R-Infra may buy troubled road projects

The ride is getting bumpy for many roads developers. But Reliance Infra is making hay out of the current tough environment. Months after it announced that it was looking at distressed road assets in the market.

The ride is getting bumpy for many roads developers. But Reliance Infra is making hay out of the current tough environment. Months after it announced that it was looking at distressed road assets in the market, NDTV has learnt that it is in talks with several players including IVRCL, Madhucon Projects and SREI Infrastructure all of who are looking to sell stake in some of their existing projects.

While Reliance Infrastructure hasn’t pinned down on any particular asset as yet, a buyout could happen in the next 1-2 months.

This will be in Tamil Nadu and will have synergies with the company’s existing projects in the state.

It may be eyeing 400 KM of road projects, including IVRCL’s Salem to Kumarapalayam highway and Madhucon’s Madurai to Tuticorin highway.

While the existing developers, many of whom bid for these projects very aggressively aren’t able to keep them viable, R-Infra hopes it can cut interest costs and bring in other efficiencies.

Meanwhile the company is also looking to go global.

It plans to bid for a BOT project in Vietnam and has expressed its interest in a project in Turkey as well but going international could be a challenge as its efforts to make inroads in Sri Lanka & Nepal have still not take taken off.

Source: http://profit.ndtv.com

Choked at home, Reliance Infrastructure looks for projects overseas

BANGALORE: Reliance Infrastructure is evaluating projects in Vietnam, Turkey, Oman and Nepal as it seeks to build a portfolio of $1.5 billion in two years and expand its footprint beyond India, where analysts say cut-throat competition and land acquisition problems are thwarting projects.

The company, part of the Anil Dhirubhai Ambani Group (ADAG), sees an internal rate of return of 20% from projects, which it aims to execute quickly, a senior company official who did not want to be identified, said.

“There are issues related to land acquisition and environmental clearances which delays projects in India making it unviable. Also the construction period is over five years here against two years overseas,” said a senior official from Reliance Infrastructure’s Road division.

Reliance has stated it is looking at five government road projects in Vietnam under the build, operate and transfer (BOT) model and is preparing to file expressions of interest (EoI) for it. The company is also evaluating, operate-maintain and toll road projects in Turkey, which will help it earn a revenue ofRs 4,000 crore annually.

With orders, especially from the central government, diminishing in the infrastructure sector, the company — which is also executing Mumbai’s Worli-Haji Ali sea link project — is looking at state roads and highways projects in the range of Rs 500-1,000 crore across the country.

“The bidding has been very aggressive with as many as 30-40 infrastructure companies bidding for the same projects. We do not want to dilute our return and portfolio value and RInfra will only choose projects which are high-density traffic corridors and offer 18-20% return,” said the official.

Recently, companies such as GMR Infrastructure, L&T Infrastructure Development Projects and IRB Infrastructure had quoted a premium of over Rs 300 crore for national highway projects. Currently, bids from as many as 30-40 infrastructure companies, most of whom have bid for multiple projects, are awaiting progress. As many as 60 road projects by the NHAI, worth around Rs 40,000 crore, are stuck in clearances with the Planning Commission. In FY12, NHAI has awarded 3,300 km of projects and will award 4,200 km by December 2011.

“Land hassles, high interest rates, adverse currency movement, low ordering environment and intense competition for the few projects that are available are several problems that companies in the India construction and infrastructure space are facing. The private sector’s confidence to invest in capacity creation remains low and that both public and private capex are likely to take longer to recover this time,” Morgan Stanley said in a report.

Separately, Reliance is also in talks to acquire national highway road projects in Tamil Nadu, Gujarat and Karnataka worthRs 2,000 crore. “We are looking at building our portfolio through secondary market and are evaluating some assets. The project should be viable and make healthy return for us,” said the Reliance official.

Reliance Infrastructure has emerged as the largest concessionaire of NHAI and currently has 11 road projects totalling 1,000 km valued at aroundRs 12,000 crore under various stages of execution. Six projects would become revenue operational by March, 2012, while four have already started generating revenues.

These projects include sixlaning of the NH 4 between Pune and Satara of length 140 km in Maharashtra, six-laning of NH 7 between Hosur and Krishnagiri of length 60 km in Tamil Nadu, six-laning of NH 2 between Delhi and Agra of length 180 km in Haryana and Uttar Pradesh. The 10 road projects are expected to be fully-commissioned by 2014 and will generate a revenue of Rs 1,200-1,400 crore annually.

“The company is also looking to bid for mega highway projects upward of Rs 2,000 crore and expects a 10-12% increase in traffic growth annually,” he said. RInfra has 25 infrastructure projects totallingRs 40,000 crore, including these 10 projects under different stage of execution. The company had posted a net profit of Rs 362 crore in the quarter ended September 30, 2011. On Friday, the firm’s stock closed up 1.78% at Rs 413 on BSE.

Source: http://articles.economictimes.indiatimes.com

Reliance Infra’s Delhi-Agra road upgrade still in cul-de-sac

Reliance Infrastructure’s Rs1,928 crore national highway upgrade project between Delhi and Agra has been stuck over clearance from the Ministry of Environment and Forests (MoEF) for more than a year now – a development that is likely to lead to cost escalation in the project.

The 180 km project spanning Haryana and Uttar Pradesh is part of the Phase Five of the National Highways Development Programme, which envisages expansion to six-laning of 6,500 km of highway network.

The phase assumes significance as upgrade of the entire golden quadrilateral (5,846 km) to six-lane standards is a part of it.

Reliance Infrastructure bagged the project from the National Highways Authority of India (NHAI) in May 2010. The company, however, has still not been able to start construction on the road.

The project is being developed on a build, operate and transfer (BoT), toll basis. Analysts, on conditions of anonymity, peg the cost escalation at round 10% as of now.

NHAI, meanwhile, has said that the issue will be resolved in the next one month. Explaining the matter, a NHAI official said, “The clearance involves an area where a toll plaza will be coming up. The clearances happen in two stages. In the first stage, the terms of references are approved by the Union environment ministry. In this project, the MoEF has approved the terms of references four months back.”

In the second stage, public hearing takes place. It is here that the matter is stuck for Reliance Infrastructure. “The public hearing has been completed in Uttar Pradesh. In Haryana, the hearing is scheduled for October 13. Once that is done, the report will be submitted to the MoEF,” said the official.

The company has a portfolio of 11 road projects spanning 970 km, worth Rs12,000 crore. Of these, at least seven will become operational by the end of the current financial year.

Source: dnaindia.com

TWO-LANING OF NHS ACROSS THE COUNTRY

There is no proposal of two-laning of all single-lane NHs across the country on BOT basis, which are not covered under approved phases of NHDP. However, NHDP-Phase-IV, involving upgradation of NHs to two-lane standards with paved shoulders primarily on BOT basis, is yet to be approved by the Government.

The Eleventh Five Year Plan (2007-12) endorsed by the National Development Council (NDC) during its meeting held on 19.12.2007 recommended that the targets for stretches other than NHDP have to be prioritised according to their importance to the national economy so that the available resources are not spread thinly among competing projects. The major targets for non-NHDP components include:

i. Accelerated efforts to bring NHs network to a minimum of two-lane standard within the next ten years and four-laning small segments of non-NHDP stretches.

ii. Removing existing deficiencies, like inadequate capacity, insufficient pavement thickness, etc. in the road network by strengthening the National Highway network/improving riding quality.

The condition of the National Highways (NHs) is monitored on regular basis. Further, the development and maintenance of NHs is a continuous process to keep them in traffic worthy conditions and are taken up as per the availability of funds, traffic intensity and inter-se priority.

This information was given by the Minister of State for Shipping, Road Transport and Highways, Shri K.H. Muniyappa in a written reply in the Rajya Sabha today.

Source: pib.nic.in

Mumbai sea link banks on ultra-high traffic flows

Reliance Energy has quoted a concession period that has taken even MSRDC by surprise.

The Reliance Energy-led consortium’s ambitious bid, which helped it emerge the preferred bidder for the Rs 6,000-crore Mumbai Trans Harbour Link, has set a new performance benchmark in the infrastructure business.

The consortium has offered to build the 22-km six-lane bridge, which will connect Sewri and Nhava Sheva (see map), by 2013, recover the costs from revenues and hand it back to the nodal agency, the Maharashtra State Road Development Corporation (MSRDC), in just nine years and 11 months.

In technical parlance, this is known as the concession period.

To put this in context, the Mukesh Ambani-controlled Sea King Infrastructure, which was the only other bidder, quoted a concession period of 75 years.

Significantly, in 2004, MSRDC itself estimated a 35-year concession period for the sea link project. For the Mumbai-Pune expressway, the period was 30 years.

Indeed, Parvez Umrigar, managing director of Gammon, said his construction engineering company had decided to opt out of the sea link project because of the “frightening equation of risk and return”. Umrigar declined, however, to comment on the Reliance Energy bid.

So what made the Anil Ambani-controlled Reliance Energy quote a concession period that has taken even MSRDC by surprise?

Reliance Energy declined to comment on the issue.

In its 2004 study, the MSRDC had projected a traffic of 50,000 passenger car units (PCUs) a day when the bridge was completed.

But back-of-the-envelope calculations show just to break even, the Reliance Energy consortium would need a minimum of 1,09,589 PCUs a day paying an average toll of Rs150 for around 10 years.

A passenger car unit considers one truck as 2.5 passenger cars to calculate the overall traffic.

An industry expert said the operational cost for the project will be at least Rs 500 crore over 10 years.

Besides, the usual debt-equity ratio for such infrastructure projects is 70:30. Assuming a conservative 5 per cent interest rate on the debt, the interest cost for a 15-year loan would be around Rs 3,000 crore.

If the consortium wants just a 10 per cent return on its investment, the traffic requirement on the bridge would easily be around 250,000 PCUs a day — five times the MSRDC’s traffic estimate.

MSRDC, however, said the traffic demand has changed a lot since 2004 and the figure is expected to be much higher in 2013, when the bridge is operational.

“The construction of the special economic zones (SEZs) by Reliance and the new airport in New Mumbai will increase traffic demand hugely,” said Vijay Garva, chief engineer for the link at the MSRDC. He, however, did not give any fresh traffic estimates.

The MSRDC officials added that a lot of traffic on the Mumbai-Pune route would also be diverted to the bridge. The sea link will also ease pressure on the Mumbai-Pune Expressway, National Highway-4 and Mumbai-Goa Highway, where traffic is expected to increase.

The MSRDC is asking for a Rs130-crore performance guarantee to be kept with MSRDC so that the bidder sticks to the construction time schedule of five years.

Nitin Gadkare, state BJP president and former public works minister, said Reliance Energy is obviously banking heavily on the new airport at Panvel and the SEZ.

However, the calculations may go awry if any of these projects gets delayed, he said.

Gammon India, however, is not expecting an exponential rise in the traffic from south Mumbai to Nhava Sheva, which is the gateway to traffic from Mumbai to Goa and Pune. Besides, there is already a link bridge in Vashi connecting south Mumbai to New Mumbai.

Source: business-standard.com

Reliance Energy is top bidder for Mumbai trans-harbour link project

A consortium led by Anil Ambani group company Reliance Energy Ltd (REL) has emerged top bidder for the Rs6,000 crore Mumbai trans-harbour link project.Maharashtra State Road Development Corporation (MSRDC) today opened financial bids for the 25-km six-lane project. However, no confirmation could be obtained from either MSRDC or REL.

Mukesh Ambani-led Reliance Industries group was also in the race for the project to build a trans-habour link between Sewri in Mumbai and Nava-Sheva across the creek in Navi Mumbai.

Sources said the REL-Hyundai combine quoted a lower concession period for the build-operate-transfer (BOT) project of nine years and 11 months as against 75 years quoted by the Mukesh Ambani-controlled Sea King Infrastructure.

Phase-I of the project will comprise a six-lane dual carriageway linking Nhava to Sewri and Phase-II, which is expected to be added in 2015 -18, will consist of a double track rail link that will run parallel to the road link on the north side.

The Rs6,000 crore project is slated for completion in five years. The REL-led consortium can charge Rs250 per heavy vehicle and Rs120 for cars and light commercial vehicles as toll charges.

Source: domain-b.com

Reliance Energy Ltd(REL) to hive off infrastructure projects

NEW DELHI: In a bid to separate the power and infrastructure projects, Reliance Energy Ltd. (REL) has now decided to transfer all its infrastructure projects to a separate wholly-owned subsidiary.

The REL board had already given its approval to the proposal.

The move comes hot on the heels of REL deciding to hive off its power generation business as a separate company — Reliance Power Limited (RPL).

RPL has filed a draft red herring prospectus with the Securities and Exchange Board of India (SEBI) for an initial public cffering (IPO) of around Rs. 12,000 crore.

The decision to hive off infrastructure portfolio to a new subsidiary comes in view of the increasing portfolio of the company on this account in recent months.

REL is developing highways for the National Highways Authority of India (NHAI) under the build-own-transfer (BOT) scheme.

It is involved in five National Highway projects in Tamil Nadu, covering a length of 400 km at a cost of Rs. 3,100 crore. In addition, it is pursuing road projects, including the proposed Rs. 5,000 crore Western Freeway sea-link project connecting Worli and Nariman Point in Mumbai and the Rs. 6,000-crore Jaipur Ring Road project.

On the real estate side, the REL-led consortium had emerged as a winner for developing a business city in Hyderabad with an estimated investment of Rs. 6,500 crore. The city will be built in 77 acres, which will include a 100-storey trade tower. It has also bagged the metro rail project in Mumbai that involved the development and operation of a fully-elevated metro rail.

The total cost of the project is around Rs. 2,500 crore. It has also bid for line 2 of the Mumbai metro elevated track between Mankhurd and Charkop with an estimated investment of Rs. 6,500 crore. The company is also bidding for the Rs. 6,000 crore Mumbai trans-harbour link.

Source : The Hindu

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