India to raise $1.9 bn debt for building highways

India will soon raise Rs.10,000 crore ($1.9 billion) through a public debt issue for funding its ambitious national highways project, union Road Transport and Highways Minister C.P. Joshi said Wednesday.

“The finance ministry has allowed us to raise Rs.10,000 crore through debt bonds for funding construction of highways across the country,” Joshi told reporters on the margins of a trade event.

The state-run National Highway Authority of India (NHAI) will raise the fund through tax-free infrastructure bonds within a month. “The proposed fund-rising will be sufficient for the highway projects under execution. We will raise more funds as we go for more such projects,” Joshi said after unveiling the sixth international construction equipment industry trade fair Excon 2011 on the outskirts of this tech hub.

In the budget for this fiscal (2011-12), Finance Minister Pranab Mukherjee made a provision for the first time to allow NHAI to raise funds as government’s share of financing the roads sector.

Though the highway authority planned to raise the amount through private placement earlier, rising interest rates had forced it to opt for the public issue.

The proposed fund will be used to partly finance highway projects to be executed on build, operate and transfer (BOT) basis and for viability gap funding through which the government pays to make the projects viable financially.

Under the BOT model, the winning bidder will build the highways and the government will pay in installments.

The authority has awarded till date 59 projects covering a distance of 7,994 km that is estimated to cost a whopping Rs.60,000 crore (Rs.600 billion).

“To achieve the target of building 20 km of road a day set by the prime minister (Manmohan Singh), the highway authority has to award 7,300 km for every three years consecutively,” Joshi pointed out.

Admitting that only 4,600 km was awarded during this fiscal, Joshi said the target of 20 km per day would be met by 2014.

“We have not been able to achieve 20 km per day but we are confident of doing it before the next general elections,” Joshi added.

Chinese firm offers to finance Lamu port plan

A Chinese company has expressed interest in financing the construction of Lamu Port and its related infrastructure.

The firm, JS Neoplant Company Limited of Shanghai, has said it is “ready, able and willing” to undertake the massive project whose cost had been estimated at US $16 billion (Sh1.4 trillion).

According to the communication, the six components of the project include a sea port straddling some 750 acres of land with 10 container terminal berths and three bulk cargo terminal berths, an oil jetty and an international airport with a 2,000 person-per-day capacity on 10 daily flights.

Other components are a three-limbed 1.4m gauge railway line for high speed trains: the limbs are Lamu-Isiolo-South Sudan (1,400km); Nairobi-Isiolo-Moyale-Addis Ababa (1,596km) and Lamu-Mombasa (350km).

The pipeline too had three phases: South Sudan border-Lamu-Isiolo (1500km); Nairobi-Isiolo-Moyale-Addis Ababa (1400km) and a branch to link Lamu to the existing Mombasa/Kampala pipeline.

The project also includes three stretches of highway: Lamu-Isiolo-South Sudan border (1400km); Nairobi-Addis Ababa (1596km) and Lamu-Mombasa (320km).

A fibre optic cable running along the highway completes his gargantuan regional project.

Last month, President Kibaki gave an indication of the impending commencement of the construction work with a promise to undertake a ground-breaking ceremony “soon”.

“The feasibility study for Lamu Port and supporting infrastructure is now complete… I look forward to soon undertaking the ground-breaking ceremony for the project,” point he said in Mombasa a week ago when he visited the town to open this year’s Agricultural Society of Kenya show.

President Kibaki mandated Kenyan ambassadors to aggressively market the proposed second transport corridor that would serve Ethiopia and South Sudan.

Several countries including Canada, Germany, China, Japan and United Arab Emirates have made inquiries since the government declared its intention to construct the corridor about three years ago.

The corridor has immense political and economic potential and will open up large sections of the country’s North Eastern and Eastern provinces that have for years enjoyed scant attention in terms of business opportunities.

“I urge you to focus some energy on promoting investment in this project in your respective areas of accreditation, as it is expected to play a major role in catalysing Kenya progress towards the achievement of the economic goals,” Mr Kibaki told the ambassadors.

Japan Port Consultants has completed a one-year feasibility study on the development of the port and Lamu-South Sudan-Ethiopia Transport corridor.

With the anticipated entry of South Sudan and even Sudan into the East African Community, estimates put unrestricted demand of cargo rising by more than 32 million tons per annum – far above what Mombasa Port alone can handle.

South Sudan has always relied on Port Sudan in Sudan to the north.

The Ethiopian market, the other target, is currently served by Djibouti port. Lack of good roads connecting Kenya and Ethiopia, with a population of 80 million, has hampered the trade between the two nations.

Ethiopia’s dependence on imported goods has meant that Djibouti port handles 98 per cent of Ethiopian traffic which is about 85 per cent of all the traffic in through the port.

Source: nation.co.ke

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