Rskhurana17's List: Infrastructure Snippets

• The plan outlay for road transport and highways ministry has been increased to Rs 25,360 crore in 2012-13 from R22,366 crore in 2011-12

• During the 10th five year plan (2002-2007), we were spending less than 5% of our GDP on infrastructure. During the 11th five year plan, the GDP base has risen sharply and we are spending 7% of our GDP, more than 2% point shift is no mean achievement.

   

  In absolute terms, the investment in infrastructure during the 11th five year plan is more than twice the investment during the previous five years on cost and prices.

• Total earnings of the railways from goods were also up by 10.15 per cent to Rs 32,439 crore, compared to Rs 29,448.55 crore in the first half of the last fiscal.
• The civil aviation sector, though incurring losses over the past two quarters, has actually clocked 18 per cent growth in passenger traffic at 59 million during April-September, 2011-12, over 50 million in the year-ago period.

• he shipping sector also witnessed some improvement - both on ground as well as on the policy front. While contract for the 4th container terminal of Jawaharlal Nehru Port has been awarded, a decision has been taken by the government to set up one more port in each of the maritime states.

  However, on the flip side, the widening and strengthening target work on the national highways remained a distant dream. Against the target of adding 1,005 km during April-September, work could be completed on 690 km only.

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• Rapid infrastructure development at national, urban and rural levels will expand the size of the ECE industry to 330,000 units by 2020 from 60,000 units in 2010 with potential to grow its revenues six-fold to $20 billion from $3.3 billion in 2010 and generate two million direct jobs," Sondhi asserted.

• Union Minister for Road Transport and Highways C P Joshi on Wednesday said the government will spend� US $70 billion to improve national highways over the next five years.
• Mechanisation is imperative to speed up the implementation of India’s infrastructure projects,” he said and added that investment made in infrastructure sector in 2011 accounted for 7.9 per cent of the GDP and it is likely to increase to 10.7 per cent by 2017.

• 58 federal government projects, 241 were delayed as of end-July, resulting in a cost overrun of some 20 percent, or more than $31 billion.

• Chinese construction companies are gearing up to cash in on the opportunity offered by India’s plans of investing over USD 1 trillion in infrastructure in the next five years, a Chinese Embassy official said here on Friday.
• Growing building material demand in India offers huge potential for Chinese investments to cooperate in housing sector by bringing technology, equipment and construction material.

• During the past three years, mutual investments have boosted 10 times and Chinese enterprises have completed infrastructure projects in India worth over $ 10 billion, he said while addressing a Sino-India building material press conference.

  The Sino-India bilateral trade, which was $ 63 billion in 2010-11, is increasing significantly, he said.

  “From January to October this year, bilateral trade volume increased by 22 per cent to $ 60.6 billion, maintaining a strong momentum of growth,” the counsellor

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• Infrastructure India plc
• he creation of an infrastructure back-bone within India which is robust and adequate to support the country's socio-economic growth begins with transportation, water and power, and moves towards a final phase of airports and international connections. In particular, the amounts invested in infrastructure projects in India in 2010 were greatest in roads (US$21.2 billion) and ports (US$13.8 billion).
• Developing infrastructure assets in a rapidly changing environment such as India is not without its challenges. There are risks that projects will suffer delays and cost overruns due to changes in regulation, financing conditions, political conditions and demography, among numerous other factors. Local interest rates remain high and are expected to remain at these levels well into 2012. Land acquisition continues to be a difficult task, while evolving environmental standards can lead to unpredictable challenges during development and constructi
• The roads sector will be one of the major beneficiaries of growing infrastructure expenditure and is expected to receive US$60 billion of investment over the Twelfth Five Year Plan period. The Government of India anticipates that nearly 60 per cent. of this investment, or about US$35 billion, will come from the private sector. India's road network of approximately 3.3 million kilometres is the third largest in the world.
• As the country continues to upgrade its road network, total length of the national highway system is expected to increase from 70,000 kilometres in 2009 to over 100,000 kilometres by 2015. Although the national highway system only accounts for approximately 2 per cent. of the total road network, it is estimated to carry nearly 40 per cent. of freight and passenger traffic in the country, which in turn creates a significant demand-supply gap.
• To narrow this gap, the Government of India has launched the largest ever National Highway Development Program ("NHDP"), under which it plans to build 55,000 kilometres of highways by 2015. The Indian Government has streamlined the regulatory framework to resolve a number of key regulatory issues, including land acquisition, technical qualification to bid for projects, a significant share of Build Operate & Transfer ("BOT") projects, and up-front payment of Viability Gap Funding ("VGF") to attract higher participation from the private sector. Also, a ten-year income tax holiday is available for companies engaged in developing roads and highways
• Logistics costs are significantly higher in India compared to other developed countries. It is estimated that Indian companies spend approximately 13 per cent. of GDP on logistics compared to only 10 per cent. of GDP in developed countries. The logistics sector is expected to benefit as India improves its infrastructure and companies focus on supply chain management to reduce costs. The sector grew at a CAGR of 14 per cent. between 2002 and 2007, and is expected to grow at a CAGR of 10 per cent. between FY2009 and FY2015. Economic growth, rising domestic demand for transportation and growing trade are major reasons for future growth in the sector. Moreover, the sector is expected to witness some key policy reforms in the near future. The Goods & Services Tax (GST) Act to be implemented from 1 April 2012 is expected to benefit warehousing services providers by eliminating the need for numerous smaller warehouses designed for minimising the impact of multiple levels of taxation under the current tax regime. Logistics companies and third party logistics ("3PL") service providers can now invest in scale, service focus and technology to optimise their service offerings and cater more efficiently to wider supply chains of their customers. Also, the Indian Government plans to spend approximately US$2 billion in building Dedicated Freight Corridors ("DFC") over the next few years.
• Between FY06 and FY11, freight volumes grew at a CAGR of 8.3 per cent. and more than 80 per cent. of freight was carried through the rail and the road network.
  Foreign investors in the Indian logistics sector can also enjoy tax incentives, such as a 100 per cent. deduction of capital expenditure incurred during the year (excluding land acquisition, goodwill or financial instruments) for cold chain and agriculture warehousing facilities, and a 100 per cent. deduction of profits from Special Economic Zones and Free Trade Warehouse Zones ("FTWZs") for ten consecutive assessment years out of fifteen.
  Within the broader logistics sector, the Board of IIP expects an attractive investment opportunity to emerge in the rail and container handling services segment. Rising containerisation levels in India, rising export and import cargo volumes, and potential for railways to gain market share in carrying container cargo, coupled with rising demand for value added logistic services may create a significant opportunity for VLMS to become a market leader in providing multi-modal logistics services. After opening the rail and terminal operations to the private sector in 2005, recent policy reforms have ensured a more level competitive environment among private players and the state owned operator, Container Corporation of India Limited ("Concor").

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• The 12th Five-Year Plan (2012-17) envisages investments worth $1,000 billion in infrastructure, 50 per cent of which would come from the private sector. So, about $100 billion would be required in the private space, in both equity and debt, every year from April 2012 onwards. Assuming that between promoters, foreign direct investment, private equity funds et al equity will be raised, the challenge is to mobilise about $66 billion of debt funds every year, or roughly Rs 3,30,000 crore per annum — not counting the debt required by the public sector.
• The oft-discussed “debt gap” in financing Indian infrastructure investments has not yet emerged because of the slower roll-out of infrastructure projects. However, it is expected to be an effective constraint soon. Various policy and institutional initiatives are being directed towards increasing financial intermediation. These include enabling policy and regulation for infrastructure finance companies, infrastructure debt funds, revised external commercial borrowing norms, buyback/refinancing of loans from commercial banks, take-out financing and credit enhancement/guarantees.
• It is also recognised that capital markets do not participate much in financing infrastructure. Dedicated infrastructure debt funds would provide a way for investors to invest in bonds issued by operating infrastructure special purpose vehicles (SPVs). Both supply and demand sides have to find common ground for credit markets to work effectively for financing infrastructure projects. In the highways of capital markets all over the world, credit ratings provide the effective “signalling” system for capital traffic-flows to happen. (Though junk bonds prove there is nothing magical in AAA bond ratings!)
• Infrastructure projects are traditionally considered “riskier” by rating agencies. This is because cash flows arise from a single asset, and carry higher political and regulatory risks. Assigned ratings are usually at BBB levels, which means a default probability of around eight per cent in a year. Th

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• Raj Kumar Khatri, secretary to the Infrastructure Development Department, Karnataka,
• Presently, the state’s rail density is around 16 km per 1,000 sq km; with an investment of Rs 25,000 crore the state intends to increase this to 41 km per 1,000 sq km. It also has rail projects involving an investment of Rs 24,000 crore under implementation, which will add 2,137 km of new railway lines.
• The state is a pioneer in adopting the new PPP model. Currently, the state has a portfolio of around 105 projects in the PPP model. Government sources said that of the PPP projects, 23 are in various stages of implementation, bids have been closed for around 30 projects and 52 others are in the development stages.

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• India Infrastructure Finance Company Ltd. (IIFCL), seeking to turn a new chapter in the funding of the clogged and inadequate infrastructure sector, will float a $1-billion (Rs.5,000 crore) infrastructure debt fund with the participation of private players.
• HSBC, Asian Development Bank, Life Insurance Corporation of India and IDBI Bank will be the co-sponsors of the fund. Under the mutual fund route, IDF would invest 90 per cent of its assets in debt securities of the sector companies

• The need for a nodal agency for implementing public-private partnership (PPP) projects in infrastructure has been felt in many quarters. But, such a nodal agency should be headed by someone with technical expertise. This national facilitation committee should be headed by a technocrat.
• Aniruddha Ganguly, Executive Vice President & Group Head-Business and Integration, GMR Group.
• private sector is looked upon with suspicion in the PPP model and the private sector wants an in-depth discussion in the government on this. “It is necessary that everyone understand that, given the right environment, we can be able partners. We have a Draft National PPP Policy. The preamble to the policy says, ‘In pursuance of this goal, the Government envisages a substantive role for public-private partnerships (PPPs) as a means for harnessing private sector investment and operational efficiencies in the provision of public assets and services’. Nowhere is there a focus on the custome

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• The railways and roads dominate the country’s transport landscape. Within these two modes, two per cent of road length carries 40 per cent of all road traffic of the country, and one-sixth of the rail network, forming the golden quadrilateral and its diagonals, carries over two-thirds of all rail traffic. Indian Railways needs to first substantially scale up the productivity of its existing assets before harping on new lines and projects to be built at huge costs. From a distressing 30 per cent share that it commands of the country’s overall freight traffic, it must strive to have not less than 50 per cent and, similarly, to enhance its share of passenger traffic from just 10 per cent currently to at least 25 per cent. IR thus has capacity and productivity enhancement as its primary task.
• With the fragmented character of the industry, road transport services in India are generally poor and logistics costs high. Clocking the world’s lowest average speeds, trucks in India are used for 60,000-100,000 km annually — less than a quarter of the average in developed countries. A master plan for 18,500 km of expressways based on “access control toll” needs to be executed urgently, in addition to the development of state highways and district roads. A large number of villages and habitations in rural areas still remain unconnected with quality roads.
• The story in the port sector is no different: Indian ports have a lot to do to reach levels of efficiency and productivity comparable to those clocked by other ports in the region. Freight transportation from Indian ports to the US, for example, is one-third more expensive than from Bangkok or Singapore. As transport costs fall, physical geography matters less. But with economies of scale in production, economic geography matters more. Today, high transport costs and low connectivity levels are more detrimental to a country’s development than ever before.
• Private capital will need to play a much larger role in infrastructure than it has done so far. Infrastructure sector PPPs are expected to close at 34 per cent of the Eleventh Plan sectoral outlay, against the target of 30 per cent. Transport is the dominant PPP sector by both number of projects and investments, mainly due to the large number of road sector projects.
• Public investment in roads, ports, etc. affords the concessionaire a local monopoly, necessitating a suitable regulatory framework for consumer interests to be duly protected, as competition among suppliers would make for an effective mechanism towards achieving transparency and ensuring lowest-cost suppl
• Total investment of Rs 20,54,205 crore in infrastructure is estimated to have increased to around 8 per cent of GDP during the Eleventh Plan, against Rs 919,225 crore (including Rs 225,220 crore from the private sector) during the Tenth Plan. The target for infrastructure outlay during the Twelfth Plan is set at Rs 40,99,240 crore — or 9.95 per cent of GDP — half of it accruing from the private sector, including an annual $30 billion in foreign direct investment (FDI) inflows

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• The trade mission will make stops in Delhi, Jaipur and Mumbai between  March 25 and 30, 2012 and focus on infrastructure opportunities in India.
• India received less than $20 billion FDI in the first six months of 2011, compared with more than $60 billion in China, while Brazil and Russia took in $23 billion and $33 billion,
• In the year through March 2011, the National Highways Authority of India built 1,780 kilometers of motorways, about 30 percent less than its target. In the same period, the nation added 9,585 megawatts of power, 34 percent less than forecast
• monitoring government infrastructure projects, saying that of 558 government projects, 241 were delayed as of end-July, resulting in a cost overrun of some 20 percent, or more than $31 billion

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• With a view to attracting more foreign funds into the economy, the government is weighing the pros and cons of reducing the lock-in period of long-term infrastructure bonds for FIIs to one year.
  
  "India is toying with the idea of reducing lock-in period of long-term infra bond for FIIs from three years to one year
• The Reserve Bank of India had recently liberalised the norms allowing foreign institutional investors (FIIs) to invest up to USD 25 billion, up from the earlier limit of USD 5 billion, in bonds and debentures of Indian infrastructure companies
• host of companies like IFCI, REC and IDFC had raised about Rs 8,000 crore through issue of tax-savings infra bonds in the last fiscal.
• Foreign funds withdrew over Rs 3,200 crore from the Indian securities market in November amid concerns over the worsening debt crisis in the euro zone.

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• he finance ministry has flagged the issue of delay in giving clearances by state governments to infrastructure projects increasing risks of defaults and bad loans for banks.

   

  In the eastern region, five infrastructure projects, with a total investment of Rs 16,686 crore, are awaiting various approvals
• The banking sector, in general, and public sector banks, in particular, have sanctioned a significant amount of loans for large projects. In a number of projects, implementation is held up because of pending approvals at the central/state levels, banks said in communication to state governments in the eastern region. Lending by banks to infrastructure projects, including telecom, power and roads, increased 21.7 per cent to Rs 5,74,569 crore in October, compared with Rs 4,72,142 crore in October 2010, according to Reserve Bank of India (RBI) data.

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• The mineral sector’s revenue losses is enough to fund the annual cost of transporting subsidised foodgrains as proposed under the Food Security Bill.

   

  In an admission of ineffective management, the government has pegged revenue losses due to inefficient logistics in the mineral sector at Rs 9,000 crore annually. Further, the government expects these losses to go up to Rs 36,000 crore over the next decade if solutions are not put in place.
• “The logistical inefficiency arises owing to issues like lack of proper coordination with the railways, ports and surface transport ministries. We do not have dedicated railway corridors for ore movement. Availability of rakes is also a problem,” said a senior official of the mines ministry.

• Standard & Poor’s
• Raju Viswanathan
• India’s inadequate infrastructure to be a major road block to the country’s target of achieving 9.0 – 9.5% annual growth in 2012-2017. The country's twelfth five-year plan for the period 2012-2017, targets on removing some of these roadblocks and creating a framework for private-sector participation, but it depends on the ability of India's leaders to execute these plans
• an estimated $1.5-trillion funds sloshing around the Middle East, largely from higher oil prices which is going to increase by about 7 Trillion by 2020. Our country is emerging as a global economic power. As per the Planning Commission report, there is a huge gap of US 300 billion (30% funding Gap) to meet the financial requirement of infrastructure sector up to 2017. Islamic financial products are ideally suitable for the much needed funding for the long term investment in various sectors including infrastructure sector. These tools - called Sukuk, are in use, by both the developing countries like Indonesia & Malaysia and developed countries like U.K., France and Germany. India should also make use of the resources awaiting investment”.

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• India's infrastructure sector have done well in the first half of the current fiscal, although highways remained a laggard, according to a mid-year analysis of the economy.
• Total earnings of the railways from goods were also up by 10.15% to Rs 32,439 crore, compared to Rs 29,448.55 crore in the first half of the last fiscal.
• The civil aviation sector, though incurring losses over the past two quarters, has actually clocked 18% growth in passenger traffic at 59 million during April-September, 2011-12, over 50 million in the year-ago period.
• The shipping sector also witnessed some improvement - both on ground as well as on the policy front. While contract for the 4th container terminal of Jawaharlal Nehru Port has been awarded, a decision has been taken by the government to set up one more port in each of the maritime states.
• 
   However, on the flip side, the widening and strengthening target work on the national highways remained a distant dream. Against the target of adding 1,005 km during April-September, work could be completed on 690 km only.

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