The total project cost estimated will be Rs.2011 crore out of which Rs.327 crore will be for the land acquisition, rehabilitation, resettlement and pre-construction.

The total length of the project will be 103.590 kms.

The project, on completion, will reduce the time and cost of travel for traffic, particularly heavy traffic, plying between Vijayawada – Gundugolanu. It will also increase the employment potential for the local labourers for the project activities.

The main objective of the project is to expedite the improvement of infrastructure in Andhra Pradesh, increase the capacity of Golden Quadrilateral corridor and also to reduce the time and cost of travel for traffic, particularly heavy traffic, plying between Vijayawada- Gundugalanu. The National Highway No.5 is an important link connecting Kolkata to Chennai, which is part of the Golden Quadrilateral Corridor. This will facilitate road users, particularly traffic on Chennai-Kolkata section of Golden Quadrilateral passing through Guntur, Krishna and West Godavari districts and Chennai- Hyderabad and Kolkata – Hyderabad section.

The project is covered in the districts of Guntur, Krishna and West Godavari in Andhra Pradesh.

Background:

Cabinet Committee on Economic Affairs in the meeting held in October 2006 approved six laning of 6500 km of four-lane National Highway comprising 5700 km of Golden Quadrilateral and 800 km of other sections at a cost of Rs.51,210 crore under NHDP Phase V. Of the total investment required, Rs.35,692 crore is expected to come from private sector and the balance Rs.5,518 crore from Government funding for bridging the viability gap and for the cost of land acquisition, utility shifting, consultancy etc. The average cost per km after acceptance of the recommendations of B.K. Chaturvedi Committee by the Government is now Rs.10 crore /km for NHDP Phase-V projects.

Source: pib.nic.in

Japan’s Minister for Land, Infrastructure, Transport and Tourism (MLITT) Takeshi Maeda, during his meeting with the Union Road Transport and Highways Minister C P Joshi here, said the country is keen on executing the project, especially with a Japan-based company being involved in preparing a detailed project report.

Speaking to reporters after the meeting, Joshi said: “We told them (Japan government) that we have a very transparent system, where you have to enter into the bidding process.

If Japan government is interested in taking up the project on government to government (G-G) basis, then you have to discuss it at the higher level.”  The project could be discussed at the Prime Ministerial level, he added.

However, G-to-G negotiations might deprive Indian entrepreneurs the opportunity to participate in the bidding, as projects are straightaway given to a country and would be executed by companies from there.

In the highways sector, 100 per cent foreign direct investment (FDI) is allowed and the Japanese companies can also tie-up with domestic companies to bid for the project, the Minister said. Currently, Egis-Secon, a private company, is preparing the Detailed Project Report (DPR) expected to be ready by March 2012.

“After getting the DPR, the government will decide how to implement the project -whether to go for competitive bidding or adopt any other method,” the minister said.

The expressway, first of its kind in the country, will be built with public-private participation on build-operate-transfer (BOT) basis.

The 100 per cent access-controlled road would cut down travelling time between Bangalore and Chennai to just three hours from the current five to six hours.

As per the proposal, the expressway will have six lanes and vehicles can travel at a speed of 120 km per hour.

The proposed road will run parallel to the existing National Highway–4 and pass through Kolar, Palamaner, Chittur and Ranipet.

Source: deccanherald.com

For a historically capital-starved and infra-deficient nation, we have rightfully been obsessed with asset creation in the public-utility space. Little emphasis has been paid, however, on the maintenance of these assets or the delivery of pre-determined service levels from these assets. Take, for example, our roads and highways. Highway users continue to be a frustrated lot in spite of massive investments in this sector. Waiting-time at toll-plazas, safety aspects, ride quality and haphazard lane-management continue to bedevil even newly constructed roads.

Highway operators must eventually get prepared for regulatory raps as well as individual and “class action” litigation for failing to provide desired levels of service. They will have to wake up to the reality that toll cannot be charged merely for the privilege of being allowed to use a particular stretch of road. The “purchase consideration” inherent in charging a toll has to come bundled with the commitment of a smooth ride at a designated average speed, with full consideration of safety and highway amenities. Failure to ensure this should attract penalties and damages.

In this cauldron of frustrations and rising aspirations, it is interesting to note that the responsibility for operations, maintenance and tolling (OMT) is gradually shifting from the developer or the contractor group to independent and professional OMT service providers. Simultaneously, the focus is also shifting from merely reducing capital expenditure to optimising life-cycle cost, as well as, providing an accountable delivery of services.

My friend and colleague, Vivek Rastogi, who has a deep knowledge and insight on these issues, likes to draw out lessons from Brazil’s experience.

Brazil, with emerging-economy demographics much like India, has faced similar challenges in highway operations. Brazil embarked on its public-private partnership (PPP) highway development programme a decade ago. Its journey in developing national highways on a build-operate-transfer (BOT) basis has been equally successful. The operations and management (O&M) for these highways started the same way as where India is today — a toll revenue leakage as high as 25 per cent, below par patrolling and unsatisfactory maintenance and traffic management.

What is remarkable is that in the last 10 years Brazil has improved the O&M performance to reach close to world standards. There are four main reasons for this success:

Source: business-standard.com

The Cabinet Committee on Infrastructure cleared widening of Kiratpur-Ner Chowk section in Himachal Pradesh at a cost of Rs 2,356.20 crore, six-laning of Vijaywada -Gundugolanu section in Andhra Pradesh worth Rs 2,011 crore and Rs 1,021.16 crore scheme for four-laning of Uttar Pradesh/Haryana border- Panchkula section in Haryana.

“The main objective of the project is to expedite the improvement of infrastructure in Himachal Pradesh and also in reducing the time and cost of travel for traffic, particularly heavy traffic, plying between Kiratpur and Ner Chowk,” an official statment said about the Himanchal Pradesh project.

The widening of 84.38 km stretch on National Highway (NH) 21 in state will be implemented under NHDP phase III on design, build, finance, operate and transfer (DBFOT) basis in BOT toll mode of delivery, it said adding of the entire cost, Rs 537.37 crore will be spent on land acquisition, rehabilitation, etc.

The project, on completion, will reduce the time and cost of travel for traffic, particularly heavy traffic, plying between Kiratpur and Ner Chowk. It will also increase the employment potential for the local labourers for the project.

NH 21 is not only an important link connecting national capital and tourist destination of Manali in Himachal Pradesh but is a major link to Leh in Ladakh.

About Andhra Pradesh project comprising 103.59 km, the statement said it will be implemented under NHDP Phase V on DBFOT basis in BOT (Toll) mode of delivery.

“The total project cost estimated will be Rs 2,011 crore out of which Rs 327 crore will be for the land acquisition, rehabilitation, resettlement and pre-construction,” it said.

It added, “The main objective of the project is to … increase the capacity of Golden Quadrilateral (GQ) corridor and also to reduce the time and cost of travel for traffic, particularly heavy traffic between Vijayawada- Gundugalanu.”

NH 5 is an important link connecting Kolkata to Chennai, which is part of the GQ Corridor. This will facilitate road users, particularly traffic on Chennai-Kolkata section of GQ passing through Guntur, Krishna and West Godavari districts and Chennai- Hyderabad and Kolkata – Hyderabad sections.

Out of the total cost of the 104.7-km Haryana project on NH 73 under NHDP Phase-III on DBFOT basis in BOT (Toll) mode, Rs 86.23 crore will be for land acquisition, rehabilitation, resettlement and pre-construction.

The project, on completion, will reduce the time and cost of travel for traffic, particularly heavy traffic, plying between UP/Haryana border – Yamunanagar – Saha – Bawala – Panchkula. It will also increase the employment potential for the local labourers for the project activities.

Source: articles.economictimes.indiatimes.com

Calcutta, Jan. 4: The Mamata Banerjee government is working on a plan to levy user charges on vehicles plying on the 14 state highways in Bengal.

If the initiative is allowed to proceed unhindered, it will be a departure for a government that has been allergic to levying or increasing user charges and the first instance of decisive action from within to fight the financial crisis.

The success of the project will depend on a larger issue that is vexing Bengal: industrialisation. The more the industrial traffic, the more the state stands to earn as toll tax.

As the first step, the government is clearing the decks to set up a company under the public works department to look after all the 14 state highways, which in turn will get private players to maintain the roads.

“The company will invite private parties to maintain the roads under a build-operate-transfer (BOT) model. They will be allowed to charge toll tax to recover their investments,” said A.R. Bardhan, the state PWD secretary.

At present, the PWD spends around Rs 200 crore a year on all the 14 state highways. The state government doesn’t collect any toll tax from these highways.

The National Highways Authority of India (NHAI), however, follows the private-agency model to maintain national highways across the country. For example, the NHAI has engaged three private agencies to maintain NH2 between Howrah and Asansol. The three agencies levy toll tax at three points on the stretch — at Dankuni, Palsit and Asansol.

Senior officials at Writers’ Buildings told The Telegraph that the highway decision had been taken to ease some of the financial burden on the state government.

“The PWD spends one-third of its budgetary allocation, which comes to around Rs 200 crore, on maintaining the state highways. The pathetic state of the roads suggests that the department is facing trouble in maintaining the roads because of paucity of funds,” an official said.

As many of these highways will require re-laying, which calls for fresh investments, the government, according to the official, is banking on private players.

States like Maharashtra are also following a similar model for better maintenance and expansion of the road infrastructure.

“For example, Maharashtra has already developed a state road development corporation through which private agencies can play a role. Private agencies maintain state highways and roads and construct bridges and culverts. They are allowed to collect toll tax to recover their investments,” said a PWD official.

He added that Gujarat and Madhya Pradesh had also brought in private players for road maintenance.

The move to collect user charge on state highways has come after months of refusal by the chief minister to tax water and raise power tariff.

“It is a good sign… If she can collect user charges for use of roads, then why not levy water tax or raise power tariff?” asked a city industrialist.

Estimates drawn up by the power department reveal that the combined losses of the power utilities in this financial year will be around Rs 2,400 crore.

“We see a ray of hope in the government’s decision on levying toll tax. If the chief minister allows us to raise power tariff, our losses will come down. The question is whether she will accept the economic logic of raising power tariff,” said a senior power department official.

According to the PWD proposal, the West Bengal State Construction Corporation Ltd — with the chief minister as the chairperson and the PWD secretary as the managing director — will be set up to look after the maintenance of all the state highways.

“The company will be allowed to take independent decisions. If its board of directors approves a decision, it will not require approval from the finance department. It will expedite the projects,” Bardhan said.

PWD officials said it had been decided that a formula would be drawn up along the lines of that of NHAI to determine toll tax rates.

“We are expecting the chief minister to clear the file as soon as possible as it has been drawn up after consulting her. We will start the process of setting up the company and inviting private players very soon,” said a PWD official.

The proposal may look fetching on paper, but implementing it will mean persuading Bengal to kick some of its habits.

“The state has to ensure proper security for the agencies that will collect toll tax. The NHAI had engaged a couple of agencies for maintenance of NH31 but when the agencies tried to collect the tax in North Dinajpur, local people chased them away and dismantled the toll tax plaza,” said a PWD official.

Infrastructure analysts pointed out that drawing private players might not be easy as the companies conduct viability studies before committing investment. “It has been observed that private companies lap up high-demand roads. Unless industrial activities go up in Bengal, getting private players will be difficult,” said an infrastructure finance analyst.

PWD officials said that of the 14 state highways, only five to six have significant industrial traffic, largely driven by natural factors such as coal, stone quarries and clay.

Source: telegraphindia.com

The corporation has started the construction of two 105-feet-long FoBs, which will connect Sahibabad to Vasundhara and Dabur Crossing to Vaishali on NH-58e stretch, on a build-operate-transfer (BOT) basis. The FOBs, to be built at Rs 4 crore, are expected to be completed in two months.

However, PWD NH division officials maintain that no such work can be undertaken on BOT basis without a prior permission from the ministry of road transport and highways.

“We can’t allow them to proceed with the BOT work and put up posters on FoBs. Their structural safety should be certified,” said Ravi Dutt Kumar, executive engineer, PWD (NH division).

The department officials have even forwarded a complaint to the Indirapuram police, asking them to lodge an FIR against the agency carrying out the construction activity.

On the other hand, GMC officials claim that the PWD had been apprised about the construction in August 2010 and the civic body would proceed with the work at any cost.

“The FoBs fall under our jurisdiction. The construction is being carried out in larger public interest as the two points are congested and pose a threat to pedestrians. The Municipal Corporation Act allows us to undertake such work,” said AK Singh, executive engineer, GMC.

It is not the first time that such construction is being carried out on highway stretches passing through the city.

The Ghaziabad Development Authority (GDA) had recently carried out the widening of GT Road from Mohan Nagar to Dilshad Garden border. It has also completed the first phase of widening six to eight lanes from Dabur Crossing to Mohan Nagar.

Further, the work of widening six to eight lanes of GT Road from Mohan Nagar to new bus stand is on. GDA is also undertaking the construction of third bridge over Hindon river near GT Road. Sources said no prior permission had been obtained for the previous projects.

Source: hindustantimes.com

IRB Infrastructure Developers Ltd has announced that the National Highways Authority of India (“NHAI”) had issued Letter of Award (“LOA”) on January 05, 2010 to the Company for the Project of Four Laning of Goa/ Karnataka Border to Panaji – Goa stretch of NH-4A from Km 84.000 to Km 153.070 in the State of Goa on BOT Toll Basis on DBFO pattern (the “Project”). The Company had subsequently incorporated Special Purpose Vehicle (SPV) i.e. IRB Goa Tollway Pvt. Ltd. – wholly-owned Subsidiaries of the Company for implementation of this Project. IRB Goa Tollway Pvt. Ltd. had executed Concession agreement with the NHAI in February 2010 and subsequently the Project had also achieved financial closure in March 2010. Construction period of the Project was 30 months.

However, NHAI could not provide necessary Land for implementation of the Project. Considering substantial delay in providing the Land, the Company had removed the Project from its Consolidated Order Book as on September 30, 2011 as a measure of Good Corporate Governance and accordingly modified Order book was represented in the presentation uploaded on the Company’s website.

Now, the Company have received a formal letter from NHAI informing the Company, termination of this concession agreement of the Project due to their inability to provide necessary Land for implementation of the Project. In this regard, IRB Goa Tollway Pvt. Ltd. will claim compensation as per Termination payment provisions of the Concession Agreement.

Source: indiainfoline.com

]]> http://www.indiantollways.com/2011/12/27/nhai-terminates-goa-contract-to-irb-infrastructure/feed/ 0 http://www.indiantollways.com/2011/12/26/opportunity-in-gloom/ http://www.indiantollways.com/2011/12/26/opportunity-in-gloom/#comments Mon, 26 Dec 2011 10:44:27 +0000 ITW Editor http://www.indiantollways.com/?p=1669 IL&FS Transportation Networks (ITNL) has seen its stock gradually slide from over Rs 360 last September to its new low (intra-day) of Rs 144 on Wednesday, thanks to weak sentiments in the global and domestic markets.

While it is already India’s largest player in road build-operate-transfer (BOT) projects, IL&FS Transportation Network last week added another feather in its cap when it announced the plan of its China foray. Analysts feel the move is unlikely to benefit it in the medium term, but they remain bullish on its Indian business.

Elara Capital Analyst Abhinav Bhandari says: “We are positive on the company due to its leadership position in the domestic road vertical, strong parentage of IL&FS, partnerships and bilateral contracts with state governments and relatively diversified and de-risked business portfolio.” Notably, stock valuations are now attractive, and, with interest rate cycle at its peak, things should improve in the times to come.

At Rs 152, the stock trades at one-year forward (FY13) PE of 6.3 times, below its historic band of 7.5-13.5 times, as well as 11.2 times for its closest peer and India’s second-largest BOT player, IRB Infrastructures. Analysts expect an upside of over 50 per cent, given the average sum-of-the-parts (SOTP) of Rs 270.

Towards the Dragon
ITNL has been selected the preferred bidder for 49 per cent stake in Yu He Expressway Company by Chongqing Expressway Group. The project is a four-lane expressway of 58 km, connecting the Chongqing city with Hechuan County, with toll rights till June 2032. The acquisition worth $160 million (49 per cent stake), or around Rs 850 crore, is expected to be funded by debt.

According to a Sharekhan report, the expressway is significant because it connects to a major industrial belt in the Chongqing region, allowing the Chinese company to enjoy a consistent traffic flow through the year and offering a decent growth prospect. Though the project has been operational for the last 10 years and is profitable, the gains for ITNL may be limited in the medium term.

According to ITNL Managing Director K Ramchand, revenue growth will be marginal in the first few years, while addition to net profit will be less than 5 per cent. But it will substantially improve after the next 10 years (total term of the debt).

PINC Research Analyst Vinod Nair adds: “The relatively small size of the project, non-strategic fit (Chinese market not being a long-term policy of ITNL) and the requirement to fund would limit any near-term benefits.”

Stable core business
In India, ITNL’s 22 projects (about 9,458 lane km) is well divided in terms of region, clients (state and central) and revenues model (toll and annuity).

Amid a weakening economy, the company has been selective in bidding for NHAI projects for the past several quarters. The guidance for it was $1 billion worth of order wins in FY12. But it has not won any major order from NHAI so far in FY12. It has bagged only three state government projects worth Rs 870 crore.

However, this is not seen as a concern either by ITNL or analysts. “The cautious bidding would pay off in the long run,” notes the Sharekhan report. Besides, it has enough work, given the order book of Rs 8,900 crore, about four times its FY11 construction revenues.

The management has expressed its intention of continuing its conservative bidding strategy, as it feels competition will continue to remain high. Moreover, the bidding pipeline remains strong at around Rs 68,500 crore (9,500km).

High on debt
For now, high interest cost, given the consolidated debt-to-equity ratio (2.7 times) in the second quarter of FY12 is a concern. In the September quarter, operating profits rose 37 per cent (Rs 383 crore) on 42 per cent rise in income (Rs 1,282 crore), but a 72 per surge in interest costs (Rs 169 crore) restricted gross profit (profit before depreciation and tax) growth to 17 per cent (Rs 214 crore).

The management expects the debt burden to remain at higher levels on the back of increased execution of 12 under-construction projects that could keep interest costs high in the interim.

Positively, rates are peaking. Edelweiss Securities Analyst Parvez Akhtar Qazi believes that the company is one the best plays on peaking interest rates. “A 100-basis-point decline in interest rates increases our SOTP estimates of ITNL by 13 per cent,” he points out.

The company also plans to complete the second BOT project before time instead of 24 months. “This will get us the extra revenue stream by way of toll and tax free revenue stream in the SPV,” he added.

Q: How much are you bidding for in terms of future orders? What will be the breakup of the geographical division?

A: We have got projects in North Delhi, Madhya Pradesh, Gujarat and Arunachal. These are the four-five larger areas where we are concentrating. We have got projects down south in Bangalore and Chennai as well.

Q: Is there any reason to concentrate more on the north or has it always been like that? Where is execution the easiest?

A: In the North, before the Commonwealth Games, we were one of the few companies who delivered most of our flyovers before the Commonwealth Games. We have built up a brand equity towards the North for the infra projects and a lot of projects are happening.

The company has also qualified itself and made bid for the underground metro, which is a high tech fish area in Delhi for Delhi Metro Corporation, along with international joint venture partner.

Q: Could you give us an update on the debt on the books? Will you all be pairing down anything in FY12?

A: The debt on the book is comfortable. It’s around 1:1 ratio. We are not over feared as yet. We are taking selective projects, where most of the projects are going at prices that are like premiums.

We have bagged projects with good IRRs. We are keeping an eye on the EBITDA and then bagging the projects, instead of just going behind the project.

Here is the edited transcript of his interview to CNBC-TV18. Also watch the accompanying videos.

Q: Could you take us through a couple of these exactions concerns that lots of infrastructure companies are facing at this point in time? How is the situation on the ground looking for you all?

A: There are execution challenges with the other infrastructure companies, who have over bagged the orders and this is the reason they are not able to execute.

The good news in the case of Valecha Engineering is that we have been able to commission our first BOT road project in Madhya Pradesh and Indore 11 months ahead of time. This is a record in the road building exercise that the country has embarked upon.

Q: Coming to the other two BOT projects that you bagged about six to seven months back; you were looking to get financial closure, particularly for the third one. Are there any kinds of delays or stress on that account?

A: All the BOT projects have got the financial closure. The recent one in Gujarat (Bhuj to Bhachau) of nearly Rs 500 crore has also received its financial closure last week. This project will also now kick-start in a faster anvil as such.

Q: Concentrate a bit on your Q2 numbers, your net sales were down 19% for the quarter on a year-on-year basis, but you improved in the margins to 11% versus 7% on a year-on-year basis. What sort of operational efficiencies are you undergoing or implementing at this point in time? What is the outlook for the remaining part of the fiscal in terms of margins?

A: We developed a strategy a year back to have 25% sales out of BOT projects and 25% sales out of budgeted projects. In the budgeted projects, we have a mixed client base and mixed geographical base so that the risk is divided.

The current stress of the management with the team at the project side is to implement the projects ahead of time for the recent projects and concentrate on improving the efficiency by quick delivery and turnaround.

Q: Even for BOT project two and three, will you execute it at a faster clip? When are they likely to get commissioned?

A: The project’s shelf life is 24 months. We are targeting the second BOT project instead of 24 months again like the first BOT project, which will obviously get us the extra revenue stream by way of toll and tax free revenue stream in the SPV. The concentration will be to complete the project ahead of time.

Q: How much are you bidding for in terms of future orders? What will be the breakup of the geographical division?

A: We have got projects in North Delhi, Madhya Pradesh, Gujarat and Arunachal. These are the four-five larger areas where we are concentrating. We have got projects down south in Bangalore and Chennai as well.

Q: Is there any reason to concentrate more on the north or has it always been like that? Where is execution the easiest?

A: In the North, before the Commonwealth Games, we were one of the few companies who delivered most of our flyovers before the Commonwealth Games. We have built up a brand equity towards the North for the infra projects and a lot of projects are happening.

The company has also qualified itself and made bid for the underground metro, which is a high tech fish area in Delhi for Delhi Metro Corporation, along with international joint venture partner.

Q: Could you give us an update on the debt on the books? Will you all be pairing down anything in FY12?

A: The debt on the book is comfortable. It’s around 1:1 ratio. We are not over feared as yet. We are taking selective projects, where most of the projects are going at prices that are like premiums.

We have bagged projects with good IRRs. We are keeping an eye on the EBITDA and then bagging the projects, instead of just going behind the project.

Source: moneycontrol.com

Supreme Infrastructure India has completed EPC for its first marine project, Kasheli Bridge and commenced tolling operations. The company added orders worth Rs212.30 crore along with a bridge project for Rs124 crore where it is declared L1.
Vikas Sharma, whole-time director, Supreme Infrastructure, said “We are proud to report completion of our first Marine project Kasheli bridge at Thane. This project has added significant capabilities to our engineering team, which can now undertake complex and larger marine projects. Also, our efforts of expanding our reach in the northern territory is starting to show positive signs. We have also won orders from our existing customers and it is a mark of the good quality work we continue to deliver for our clients and a testimony to our work ethos.”
It has also added a road BOT project in Maharashtra. Further, the company is in advance dialogue with the strategic investors to explore possible investments in its BOT portfolio. The EPC work in the Marine Segment involves building a six lane flyover on old Thane-Nashik highway for a length of 1.2 Km on the Thane Creek for Rs301 core.
This project was awarded to Supreme in 2009 by the Sangam group and has been completed in 36 months. The project involved complex engineering skills to cast pilling with depths ranging from 15–25 meters. This project is an engineering marvel and a reflection of our in house capabilities.
Supreme holds 10 per cent equity stake in the Kasheli Bridge SPV through Kalyan Sangam Infratech. This SPV was involved in the construction of the Kasheli Bridge on a BOT basis. The construction of Kasheli Bridge is completed and tolling operations have commenced.
Construction of Villas and premium apartments have been awarded by BPTP Group, Gurgaon. This is a state-of-the-art project being developed in Gurgaon. Order size is Rs71 crore and is expected to be executed by March 2014.
The group also has project awarded by Ramprastha Group for construction and development of Multi storied tower ‘SKYZ’, at Gurgaon. The scope of work order involves construction of nine towers of 19 stories each. Order size is Rs141.30 crore, which is expected to be competed by March 2014.
The company has been declared L1 by MMRDA for the design and construction of flyovers at Rajnoli Junction and at Mankoli Junction on NH-3 at Thane Nashik road. Order size is Rs124 crore.

Source: constructionweekonline.in