IN THE 2G scam proceedings before the Supreme Court and the trial court, the Central Bureau of Investigation (CBI) has been variously caricatured by both the complainants and the accused as the Congress Bureau of Investigation, the Confused Bureau of Investigation and Central Bureau of Imagination. It’s an undeniable fact that when it comes to bringing to book the high and mighty, the track record of the country’s so-called premier investigating agency has been dismal. The Bofors scam, the Babri Masjid demolition case and the anti-Sikh riots cases are only some of the sensitive cases that ran aground because of the CBI’s biased and subservient approach towards ruling politicians.

“Will the case be over in seven years? Seven months down the line we have seen paper book after paper book being filed, rolled-up chargesheets filed, witness after witness being called. This has been going on without a trial for months together now,” a Bench comprising Justice GS Singhvi and Justice HL Dattu quipped on 14 October while hearing the bail application of the 2G scam accused. The court wanted to know from the CBI how long it planned to continue with the investigation.

Many believe — perhaps justifiably so — that but for the sustained judicial activism of the SC Bench comprising Justice Singhvi and Justice AK Ganguly, former telecom minister A Raja would have still been in Sanchar Bhawan while Swan Telecom Director Vinod Goenka, Unitech Managing Director Sanjay Chandra and DB Realty promoter Shahid Balwa would have still been jet-setting.

But what about those cases of graft that are not being monitored by the court? After all, telecom is not the only ministry afflicted by the malaise of corruption. The Ministry of Road Transport and Highways, particularly its apex agency for development of national highways — the National Highways Authority of India (NHAI) — has been mired in a spate of allegations of corruption and crony capitalism. Because of rampant corruption, poor planning, inefficiency in execution, cost overruns and inordinate project delays, the very objective behind creating NHAI, which was to take national highways to global standards and thus work as an engine for economic development, has been defeated. In a statement issued on 18 October, the Associated Chambers of Commerce and Industry (ASSOCHAM) estimated the economic loss due to bad condition of roads at over Rs 30,000 crore per year. In August 2010, the road transport ministry told the Rajya Sabha that out of 441 projects undertaken by the NHAI since its inception, 299 (67.80 percent) had been delayed, resulting in massive cost and time overruns.

THE ROT within the  NHAI first came to the fore when, during the NDA rule in 2002, a NHAI engineer, Satyendra Dubey (later murdered under mysterious circumstances) wrote to then prime minister Atal Bihari Vajpayee blowing the whistle on the rampant corruption and crony capitalism prevailing in the ministry.vOver the past three years, the CBI has received over 100 complaints, some anonymous and some official, alleging a deeprooted nexus between officials in the NHAI and the road transport ministry and various private developers. It is alleged that crores of rupees are routinely paid as kickbacks to procure highway development contracts, manipulate bid documents, rig the tendering process, inflate project costs, avoid penalty for delays in execution, shoddy construction and for the officers to look the other way while private firms collect toll much before the highways got completed. Each complaint spoke about a specific project running into hundreds of crores and gave details about the irregularities and graft involved.

But out of over 100 complaints of corruption received, all of which were about the projects awarded during Kamal Nath and his predecessor TR Baalu’s tenure, the agency in its wisdom saw merit in just three. It registered cases of regular offence and then carried out raids and made arrests. Two of these cases were registered in December 2009, and one was registered in May 2010. But shockingly, in none of these three cases has the CBI so far filed even a single chargesheet.

Ironically, in two out of the three cases, the 2G Supreme Court Bench judge Justice Singhvi’s younger brother SS Singhvi was named as the main accused. It was alleged that Singhvi, while he was posted as chief general manager of NHAI’s Chennai regional office, entered into a conspiracy with two private infrastructure companies — Indu- Navayuga Infra Pvt Ltd and Madhucon Projects Ltd — and by abusing his official position allowed the companies to collect massive amount of toll even though road construction was far from complete. The CBI had alleged that Singhvi’s act allowed the contractor to make illegal gains and put the lives of those using the incomplete highway at risk. Irregularities in toll collection constitute a big area of corruption in the management of national highways.

But surprisingly, over a year after the FIRs were registered against Singhvi, the CBI in February this year filed a wishywashy closure report in one out of the two cases, saying the FIRwas a ‘mistake of fact’. The report, a copy of which is available with TEHELKA, is full of baffling non sequiturs. It concludes by saying that the agency could not find any ‘mala fide’ intention in Singhvi’s conduct but at the same time recommended “suitable action” to be taken against him by the NHAI for showing undue haste in granting sanctions to the contractor. The agency didn’t spell out what it meant by ‘suitable action’. However, while closing the case, the agency curiously chose to keep the second case open. The modus operandi of the scam alleged in both cases was exactly the same. Till date, the CBI has not concluded its investigation in the second case.

THE THIRD case registered by the CBI against the NHAI is even more curious. It involved the alleged rigging of the Rs 2,500 crore tender to build a 174 km highway connecting Nagpur in Maharashtra to Betul in Madhya Pradesh. Sometime in the month of April 2010 while the tendering process for the project was still on, the CBI got a specific tip-off that the bid was going to be rigged in favour of a company named Oriental Structural Engineers Pvt Ltd (OSEPL). The CBI conducted a preliminary inquiry and found enough merit in the allegations. The agency, after seeking necessary approvals from the Ministry of Home Affairs, started tapping the telephone lines of a few top company executives and two senior NHAI officials. A few weeks of tapping yielded incriminating evidence of the builder-official nexus. As informed by the complainant, all other bidders except OSEPL were eliminated at different stages of the tendering process before the tender was finally awarded to it.

A tale of Two roads
• Multi-crore scams involving two highways in which the builder-official nexus has been exposed.
• The CBI has acted on three complaints and registered cases of regular offence. Two were registered in December 2009 and the third in May 2010. So far, the agency has not filed a single chargesheet.
• SS Singhvi, brother of Supreme Court judge GS Singhvi, is the main accused in two of the three cases. Singhvi was posted as chief general manager of NHAI’s Chennai regional office at the time
• It was alleged that as CGM, Singhvi had entered into a conspiracy with two private infrastructure companies — Indu Navayuga Infra Pvt Ltd and Madhucon Projects Ltd — wherein he abused his official position and allowed the companies to collect toll even though the work was miles from completion.
• The NHAI had entered into a concession agreement with Hyderabad-based Madhucon Projects Ltd for construction and maintenance of the highway from Karur to Dindigul and improvement and maintenance of the road from the start of Karur Bypass to the end of the Bypass on NH-7 in Tamil Nadu on Build, Operate and Transfer (BOT) basis.
• According to the agreement, the company was entitled to collect toll for 20 years after completing the work by 16 April 2009. Misusing his official position, Singhvi allowed the contractor to start collecting the toll, which was about Rs 1.5 lakh per day, at a time when the work on the highways was far from complete.
• The third scam in which the NHAI is involved is the alleged rigging of the Rs 2,500 crore tender to build a 174 km highway connecting Nagpur in Maharashtra to Betul in Madhya Pradesh.
• Acting on a tip-off, the CBI found that the tender process for the project was rigged in favour of Oriental Structural Engineers Pvt Ltd (OSEPL). The agency found that all bidders except OSEPL were eliminated at different stages of the tendering process.
• A year-and-a-half later, the CBI has still not concluded its investigation. The NHAI awarded the Rs 2,500 crore contract to OSEPL.
• Only five out of 17 firms made it past the pre-bid technical qualification stage. According to the CBI, tenders of four companies, including Larsen & Toubro were rejected on frivolous grounds.

In the initial stages at least, the agency showed firm intent and moved fast to register an FIR. On 26 May, the agency carried out simultaneous raids at the offices of NHAI and OSEPL. Two senior NHAI officials and two top executives, including OSEPL’s managing director, were arrested and sent to jail. According to an official press release, the sleuths had found a whopping Rs 2.87 crore in cash at the homes of the two NHAI officials. But more than a year-and-a-half later, the CBI has not yet concluded its investigation nor has it filed its first chargesheet. As a result, the accused are out on bail, going about their usual business. More shockingly, despite the FIR in which the CBI had laid down the modus regisoperandi in great detail, and the subsequent raids and arrests, the NHAI went ahead and awarded the Rs 2,500 crore contract to the same company with which it is alleged to have entered into a conspiracy. When the award was contracted, Kamal Nath was the surface transport minister.

If you thought this wasn’t bad enough, consider the following. A few months after the FIR was registered, the CBI wrote several letters to then Cabinet secretary KM Chandrashekhar and the road transport ministry seeking sanction to investigate the then member (Projects) SI Patel, as the investigation had yielded prima facie evidence suggesting Patel’s involvement in the alleged rigged tender. Patel was an IAS officer of the additional secretary level and thus prior permission from the ministry was required before the CBI could move against him. But Nath steadfastly refused the CBI the necessary sanction, frustrating its attempts to go to the depth of the conspiracy. A helpless CBI then wrote to the government to at least transfer Patel from NHAI. Last November, Patel was repatriated to his parent cadre of Gujarat.

Repeated attempts to seek an official response from the office of NHAI Chairman AK Upadhyay and also the authority’s official spokesperson Vishnu Darbari proved to be futile. A senior NHAI official, speaking on condition of anonymity, justified the decision to give the contract to OSEPL, saying that signing the concession agreement was perfectly logical since the firm was the lowest bidder and a letter of award had already been issued when the CBI registered the case.

According to a contractor, at every stage of a project, one has to bribe officials. From getting monthly bills cleared to clearances of quality control to completion certificates, the contractor has to give a certain percentage of the money cleared to officers in charge. At least 3-5 percent of the cost of every project is paid in bribes, they allege. In some cases, the contractors pay kickbacks to the NHAI engineers and overseeing consultants and inflate the project cost many times over. The officers pass the cost overruns on some pretext or the other.

The NHAI has often been rapped by the CAG for irregularities in project execution and cost overruns. Three years ago, the CAG estimated a revenue loss of Rs 384.25 crore to the exchequer because of the irregularities in two major national highways. The same CAG report also blamed the NHAI for faulty preparation of detailed project reports (DPR) in many projects, resulting in cost overruns. But unlike its report on the 2G spectrum sale, which led to a political storm, the CAG’s adverse observations about NHAI’s poor functioning and losses estimated in different projects have caught little attention.

The CBI had alleged that Singhvi allowed the contractor to make illegal gains and put the lives of those using the highway at risk

Many in the industry see the past five years of UPA as one of policy stalemate within the road transport ministry. “I’d not like to comment on individual ministers but the fact is that there is rampant corruption in the NHAI,” says a senior Planning Commission official on condition of anonymity. “The system of checks and balances has clearly failed to tackle this menace. The CBI also has proved to be completely ineffective in nailing the culprits. Either they don’t understand the modus operandi or they just lack the capabilities to investigate sophisticated and institutionalised corruption like that which prevails in the NHAI.”

Or is it the case that the agency is afraid that if these investigations are taken to their logical conclusion, many more heads in the UPA may roll? People who are aware of the details of the investigation told TEHELKA that like the Niira Radia tapes, the tapped phone conversations between top NHAI officials and owners of OSEPL carry incriminating statements which, if placed in the public domain, are bound to embarrass an already scam-ridden government. Whatever its reasons, the fact is that with no court or special body to monitor it in NHAI-related matters, the CBI seems to be unwilling to carry the ball.

Reacting to the charges, CBI spokesperson Dharini Mishra told TEHELKA, “The CBI had registered two cases against SS Singhvi on 9 November 2009. The allegations in both cases were similar, which was abuse of official position to cause pecuniary advantage to private persons. In the case pertaining to Madhucon, the CBI filed a closure report u/s 173 (2) (i) of CrPC and it was accepted by the court. The second case is still under investigation.” When contacted, Singhvi refused to comment.

CBI files closure report in one case against Singhvi, keeps the second case open

On 10 December 2009, the CBI carried out simultaneous day-long raids at Singhvi’s offices and premises in three cities — Chennai, Delhi and Jaipur.

The CBI told the media that it was a multi-crore scam and that they had seized several documents and details of assets worth over Rs 1 crore from the possession of Singhvi and his family. The CBI disclosed that the searches at Singhvi’s posh Shyam Nagar residence had yielded documents of a 400-sq yard plot at Jagdamba Nagar on Ajmer Road purchased for Rs 25 lakh, besides Rs 4.70 lakh in cash and gold weighing around 500g. “A large number of bundles containing NHAI office files were found stacked in the basement. We have also seized passbooks of 30 bank accounts and details of two bank lockers of Singhvi in Chennai. A large quantity of Indian and foreign liquor was also recovered,” a CBI spokesperson had told the media.

Raids were also carried out at the residence and office premises of private contractors at Samayapuram, Aravakurichi and Tiruchendur in Tamil Nadu and in some places in Andhra Pradesh. The CBI also claimed to have seized several highend mobile phones and laptops, which they claimed were allegedly gifted to Singhvi by private contractors. Consequently, the agency registered two cases against Singhvi, one for the alleged favours to a private firm named Madhucon and another with regard to Indu Navayuga Infra Pvt Ltd. On various occasions in the past, Madhucon had been issued official warnings by the NHAI for shoddy and delayed work. But on each occasion the company managed to evade penalties or blacklisting.

In the case involving Singhvi registered by the CBI, the crux of the matter is as follows: The NHAI had entered into a concession agreement dated 20 April 2006 with Hyderabad-based Madhucon Projects Ltd for (i) design, engineering, construction, development, finance, operation and maintenance of the stretch from Karur Bypass to Dindigul (68 km) and (ii) improvement, operation and maintenance of the 13 km Karur Bypass on NH-7 in Tamil Nadu on Build, Operate and Transfer (BOT) basis. The validity of the agreement was for a period of 20 years, which means the company was entitled to collect toll for 20 years after completing the contracted work. But Singhvi, by misusing his position, the FIR alleged, allowed the contractor to start collecting the toll, which was about Rs 1.5 lakh per day, at a time when work on these highways was far from complete.

Over a year after the FIRs were registered, the CBI filed the closure report in this case. The report was first filed before the principal sessions judge, Chennai, on 24 February this year. In March, the judge returned the report and asked the investigating officer (IO) P Rama Mohana Rao, a deputy SP with the CBI, to submit the report along with statements of witnesses recorded by the agency. On 29 March, the IO resubmitted the report along with the witnesses’ statements. On the same day, the judge passed the order saying, “Reasons stated therein are convincing. Hence the FIR is closed.” However, a quick read of the report reveals glaring gaps in the CBI’s investigation. The report, running into over 70 pages, leaves several key questions unanswered and the suspicious circumstances surrounding the act unexplained. The judge clearly erred by not asking the agency pertinent questions seeking explanations about the glaring lacunae in its investigation and closed the case in unjustifiable haste. The CBI’s final report made the following arguments justifying the closure of the case:

THE INDEPENDENT consultant in-charge of the project, a foreign firm named Egis Bceom International, issued the provisional certificate of completion after which the contractor started collecting the toll (The NHAI has independent consultants monitoring projects).

The certificate was issued after due consultation with and approval from the NHAI. At the time of issuing the provisional certificate, the work on the highway was not over but it was still issued in accordance with a provision provided in the agreement by which the contractor could be given permission to collect toll if most of the work was over and what remained was only minor work that would not hamper the commercial use of the highway.

Singhvi only passed on the request proposal from the consultant to issue the provisional certificate to NHAI headquarters and accordingly permission came from officials in Delhi and not from Singhvi.

Since the FIR alleged that Singhvi had given permission to collect toll and this could not be substantiated by the investigation, the agency sought to close the case.

However, the CBI failed to give any justification for the following irregularities in the entire process of giving the permission of toll collection, which even in its extremely limp report it has found to be improper:

The deadline for the contracted work was 16 April 2009. But as late as August 2009, the work was far from over. On 25 August, the NHAI regional office, Chennai wrote a letter to the project director, NHAI, Karur, and sought the reasons for delay in project completion. Subsequently, on 1 and 2 October, discussions over delay were held in the office of the project director. This shows that at least till these dates, Singhvi was unhappy with the progress of construction.

From 17 August 2009, the contractor was requesting the consultant for issuance of provisional completion certificate. A consultant is required to issue such certificate only after he is satisfied that the work on the main highway is complete and it could be thrown open for vehicular movement. Such a certificate is issued after due consultation with and permission from the NHAI. But the proposal is initiated by the consultant and first vetted by the regional CGM, who in this case was Singhvi, who in turn forwarded it to the NHAI headquarters in Delhi. Clearly, it’s the consultant and CGM who held the key for the issuance of any such certificate as the NHAI headquarters would go by the advice of its CGM. In this case, the consultant was a foreign firm and the person in charge was a foreign national, Ian Pragnell. Despite repeated requests from the contractor, Pragnell refused to initiate any such proposal.

However, when on 1 October 2009, Pragnell went on leave and his place was taken by his deputy Viswanatha Rao, the latter initiated the proposal for provisional completion certificate hitherto denied by Pragnell. Rao sent the proposal to NHAI Project Director M Thangamani. It was received by the project director on the same day, who, for his part, did not waste another day in forwarding it to Singhvi. Along with this proposal, a list of both work pending on the main highway and some minor work was annexed. As per rules, such a proposal could only be moved if the main carriageway is ready for use. But Singhvi overlooked this fact and forwarded the proposal to NHAI, Delhi, with an assurance that all pending work on the main carriageway would be completed by 20 October. The proposal was duly approved and permission to collect toll granted.

In the meantime, Pragnell came back from leave and shot off a letter dated 12 October saying that the acting team leader’s move to initiate the proposal for provisional certificate was unjustified. He said that upon his return, he visited the site and found many parts of work far from complete. He also said that the assurance given by his deputy in his absence that all pending work would be completed by 20 October was unrealistic. But the CBI in its closure report has claimed that this letter, both the fax and posted copy, were received by Thangamani, not by Singhvi’s office. The CBI has not bothered to nail Singhvi on the fact that even if Pragnell’s letter did not reach him, surely the project director would have informed Singhvi.

The contractor started collecting the toll from 5 November 2009, but failed to finish the work on time. The consultant recommended the imposition of a total penalty of Rs 5.95 crore for the delay. At the time the CBI filed the closure report, the NHAI had not realised the penalty.

From the above-mentioned facts, which are part of the CBI’s own closure report, it’s quite clear that the agency has left gaping holes in its own investigation. Besides, the report does not even talk about the 30 bank passbooks, the papers related to various properties owned by Singhvi, the NHAI files recovered from his residence in Jaipur, the expensive mobile phones and liquor bottles which the CBI claimed it recovered during the raids. It’s also silent on the other case in which a similar modus operandi of illegally allowing the contractor to collect the toll was alleged.

A senior NHAI official speaking on condition of anonymity told TEHELKA that toll collection is a mega scam within the NHAI. “Every day, the government loses at least Rs 1 crore to private contractors by way of illegal tolling,” he says.

The agency taps into phones, carries out raids and arrests, Seizes crores of rupees of cash but finally fails to file a chargesheet

On 26 May 2010, the CBI arrested two senior NHAI officials — a Chief General Manager named SK Nirmal and a General Manager, Nitin Jain — and two senior executives from OSEPL, including its Managing Director KS Bakshi. The arrests were made after extensive raids at the homes and offices of all the accused. All four were produced before a designated CBI court in Delhi following which the court sent them to CBI custody for five days. The accused were subjected to sustained interrogation and were later sent to judicial custody. They remained in jail for over 50 days before being granted bail. In fact, the accused managed to secure the bail because of the CBI’s inability to file the chargesheet within the stipulated 60 days of the arrest.

TEHELKA found that as many as 17 firms had participated at the pre-bid technical qualification stage. But only the following five firms made to the final stage of the bid:
1) SEL-GDCL-GKC Consortium
2) Oriental Structural Engineers Pvt Ltd – Continental Engines Ltd
3) Shapoorji Pallonji & Co Ltd
4) IL&FS Transportation Networks Ltd
5) Soma Enterprises Ltd

The CBI FIR, a copy of which is available with TEHELKA, says that Nirmal and Jain rejected the offer of four companies, including Larsen & Toubro, at the prequalifying stage on frivolous grounds. It further says that in order to eliminate potential competitors, both got issued a new circular No. 54/2010 on 2 April 2010 specifying that only those applications would be considered that were submitted with original documents and thereby eliminated four bidders — Valecha Engineers, Nagarjuna Construction Company, Transstroy and Reliance Infrastructure. “During the processing of the present tender, the ground for disqualification was submission of scanned documents but during the same period, the scanned documents of Transstroy were accepted at Request for Proposal stage in a different tender by the same two officers,” the FIR alleged. It concluded by saying that the two NHAI officers “used to part with key confidential and vital details of the tender process and documents and facilitated the calculation of annuity by applying financial parameters on the upper side so that the firm can fetch maximum financial benefits and subsequently awarded the contract to OSEPL.”

Now, a year-and-a-half later, the CBI is yet to conclude its investigation. The CBI spokesperson failed to respond on the status of the case at the time of going to press. On the other hand, VC Verma, Director, OSEPL, told TEHELKA that though the project was still with them, the construction work had not yet commenced because of lack of environmental clearance.

A mix of corruption, inefficiency and red-tapism is crippling our roadways. There is an urgent need to give some of our collective time and attention — that is devoted by the media, courts and constitutional bodies — to issues other than the 2G scam.

Source : www.tehelka.com

Source: chinadaily.com.cn

PINC Research is bullish on Madhucon Projects and has recommended buy rating on the stock with a target of Rs 109 in its October 3, 2011 research report.

Phase I power project to be synchronized: Phase I power project of 300MW of the 1,920MW at Nellore, AP is likely to be synchronized in a month’s time. MPL has arrangement with PTC for 100% of coal supply from 70% earlier for phase I and for phase II, PTC will supply 50% of the coal requirement.

Rate revised upward to Rs1.45/unit: The conversion rate for PTC power contract has been increased to Rs1.45/unit for Phase I and Rs1.50/unit for Phase II from earlier rate of Rs1.25/unit for phase I. This is largely due to delay in plant completion and rationalization of cost.

Dilution on card; looking at Rs16-22bn for MTHL: Madhucon is looking for dilution in Madhucon Toll Highway (MTHL) & Simhapuri Energy Pvt. Ltd. (SEL) and is actively scouting for private equity deals. The company’s internal valuation for MTHL is ranging from Rs16-22bn and for SEL is Rs30bn (including phase III).

L1 in Vijayawada-Machilipatnam road project: The company is L1 in Vijayawada-Machilipatnam project on DBFOT toll basis. The project involves four laning 63km (258 lane km) of existing section on NH9.

Orderbook at Rs62.7bn; 3.7x FY11 revenue: Orderbook continues to be strong at Rs62.7bn (3.7x FY11 revenue), largely due to internal orders of road and power. Excluding Andhra Pradesh irrigation project of Rs13bn, book to bill ratio stands at 2.9x FY11 revenue.

“We revise our target price to Rs109 from earlier Rs141 due to a) increase in cost of equity for BOT road and power phase I projects to bring it inline with the current market risk, resultantly we have raised cost of equity to 15% from 13%. b) Earlier we had valued mining project at one time equity investment i.e. Rs410mn (Rs5 per share), now we wait till the logistical issue is resolved. c) The core EPC business earnings have been revised downward by 4.1% and 16.7% for FY12E and FY13E due to higher interest cost factored at 11.5%, now the total debt in MPL stands at Rs7.5bn (1.1x D/E FY11) and is likely to increase to 1.3x by FY12 end. We maintain our ‘BUY’ recommendation,” says PINC Research report.

Attachments : MadhuconProjects_PINC_031011.pdf

Source: moneycontrol.com

The Transport Department has floated a summary to the chief minister Sindh regarding the CNG buses and a host of transport sector projects. Subsequently, a high-level meeting was held at Sindh Secretariat to deliberate on these issues in detail and take decisions.

About CNG bus project, the meeting was informed that this project was taken up at a cost of Rs 5,000 million under the federal government-funded scheme for 10 mega cities including Karachi, Hyderabad and Sukkur of the Sindh province. The meeting was told that since the funds had been released for the purpose of purchasing buses, the operators of CNG buses be entertained as per the approved credit policy.

Informed sources said that the Transport Department wanted to take over the project implementation unit for launching the CNG bus scheme in true spirit and in line with the other provinces.

The meeting was informed that the Karachi Mass Transit Project was being managed by the CDGK but the Sindh Transport Department was never involved or consulted in any aspect of the project. The participants were told that since the CDGK now stands abolished, it would be advisable that this important project concerning major transport infrastructure issues of Karachi should be entrusted to the Transport Department.

Regarding the shifting of oil terminals from Shirin Jinnah Colony to Zulfikarabad on National Highway, the meeting was informed that the Sindh government had decided on June 30, 2008 to establish truck terminals at three gateways i.e. Super Highway, National Highway and RCD Highway in order to reform and promote an integrated and sustainable modernization of the trucking sector through efficient management of road freight sector. It was decided to entrust two out of three terminals to the Transport Department which was directed to make a request for the land allotment to Member (Land Utilization), Board of Revenue.

Subsequently, a committee constituted by the chief minister for resolving the transport-related problems held a meeting on July 27 and decided that in pursuance of the orders passed by the Supreme Court of Pakistan in suo moto case (No. 10-K) the oil terminal having modern facilities should be established at Zulfikarabad.

The committee also supported the proposals of the Transport Department contained in the summary that was submitted to the chief minister.

The Transport Department had proposed that in order to establish the facility for trucks, buses and tankers on 250 acres at two separate sites, it should be allowed to commence construction activity at Zulfikarabad and Hub River Road at the cost of Rs 313 million. However, the land could be insufficient for the purpose and the committee may also consider this aspect in view of the increasing number of oil tankers.

It was suggested in the summary that 200 acres land on each site may be allotted to the Transport Department along with the funds of Rs 150 million for each site for land levelling/earth filling and providing electricity, water, sewerage and roads etc. The sheds and other facilities will be arranged by the stake holders on BOT basis.

Regarding the construction of truck terminal at Hawksbay, the meeting was informed that 500 acres land was proposed in the year 2003 for the establishment of truck terminal. Although the payment challans for 150 acres land were issued, the establishment of the terminal could not materialize.

This matter was also referred to the said committee which decided that the terminals should be established on BOT basis under public/private partnership. It was also decided that such terminals should be established/administered by the Transport Department following the disbandment of the CDGK. The committee supported the allotment of land to Transport Department free of cost for the construction of the said terminals.

About the conversion of two-stroke rickshaws into four-stroke/CNG-dedicated vehicles, it was told that the Supreme Court had directed in its order of June 30, 2009 that “we would make it clear to concerned authorities that they should not adopt a procedure/measures which will render rickshaw drivers unemployed because they have to support their families”.

In compliance with the above orders, the chief secretary held a high-level meeting on October 12, 2009 wherein it was decided that in order to convert 500 two-stroke rickshaws of not beyond five years old a subsidy of Rs 30,000 would be given per rickshaw under a pilot project. The said decision of the meeting, however, could not be implemented as the schemes were held up owing to the devastating floods of last year.

The committee decided to move a summary on the subject to the chief minister for approval as well as preparing and submitting PC-I for the allocation of funds.

With regard to paying compensation for damaged/burnt vehicles, the meeting was informed that this mater has been taken up by the Home Department and it was under process with the Relief Commissioner. The transport associations had been approaching the Transport Department for the compensation of the losses that they sustained during the last one-and-a-half years.

Informed sources said that Chief Secretary Sindh Raja Muhammad Abbas had recently directed DCO Karachi Syed Muhammad Hussain to present a detailed report on these matters.

Source: http://www.thenews.com.pk

Summary Indian Toll Ways

Source: http://news.in.msn.com

NCC posted moderate set of numbers for 1QFY2012. The company is facing headwinds like 1) increasing debt levels; 2) overall slowdown in order booking; and 3) delays in financial closure for its power plant. However, owing to its attractive valuations and diversified order book with exposure to most growth sectors, we maintain our Buy view on NCC.
Disappointing numbers, as expected: The company reported top-line growth of 5.1% yoy to Rs.1,141.5cr (Rs.1,086.5cr), which was in-line with our expectation of Rs.1,169.5cr. On the operating front, the company’s margin was marginally ahead of our estimate at 10.2% (9.7%). The company continues to reel under pressure on the earnings front on account of subdued top-line growth and burgeoning interest costs. The bottom line came in at Rs.23.3cr (Rs.41.4cr), which was again pretty much in-line with our estimate of Rs.25.3cr.
Outlook and valuation: The current o/s order book of NCC stands at Rs.16,189cr, flat qoq, with order inflow of Rs.1,349cr for 1QFY2012. Going ahead, we believe the order inflow would be driven by EPC work of its own power plant. However, earnings would continue to reel under pressure due to higher interest cost on the back of higher debt requirements to fund its investments in the power project and on potential winning of road BOT projects. We have downgraded the P/E multiple for the stock (from 10x earlier to 8x currently) in light of increased debt levels, gloomy macro environment and pressure on earnings growth in the near to medium term. However, at the current price, the stock is trading at attractive valuations (3.9x FY2013E earnings adjusted for its investments and subsidiaries) and at 0.5x FY2013E on P/BV basis (standalone). Hence, we maintain our Buy view on the stock with a revised target price of Rs.82.

Execution slows down once again
For 1QFY2012, NCC’s numbers were in-line with our estimates but were lower than street expectations. The company posted yoy growth of 5.1% on the top-line front at Rs.1,141.5cr (Rs.1,086.5cr), which was in-line with our expectation of Rs.1,169.5cr and street expectation of Rs.1,193.5cr. Muted revenue performance was due to lower order booking during the year and delayed payments from clients.
On the order booking front, the company faced a slowdown. The company bagged orders of mere Rs.1,349cr during the quarter. Going ahead, we believe the order inflow would be driven by EPC work of its own power plant.\

Net margin under severe pressure due to higher interest cost and subdued top-line growth
On the operating front, the company’s margin was marginally ahead of our estimates at 10.2% (9.7%). The company continues to reel under pressure on the earnings front on account of subdued top-line growth and burgeoning interest costs. The bottom line came in at Rs.23.3cr (Rs.41.4cr), which was again pretty much in-line with our estimate of Rs.25.3cr but was lower than street’s expectation of Rs.28.4cr.

Order book analysis
NCC’s order book, which stands at Rs.16,189cr (3.2x FY2011 revenue) as of 1QFY2012, is spread across nine verticals and the major contributors include the building, water and power segments. Going ahead, management expects the road, building and captive power segments to gather momentum and add significantly to the order book.

Change in estimates
Going ahead, we expect NCC’s interest cost to increase on the back of higher debt requirements to fund its investments in the power project and on potential winning of road BOT projects. Therefore, this will significantly impact the company’s bottom-line growth, given the limited cushion from top-line growth.

Outlook and valuation
The current o/s order book of NCC stands at Rs.16,189cr, flat qoq, with order inflow of Rs.1,349cr for 1QFY2012. Going ahead, we believe order inflow would be driven by EPC work of its own power plant. However, earnings would continue to reel under pressure due to higher interest cost on the back of higher debt requirements to fund its investments in the power project and on potential winning of road BOT projects.
We have downgraded the P/E multiple for the stock (from 10x earlier to 8x currently) in light of increased debt levels, gloomy macro environment and pressure on earnings growth in the near to medium term. However, at the current price, the stock is trading at attractive valuations (3.9x FY2013E earnings adjusted for its investments and subsidiaries) and at 0.5x FY2013E on P/BV basis (standalone). Hence, we maintain our Buy view on the stock with a revised target  price of Rs.82.
We have valued NCC on an SOTP basis with a target price of Rs.82/share by assigning 8x FY2013E earnings (standalone). The company’s real estate venture has been valued on P/B basis and its BOT assets have been valued on DCF basis. Our target price implies an upside of ~50.8% from current levels. Hence, we maintain our Buy view on the stock with a revised target price of Rs.82.

Source: stockmarketsreview.com

It was a scheduled item for presentation but by the time it was tabled, it elicited a near gloomy embrace. Not one of the five ACN governors and one deputy governor present showed beyond a passing interest in the high speed rail project, designed to revolutionalise transportation link between the Western and Midwestern states of Nigeria.

The occasion was the retreat organised for Action Congress of Nigeria (ACN) governors in Benin City recently. Present were the host, Comrade Adams Oshiomhole, Governors Babatunde Fashola of Lagos,  Senator Abiola Ajimobi of Oyo, Dr. Kayode Fayemi of Ekiti, Ibikunle Amosun of Ogun and Mrs. Grace Laoye-Tomori, deputy governor of Osun State.

Chaired by former Governor of Ekiti State, Otunba Niyi Adebayo, the retreat also had in attendance National Chairman of ACN, Chief Bisi Akande, Vice Chairman, South South, Pastor Ize Iyamu, National Publicity Secretary, Alhaji Lai Mohammed and other chieftains of the party.

However, the noticeable lack of the anticipated enthusiastic response may have been due in part to the unimpressive manner the presentation was conducted. Done by representatives of proposers of the project, Hammcobtb Engineering, trading in Nigeria as Hammco Engineering Works Limited, it was largely marred by projector failure and microphone malfunction. Some of those who responded to the idea even mistook it for the planned Coastal Highway from Lagos to Calabar, which is also expected to have a railway line.

But “THE GREAT WESTERN” high speed rail project is one project that demands deep reflection not only by the governors of the old Western Nigeria but by the federal government.

The Western and Southern parts of Nigeria constitute a major movement area in Nigeria as a hub of sea, air and land transportation.  Major agricultural and commercial activities originate and flow through this region and as the economic nerve centre of the nation, efficient and free flow of people and produce is a prerequisite for both economic and political development.

Interestingly, past governments, both in the Western part and the nation generally have paid lip-service to transforming the various sectors of the economy. Empty promises from the governments; negligence and neglect of infrastructure; corruption and decadence have characterised our national life. The result has been loss of hope, backwardness of the region and hunger and poverty in the midst of plenty.

This is compounded by the fact that existing transport system within this region has been inadequate. The poor infrastructure has also proven to be unable to support rapid socio-economic expansion, thus limiting the movement of people and farm produce to market locations within the region.

With an under-achieving transportation network, characterised by bad stretches, insufficient road networks, a poorly developed water ways, an inefficient air transport system coupled with moribund rail lines, there is the utmost need for a modern and efficient high speed rail transportation system to enhance long-term growth of other developmental processes like power generation and distribution.

Designed as a loop within the western part of the country, the high speed rail project will  cover a distance of 800 kilometres through major industrial and commercial centres. It would also accommodate growth potentials with expansion into new arteries as well as extension into other regions of the country.  Expectedly, it will facilitate major industrialisation of the area. It will also improve transportation of agricultural produce and create immediate political awareness for further emancipation of the people.

So why really did the governors not show much interest in the presentation?  Could it be that they were scared by the cost?

According to Hammcobtb Engineering, it had put together a team of consultants to oversee the design, construction specification and implement the fast rail route. An initial evaluation, they said, had been made, potential technical partners identified and necessary contacts made on the project. The average cost of the high speed rail system covering a distance of 800 kilometres in a loop within the terrain of the South West is put at about $57 billion with a completion time of 156 weeks.

This cost, as high as it may appear, is not expected to be borne by the respective governments alone or even at all.  The encouragement of public-private partnership in various forms and scales seem to be a key policy in financing all types of transport infrastructure. This will ease the burden of maintaining and expanding transportation facilities which has simply grown too great to be borne solely by tax-payers and government.

The rail project, therefore, will be funded through a public-private initiative, which presupposes that the project when completed will be run on a commercially viable basis through private sector investors. This should guarantee timely completion, efficient management of the rail system, and uninterrupted pay-back of project cost.

The involvement of the various governments may be limited to expressing interest in writing  which should enable Hammcobtb Engineering bring in foreign investors; assistance in obtaining necessary permits from the federal government; release of right of way and the execution of a Board of Trustees (BOT) agreement for the project.

In view of the great prospect of the project, the governments of the South West should give the proposal its due consideration and lend their weight as a measure of commitment via a letter of expression of interest which should facilitate Hammcobtb‘s  further negotiations with “international parties already identified for the project”.

According to the engineering company, it has “relationship with fund providers from South Africa and Canada who have indicated firm interest in funding this project”.

Hammcobtb‘s proposal should be revisited by a technical committee set up by the governors concerned to study and properly advise them on the viability and its overall benefit not only to the states of the West but to the nation as a whole.

The high speed rail service with a speed of about 250 kilometres an hour is expected to open up the rural areas for easy access for development as well as aid and sustain all other developmental reforms in the region by the present visionary leaders of the western part of the country.

The creation of a safe, efficient and affordable transport system will increase the quality of life of the people.  Such a project is bound to decongest the cities as most of those who work in Lagos, Ibadan and other cities and towns within the region would prefer to live in their villages or other towns far away and commute to the cities to work.

Our highways would, therefore, be decongested of the heavy vehicular movement presently being experienced particularly in Lagos.  These are generally the needs of the people and any government which can identify and meet the most pressing needs of its populace is guaranteed continuous support.  Meeting the needs of the people is an insurance policy for any government to stay in power.

There is no doubt, the governors of the South West are visionary and have a burning passion to take their states to a higher level and make the region a pacesetter once again.  This is one project which should help them achieve a higher quality of life for the people and return the region to the glorious days of yore

Source: thenationonlineng.net