PHYSICAL INFRASTRUCTURE IN INDIA

Presented By:

GROUP - 26

POWER PETROLEUM

RAILWAYS ROADS AVIATIO

N PORTS TELECOM

Stimulus Measures to improve infrastructure to combat economic downturnAllocation for many infrastructure projects in Union Budget 2009-10

PHYSICAL INFRASTRUCTURE IN INDIACurrent Highlights

Vastly under capacity

•It takes Longer to take freight from Delhi to Mumbai than Mumbai to foreign ports.

•Many Large programs, but not one National Plan

•And on and on!

•Up to 2015, goods traffic is expected to rise at 15% /year

•Do we have the roads?

Roads •New Network of Roads and Flyovers connecting with Domestic and International Terminals

Railways •Delhi Metro Railway System connecting the NCR region

Airport •Domestic and International Airport Beautification and Expansion

CWG 2010- Boost to Delhi Infrastructure

Size

Structure

POW

ER

•Majority of Generation, Transmission and Distribution capacities are with either public sector companies or with State Electricity Boards (SEBs) • Private sector participation is increasing especially in Generation and Distribution- Distribution licences for several cities are already with the private sector- Many large generation projects have been planned in the private sector

• Generation capacity of 164 GW (5th in the world); CAGR of 4.6% over the last four years• Low per capita consumption at 606 units; less than half of China•T & D network of 5.7 million circuit km – the 3rd largest in the world

Current Scenario

57%25%

10%3%5%

% of power generation

ThermalHydelGas BasedNuclearOther Renewable

Sector MW %

State 80844 52.5

Central 51867 34

Private 32124 13.5

Total 164835

POW

ER

•Large demand-supply gap: All India average energy shortfall of 7% and peak demand shortfall of 12%

• The implementation of key reforms is likely to foster growth in all segments:Unbundled SEBs; Open Access networks; privatised distribution circles; Tariff reforms

•Opportunities in Generation for:Coal based plants(imported coal); Natural Gas/CNG based turbines; 150 GW Hydel power potential; MRO of old plants; Private/ foreign player entry in NPPs •Opportunities in Transmission network ventures - additional 60,000 circuit km of transmission network expected by 2012 •Opportunities in Distribution through bidding for the privatisation of distribution in thirteen states that have unbundled/corporatised their State Electricity Boards – expected to take place over the next 2-3 years

Total investment opportunity of about US$ 200 billion over a seven year horizon

Future Potential

Positive Outlook

POW

ER

• 100% FDI permitted in Generation, Transmission & Distribution - the Government is keen to draw private investment into the sector •Policy framework in place: Electricity Act 2003 and National Electricity Policy 2005

•Incentives: Income tax holiday for a block of 10 years in the first 15 years of operation; waiver of capital goods import duties on mega power projects (above 1,000 MW generation capacity)

•Independent Regulators: Central Electricity Regulatory Commission for Central PSUs and inter-State issues. Each State has its own Electricity Regulatory Commission.

Policy Initiatives

Major Players currently

PETR

OLE

UM

UpstreamExploration and Production

• ONGC, RIL, Cairn India, OIL

DownstreamRefining and Marketing

• IOCL, BPCL, HPCL, RIL, Essar

Strategic Importance

Foreign Policy

75% Imported

Petroleum Industry Petroleum Sector

Steps to Boost Crude Oil ProductionPE

TRO

LEU

M

NELP•NELP-VIII:36 blocks awarded in 2009•NELP-IX: Bids invited for 34 Blocks for 2011•KG Basin: 80 MMSCMD•Barmer Oil field: 6.5 Bn barrels/day

Overseas Acquisition

•National Oil companies encouraged to acquire oil fields abroad•OVL, IOC-OIL, BPCL-Videocon•OVL 7 blocks; IOC-OIL 3 blocks

Refining CapacityPE

TRO

LEU

M

120 MMTPA

Domestically

Consumed

60 MMTPAExported

180 MMTPARefining Capacity

Year 2010 Year 20120

50

100

150

200

250

300

In MMTPA

PETR

OLE

UM

Grass r

oot refi

neries

by I

OCl,

BPCL a

nd

HPCL at Para

di

p,

Bi

na a

nd

Bhati

nda

Expansion projects at Existing Refineries

Expansion by Reliance and Essar

As

hok Leyla

nd,

Ni

ppon

De

nr

o a

nd S

or

os F

oud e

nteri

ng

Refi

nery

Busi

ness

Capacity Expansion

ROAD

S AN

D H

IGH

WAY

S

The Golden Quadrilateral (GQ-5846 kms of 4 lane highways)

•Highways/Expressways constitute about 66,590 kms (2% of all roads) and carry 40% of the road traffic

•Annual growth projected at 12-15% for passenger traffic, and 15-18% for cargo traffic

•Opportunity or Threat?

Investment in road sector during the Eleventh Plan is projected at $ 78.50 billion

India has an extensive road network of 3.3 million kms - the second largest in the world

Potential

Road development is recognised as essential to sustain India's economic growth

The Government is planning to increase spends on road development substantially with funding already

in place based on a cess on fuel

A Rs.41,200 crores (US $ 5 billion) project plans to lay 6 lane roads over 6,500 kms of National

Highways on the Design Build Finance and Operate (DBFO) basis - in Golden Quadrilateral and other

high traffic stretches.

ROAD

S AN

D H

IGH

WAY

S

Size and Structure

Launch of New Trains

•Izzat Scheme–Uniformly Priced Monthly Season Tickets(MSTs)•Matrabhumi Train Services – Targeted at only Ladies•Yuva Trains – Targeted at unemployed youth

Up gradation of Passenger Amenities

RAIL

WAY

S

•Computerization of Passenger and Freight Services•Development of Adarsh Stations - Basic Facilites like drinking water, toilets•Multi-functional Complexes –shopping, food stalls, restaurants

•World’s Largest Number Of Employees•Third Largest Rail Network in the World•Owned and Controlled by Indian Government – Headed by Mamata Banerjee

Current Scenario

Usage of Bio-Fuel

Establishment of Rail Land Development Authority

Improvement of Financial Health

RAIL

WAY

S

•Largest Consumer of High-Speed Diesel (HSD) currently•Potential for B10 blend – 10% bio-diesel in HSD oil •Plantation of Jatropha curcas on vacant Railway Land

• Utilization of vacant Railway Land and air space• Setting up of Infrastructural Projects - Generate Employment

•New milestone in incremental freight loading this year by carrying 5.70mTonnes•Hiving off Non – Core Activities

Future Potential

Dedicated Freight Corridors

•Investment – Rs. 22,000 crores•Western and Eastern High Density Routes

Privatization of Container Trains

•Monopoly of CONCOR –public sector entity till now•14 applicants for container train operation

Tariff Rationalization

RAIL

WAY

S

• Methodology for indexing the fare structure to line haul costs•Introduction of commercial accounting and information technology systems

National Rail Vikas Yojana

•Strengthening of the golden Quadrilateral to run more long-distance mail•Strengthening of rail connectivity to ports •Development of multi-modal corridors to hinterland

Policy Initiatives

AVIA

TIO

N

In 2004-05, Indian airports handled 60 million passengers and 1.3 million tonnes of cargo

•Passenger traffic grew at over 22% in 2004-05 over 2003-04; Cargo grew at 21.6% over the previous year

100 million passengers p.a. by

2010Cargo to cross 3.3 million tonnes by

2010

•Total 125 airports in India.• 11 International airports.

PORT

S•12 major ports•200 non-major ports

•95% of India’s exports & imports moved by sea

•Traffic estimated to reach 877 million tonnes by 2011-12

18 Billion investment

100% FDI Automatic Route

PPP on BOT basis

100% IT exemption for 10 years

5% of World Exports(2020)

Present StatisticsTE

LECO

M

Total Subscribers (Wireless+Wireline) 671.69 million

Urban Subscribers 452.59 million (67.4%)

Rural Subscribers 219.09 million (32.6%)

Teledensity 56.83

Urban Teledensity 128.20

Rural Teledensity 26.43

Jan/04 Jan/05 Jan/06 Jan/07 Jan/08 Jan/090

50

100

150

200

250

300

350

400

450

33.6952.22

98.77

165.11

261.07

391.76

SUBS

CRIB

ERS

(in m

illio

ns)

Source: trai.gov.in 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-090

5

10

15

20

25

30

35

40

45

50

Reve

nue

(US

billi

on $

)

New Growth Horizons for Telecom service providers

TELE

COM

TELECOM

3G Telecom Services

Mobile Number Portabilit

y

Value added

Services

WiMaxManufacturing

Enterprise Telecom Services

Managed Service

Rural Telephon

y

TELE

COM

MAJOR POLICY INITIATIVES• 100% foreign direct investment

(FDI)• FDI ceiling in telecom services

raised to 74% • Introduction of a unified access

licensing regime for telecom services on a pan-India basis

• Mobile Number Portability.• Bharat Nirman programme. • Bidding for 3G spectrum by

foreign companies.

TARGET SET BY THE GOVERNMENT• 800 million connections by the

year 2012.• 200 million rural subscribers by

2012.• 20 million broadband connections

by 2010.• Broadband coverage for all

secondary & higher secondary schools and public health care centres by the end of year 2010.

• Achieving exports of 10 billion during 11th Five year plan.

• Quadrupling production in 2010.

Sources of funds for infrastructure projects are very much similar to those for a corporate

Sources of Fund

Instruments

Debt Financing

Equity Financing

Institutions

Govt. Institution

s

Banks

Foreign

Investors

Promoters

Governme

nt

Private

Sector

PPP

FIN

ANCI

NG

OF

INFR

ASTR

UCT

URE

•11th Five Year Plan (2007-2012) calls for more than doubling

the financial outlay for infrastructure

•Share of private investment in total to rise from 17% to 30% by 2012

•Key foreign players include 3i, Blackstone, Citigroup, Macquarie

•International funding also comes from ADB, World Bank, etc

•Mismatch of funding period – major hitch

Facts about Infrastructure Financing

Many Infrastructure sectors have consistently featured in the top 10 sectors in terms of FDI fundings

Rank Sector 2010-11

(April- August) Cumulative Inflows

(April ’00 - August ‘10)% age of Total Inflows

(In terms of US$)

1 SERVICES SECTOR 1,260 24,862 21%

2COMPUTER SOFTWARE & HARDWARE

458 10,330 9%

3 TELECOMMUNICATIONS 1,054 9,985 8%

4 HOUSING & REAL ESTATE 539 8,895 7%

5 CONSTRUCTION ACTIVITIES 294 8,347 7%

6 POWER 677 5,305 4%

7 AUTOMOBILE INDUSTRY 114 4,710 4%

8 METALLURGICAL INDUSTRIES 613 3,743 3%

9 PETROLEUM & NATURAL GAS 218 2,883 2%

10 CHEMICALS 146 2,642 2%

Source: Department of Industrial Policy & Promotion Ministry of Commerce and Industry

FDI I

NVE

STM

ENT

IN IN

FRAS

TRU

CTU

RE

Key sources of funds in India are initiatives like PPP and institutes like IFCL

FIN

ANCI

NG

OF

INFR

ASTR

UCT

URE

180 projects undertaken till date Projects undertaken mainly in Roads & transport sector Introduces private sector expertise and cost reducing technology Fast approval through PPPAC

2006 2007 2008 2009 2010 (Till June)

02468

10121416

1.4

3.9

14.4

11.1

7.5

Projects under PPP (in $ billions)

Source: PPP India Website

Public Private Partnerships

Addresses need for long term debt Funds up to 20% of capital costs of project Raises funds, on Govt. guarantees, from domestic & external markets Direct approval for PPP projects

India Infrastructure Finance Company

1.4

2.2

0.1

Private (Non PPP) PPP Public Sector

(in $ billions)Composition of IIFC Funding

Source: PPP India Website

Group - 26

Anubhav AgarwalPradeep TewaniPreethi NatarajanOsama AbdullahSidharth SrninivasanSurbhi Jain