee (NSAC) and Sagarmala Coordination & Steering Committee (SCSC) have been constituted.

There is provision for setting up Sagarmala Development Company (SDC) at the state level, for constitution of State Sagarmala Committees in maritime states.


GOVT ANNOUNCEMENTS Government of India plans to invest Rs

70,000 crore (US$ 10.5 billion) in 12 major ports in the next five years under 'Sagarmala' initiative.

Government of India is planning to set up low-cost non-major ports along coastline under the Sagarmala project and has asked all the 12 major ports to accord priority berthing to such vessels and to encourage quicker movement of cargo.

Up to 100 per cent FDI would be allowed under the automatic route for port development projects.

/Harveersir


/Harveersir


ELEMENTS OF SAGARMALA

Development of 10 CER (Coastal Economic Region)

Inward linkages through multiple freight options - rail, land & inland waterways

Infrastructure Upgrade for Major and Minor Ports/

Harveersir

CERInward Linkage

sPort Modernization

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THANK YOU

Date post:	06-Jan-2017
Category:	Economy & Finance
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Kelkar panel ppp niif etc

Economy & Finance