RNI NO.: MAHENG/2014/55864 VOL. 3 ISSUE: 6 MUMBAI OCTOBER 2016 PRICE: X100 PAGES:68
Sailing Towards a New Horizon Interviews Anil Diggikar, (IAS), Chairman, JNPT .....Pg 24
Rajiv Agarwal, Managing Director, Essar Port....Pg 28
Dr Shailendra Chouksey, Whole Time Director, JK Lakshmi Cement Limited....Pg 38
Emerging Dominance of Solar Energy
... Pg 32
Managing Construction Waste
...Pg 44
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content india talk 8 News on Indian Project
Smart Cities Development 44 Managing Construction Waste
cover story 14 Sailing Towards a New Horizon
Renewable Energy
INTERVIEWS 24
“Need to upgrade basic infra to improve competitiveness”
28
“LNG is expected to be a game changer”
“We hope to see an increased demand for port equipment”
38
“Our capacity will reach in excess of 13 million MTPA by end of FY 17”
34 RE Projects Losing Steam due to Counterparty Delays
30
Real Estate 50 Setting Trends
plant visit 56 BKT Bhuj Poised to be a Game Changer
Project Update 40 BangaloreMysore Infra Corridor: Boon for Urbanisation Woes
INTERNATIONAL TALK 60 News on International Project
EVENTS CALENDAR 66 National
6 | CONSTRUCTION TIMES | October 2016
FROM
from
THE DESK
the desk
Editor In Chief Editor In Cheif Ramamurthy Mayavan
Ramamurthy Mayavan
Director Communication
Kranti Shanbhag Director Communication Kranti Shanbhag Asst. Editor Supriya Oundhakar
Asst. Editor Supriya NationalOundhakar Product Head
Dear Readers,
Jay Bhoir
The Indian Aviation sector has gathered momentum with new National Civil AviationDear PolicyReaders, (NCAP 2016) that was cleared by the Union Cabinet on June 15, 2016. Thus, it has paved the way for an ambitious reorientation of the Indian Indian shipping and ports sector is the carrier of around 95 percent of aviationThe industry. India´s trade by volume and 70 percent by value. The sector being a major The new civil aviation policy has addressed issues from regulatory, financial and driver of the economy, the government has taken initiatives to chart a new operational perspectives in three main areas. growth trajectory. The NCAP may help reduce cost of operations, rationalise taxes and enhance As per Frost & Sullivan, industrialisation without adequate infrastructure connectivity – both global and domestic. One of the most important initiatives development is likely to affect competitiveness of the manufacturing sector proposed is the Regional Connectivity Scheme (RCS) to boost air travel in smaller and, hence, port development initiatives are likely to gain support from the towns. Under the scheme, the government will work towards revival of un-served Government in terms of policy support, which will attract investment from airports through a no-frills model and provide subsidies to stakeholders. the private sector. With the roll out of NCAP, now common man can afford to travel by air as airlines Government initiatives to promote theunder manufacturing sector and increased would charge only Rs 2,500 for one hour flights RCS. exports are likely to increase the demand for port capacity and improve Secondly,logistics the FDIconnectivity limit in airlines and airports has centers been increased to 100 perTrade between production and major ports. cent withwith riders. Further, the 5 year 20 aircraft rule has been amended to 0 year drivers Asia, Europe, and North America are likely to remain the major 20 aircraft which means that airlines can rapidly achieve their goal of flying to for freight forwarding services in the next decade. international sectors as soon as they deploy 20 aircraft to domestic routes. Hence, Goingofforward, theinvestments ports sectorinhas traction award of port the possibility increased thewitnessed sector as well as lessinrestrictive development projects attracting investments due to the government’s thrust operational norms will bring increased competition to the market. on port-led development. Further, the aircraft Maintenance Repair and Overhaul (MRO) business will get On the flip side, the development of of these has higher implementation a boost from certain tax exemptions as most the projects Indian airlines’ maintenance highoutside financing cost, acquisition issues and ensuringwill hinterland activitiesrisk are like carried India. Inland addition, ‘Make In India’ initiative connectivity forOEMs evacuation of cargo. Ininthe past,The many projects were not able attract global aerospace for investments India. policy recommends to seeto thesuch dayinitiatives of light due lack of clearances environment, security fiscal support andtotherefore will have alike positive impact, not only in place. in these industries but also on the local economy where such industries are based. In order bring glorious days to Indian maritime sector,ofitthe is essential The policy wouldtogenerate the much needed holistic development aviation that the risks are equitably shared. The government needs to undertake sector in the near future soon. modernization of facilities. However, the government needs to fast track clearances including environment in order to make this new policy effective from regional connectivity. Expediting clearances will ensure completion of projects on schedule.
Ramamurthy Mayavan Mayavan Ramamurthy
6 CONSTRUCTION TIMES
August 2016
8 | CONSTRUCTION TIMES | October 2016
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LNG Soon to be Fuel for Barges The Haldia Dock Complex under Kolkata Port Trust has recently earmarked about 10 acres of land in the vicinity of Haldia Oil Jetty No 1 for a period of 30 years for setting up of LNG storage facilities with permission to lay pipelines and install unloading arms through tender cum auction. The project will be undertaken on land lease model by granting lease of land by middle of December, 2016. LNG facilities are expected to be developed within 24 months from date of allotment of land. This is an important development in context of the recent efforts of the Ministry of Shipping to reduce logistics cost and achieve the COP21 targets on cutting down pollution by introducing the use of LNG as fuel for barges. Use of LNG is expected to save around 20 per-
cent on fuel. Carbon Dioxide emissions are likely to get reduced by 20-25 percent and nitrogen/ sulphur oxide emissions by 90 per cent. The government is therefore taking measures to facilitate the movement of LNG and its storage at places situated along the inland waterways. Only a few advanced countries are using LNG powered barges at present. Therefore in that sense, the development at Haldia Dock Complex can be seen as a very positive one. The efforts to introduce LNG as barge fuel is part of the overall efforts to promote transport on inland waterways and coastal shipping. Inland Water Transport (IWT) is a cost effective and environment friendly system and a lot of importance is being accorded to it since the last two years.
Boost for Coastal Transportation Promotion of costal shipping is one of the major thrusts of the Ministry of Shipping. In order to promote transportation of automobiles through coastal shipping, Ministry of Shipping has decided that all Major Ports will provide discount of 80 percent for two years on Vessel Related Charges (VRC) & Coastal Related Charges (CRC) for coastal transportation of vehicles through Ro-Ro ships. This discount is also extended to other similar ships such as Ro-Pax, PCC, PCTC, PTC etc. An order in this regard has been issued on 20th September, 2016. In order to make this discount sustainable for the Shipping Service Providers, the major ports will also carry out intensive marketing for demand generation.
IWAI Contract with DST Germany for NW-1 With its objective of providing safe, environment friendly and economical mode of transportation through National Waterway-1 (NW-1), the Inland Waterways Authority of India (IWAI), Ministry of Shipping signed a contract with M/s DST, Germany to design vessels, especially suited to navigate the 1620 km stretch of NW-1. Speaking on the occasion a senior IWAI official said it is a revolutionary step and a milestone in the journey of NW-1. “The objective of IWAI is to go along with nature and disturb the river minimally. The specially designed vessels will navigate on low drafts and will be of high carrying capacity, and most importantly, will be environment friendly,” he said. Considering the expected growth of the Inland Waterways sector in India, DST Germany is expected to develop a combination of standardised vessels to
through NW-1, M/s DST, Germany has been initially tasked to develop low draft vessels that can carry up to 150200 vehicles. meet the requirement of various types of cargo. One of the most important navigational challenges for NW-1 is the kind of vessels that will play on the Ganga-Bhagirathi-Hooghly stretch. Keeping in view the difficult hydromorphological characteristics of the river in the upper reaches between Patna and Varanasi, it is important to have vessels which can ply on low draft with high carrying capacity, and are economically viable and environment friendly. Earlier in August 2016, the Minister for Road Transport, Highways and Shipping Nitin Gadkari flagged off the trial run of two cargo vessels from Varanasi on NW-1(River Ganga). Keeping in view the demand for transportation of cars
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Government is developing NW-1 under the Jal Marg Vikas Project, with assistance from the World Bank at an estimated cost of Rs 4,200 crore. The project would enable commercial navigation of vessels with capacity of 1500-2,000 tons. Phase-I of the project covers the Haldia-Varanasi stretch. The project includes development of fairway multi-modal terminals at Varanasi, Haldia, and Sahibganj, strengthening of river navigation system, conservancy works, modern River Information System (RIS), Digital Global Positioning System (DGPS), night navigation facilities, modern methods of channel marking, construction of a new state of the art navigational lock at Farakka etc.
Foundation Stones for 12 NHs Laid Punjab witnessed a major step towards world-class road connectivity in all major cities as Union Minister for Road Transport, Highways & Shipping Nitin Gadkari laid the foundation stones of 12 major National Highways projects worth Rs 10,596.19 crore at Ropar, Samrala and Jalandhar in the state. These road projects mainly include 4 laning of Jalandhar-Barnala, Jalandhar-Hoshiar pur, Ropar-Phagwara, Kharar-Kurali, Chandigarh-Kharar, Kharar-Ludhiana roads besides elevated road in Ludhiana.The projects would provide worldclass road connectivity to commuters between Doaba and Malwa along with adjoining Haryana and Himachal Pradesh in next two years. Chandigarh would also be connected with four lane roads with all major cities like Amritsar, Jalandhar and Ludhiana.
MoU for Namami Gange Program Ministry of Water Resources, River Development and Ganga Rejuvenation (MoWR, RD&GR) signed an MoU in Delhi with the Ministry of Agriculture and Farmers Welfare (MoA&FW) for speedy implementation of Namami Gange program. The MoU was signed by Hari Har Mishra, Additional Mission Director, National Mission for Clean Ganga (NMCG), MoWR, RD&GR and Dr S S Tomar, Additional Commissioner, MoA&FW in the presence of Union Water Resources, River Development and Ganga Rejuvenation Minister Uma Bharti and Union Minister for Agriculture and Farmers Welfare Radha Mohan Singh. Speaking on the occasion Bharti said that signing of this MoU will ensure effective and efficient implementation of various projects of Namami Gange in coordination with MoA&FW. The Minister said being a multi-
disciplinary program, the success of Namami Gange largely depends upon the participation of other ministries, state governments and local communities. She expressed the hope that MoA&FW will play a major role in the success of Namami Gange program. Radha Mohan Singh promised all required help from his Ministry to the Ministry of Water Resources for successful implementation of Namami Gange Program. He was of the opinion that Namami Gange is a major program under taken by the Modi Government and expressed the hope that both the Ministries will put their best together for its success. As per the terms of MoU the MoA&FW will develop organic farming in the villages along Ganga with each Gram Panchayat representing a single cluster, promote organic farming through awareness programmes, self help groups, mobile apps etc.
National Highways Projects in Arunachal Pradesh Pappu-Yupia-Hoj-Potin section of NH 713 A and Potin-Ziro section of NH-13. He also spoke to senior officials from the department .
The Minister of State for Road Transport & Highways, Shipping, Chemical & Fertilizers Mansukh Lal Mandaviya has stressed upon the Central Government’s commitment to build high class road infrastructure in the North Eastern states of the country. Speaking to mediapersons in Itanagar, he said that of the total 2,570 km roads sanctioned for the state, 653 km have been completed and 1,917 km are under progress. Out of this total length, the Ministry of Road Transport & Highways will build 710 km, state
PWD will construct 420 km, NHIDCL 722 km and Border Roads Organization 718 km. The ongoing projects and their costs are 250 km Nechipu-Hoj (Rs 1985 crore); 20 km Dibang-Alubari river bridge system (Rs 860 crore); 75 Km Pasighat-Pangin (Rs 500 crore) and 12 km Itanagar-Naharlagun 4 laning (Rs 250 crore). The Minister said that building of road infrastructure in the state would herald a new era of socioeconomic development. On a two day visit to Arunachal Pradesh, the Minister inspected the
The 50 km long Pappu-Yupia-Hoj-Potin section of NH 713 A has been damaged at about 30-35 spots as a result of heavy rains and consequent landslides since April. Two laning of the road through the state PWD was completed in March this year, and the Ministry is now required to take it over for maintenance purposes. Mandaviya inspected several of the damaged locations and expressed serious concern at the condition of the highway. He directed concerned officials to take urgent remedial measures at these sites. He also stressed that guidance should be sought from expert agencies for making use of appropriate technology for hillside maintenance and slope stability as a long term measure.
October 2016 | CONSTRUCTION TIMES | 11
India
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JCB’s Reliable, Efficient 455ZX Wheel Loader The JCB 455ZX Wheeled Loader is the latest addition in the JCB India’s worldclass Wheeled Loader portfolio. JCB Wheeled Loaders are known for productivity, reliability and efficiency. In the 3T to 5T category JCB has three product options - 430ZX Plus, 432ZX, and the latest being the JCB 455ZX.This 5.5T payload machine comes with a common rail JCB DieselMAX 672 engine and is targeted towards sectors such as mining, construction, ports, and roads. • Few salient features of JCB 455ZX: • Powerful Engine: JCB Common
Rail Diesel Max CRDI 672 Engine • Highest Reliability: World renowned ZF Axles and Transmission • Best in Class Comfort: Servo Controls and Air Conditioner • Technology: Livelink enabled • Country Wide Support : 650+ JCB dealer outlets This new, ‘Made in India’ product is designed to work more for longer hours at a lower maintenance cost. The world class aggregates used in the machine ensures quality, reliability and value for money. With air conditioning as standard, the 455ZX offers the best in class
‘SCI to Play Key Role in Energy Security’ Shipping Corporation of India (SCI) has to play an important role in the energy security of the country and all efforts would be made to further boost the capacity of the SCI and the sector in this regard to ensure that national interests are fully safeguarded”, said Minister of State for Shipping, Road Transport and Highways, Chemicals & Fertilizers, Mansukh Lal Mandaviya. He was reviewing the activities of Shipping Corporation of India in Mumbai recently.
He said that Government of India will consider giving shipping the status of infrastructure in the country and all efforts would be made to improve its productivity. The Minister was briefed by the senior officers of the Shipping Corporation of India about the recent business initiatives like formation of Inland Waterways, subsidiary to undertake transportation on NW-1, NW-2 &
NW-5 and increasing coastal presence by providing weekly services on west & east coast of India. The Minister said that SCI should make special efforts to attract more cargo business from the government sector which includes various ministries, departments, and PSUs under Government of India and state governments. As far as the inland waterways are concerned, the Minister emphasised that there is great potential to improve and increase inland waterways and canal tourism in India. He said that Government of India would ensure that all possible resources are made available to SCI for the development of the sector. The minister also stressed on the need for skill development in the maritime sector mainly for seafarers and applauded the efforts of SCI in terms of providing training courses to deck & engine officers at Maritime Training Institutes at Mumbai & Tuticorin.
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operator comfort. The large cabin interior offers excellent entrance. The stylish, modern central dash display combines analogue dials and a color LCD screen that displays the health status of the machine, service requirements and operating information. The limited slip differential in this machine is ideal for working in demanding conditions. The Z-bar loader geometry facilitates enhanced penetration into the pile, as well as delivering high breakout forces, good roll-back angles and faster cycle time. In addition, the Electronic Management System allows for a progressive clutch cut-off giving effective loader control while the powerful twin variable displacement piston pumps enhance multi-function capabilities. This world class product with multiple innovative features is not only been used in the Indian market, but is also exported to over 30 countries. The present market size for 5T Loaders in India is around 400 units.
NHAI to Resolve Disputes Faster Chairman NHAI Raghav Chandra has emphasised that disputes in highway projects should be resolved expeditiously and ideally always on the ground, the moment they arise and before they become unbearable. The fewer the disputes, the faster they are resolved, the better the governance. This is a win-win situation for all stakeholders. Speaking at the inauguration of the Legal Conference on Contractual Matters in Management of National Highways at New Delhi, Chairman NHAI said that the Model Concession Agreement creates a framework on trust for resolution of disputes and also to ensure that justice is delivered on both sides i.e. public authority and the private party.
Eicher Launches Eicher Pro 6037 with Innovative M-Booster Eicher Trucks & Buses, part of VE Commercial Vehicles Limited, consolidated its presence in multi-axle range with Eicher Pro 6037; a higher payload 37 ton GVW truck. The Eicher Pro 6037, earlier unveiled at the Auto Expo is a “Born Intelligent” truck from Eicher Trucks & Buses with advanced telematics, innovative M Booster, EMS 3.0 (Engine Management System), EPS (Engine Protection System), real time fuel coaching and cruise control making this truck the most feature rich in this segment. Taking a step ahead in the modernisation of the commercial vehicle industry; the Eicher Pro 6037 comes with the innovative M Booster (Mileage Booster) system for high fuel efficiency through a combination of energy conservation processes. Eicher Pro 6037 is embedded with Eicher Live Advanced Telematics; offering uptime
management, fuel management and trip management services. To ensure maximum driver comfort and lifetime profitability, the Eicher Pro 6037 is equipped with fuel efficient driveline with VEDX5 – 4 Cylinder Engine and 9 Speed Transmission, robust Domex chassis and fully suspended world class sleeper cabin. The vehicle suits to the long haul applications such as market loads, tankers, cement, and frozen goods transportation while cruise control ensures a fatigue free driving experience. Commenting on the
growth of heavy duty segment in India, Vinod Aggarwal, CEO, VE Commercial Vehicles, said, “The Heavy Duty sector is expected to touch a new peak in the current year with huge growth in the segment based on both replacements as well as additional truck requirements with a massive focus on infrastructure and core sectors in the economy. With our entry into the fastest growing 37 ton segment, our position in HD segment will strengthen and we will consistently grow our market share in HD segment from a current market share of around 6 percent YTD FY 2016-17.” Further commenting on the aftermarket support solutions to the customers, Aggarwal added, “Eicher also offers innovative and customized service solutions to meet individual customer needs. Our warranty offerings are among the best in the industry; customers can opt for extended warranty program as well.
Sany India Rolls Out 1000th & 1001st Machines are confident to cater to this demand. We look forward to achieving more such milestones in the coming years, at the same time setting new benchmarks in quality standards that SANY stands for”. This marks a historic achievement in SANY India’s growth journey. The 1001 machines manufactured at the plant during the year 2016 includes excavators, transit mixers, truck mounted cranes and batching plants. SANY India, a leading manufacturer of construction, heavy machinery and renewable equipment, announced the roll out of 1000thand 1001st machine from its plant in Chakan, Pune. The 1000th machine was an excavator and the 1001st machine was a transit mixer. This milestone has been achieved
in a short span of nine months, from January-September 2016. Commenting during the roll out, Deepak Garg, CEO, SANY Heavy Industries Pvt. Ltd., said, “This achievement reaffirms SANY’s commitment to the Indian market. We have witnessed an increase in demand for construction equipment machines and with this milestone, we
SANY is the top-selling excavator brand in the world and SANY India is slowly moving towards realising such goals in India as well. In line with its motto and corporate mission ‘Quality changes the world’, Sany has been reinvesting 5–7 percent of annual sales revenue in R&D every year to ensure that its products remain at the cutting edge of technology.
October 2016 | CONSTRUCTION TIMES | 13
India
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STAHL Crane Systems India Appoints Spare Parts Distributor markets through their sales partners strategically located in India in major cities like, Coimbatore, Pune, Chennai , Ahmedabad for 20 years . STAHL Crane systems India Private Ltd, a subsidiary is set up since 2006 for local support and business development for the sales partners. The sales partners import the hoists and crane components as a kit and in turn build all types of cranes locally. So, practically German quality is combined with competitive price advantage and local support .
STAHL Crane Systems GmbH is a highly reputed German manufacturer of hoists and crane components since 140 years. They are one of the pioneers and preferred supplier over decades worldwide in oil and gas for explosion protected hoists and components. They have been supplying into Indian
STAHL Cranes Systems GmbH believes in very high quality standard which results in lesser consumption of consumable parts and replacement spare parts. Due to long standing in the market, number of customers and also the number of equipment in safe operation has drastically increased. Hence, importing parts every time is time consuming and tedious.
Based on the voice of customers and also to improve the product performance, STAHL Crane Systems have decided to tie up a partnership with independent distributor cum stockist for genuine spare parts M/s Indstahl Spare Parts and Distribution Company ,Chennai .The distributor stocks all the necessary parts in Chennai and the end users can order the spares locally through the sales partners who have supplied the original equipment . Thomas Kraus , Director , STAHL Cranes Systems GmbH believes that this is a major step in making the spares available in India and thus reducing the supply time for our Indian customers. Anand Dayanidhi ,Country Head of STAHL CraneSystems India Private Ltd is extremely happy to dedicate this facility in India which will go a long way in boosting the brand value that STAHL Cranes is enjoying for many years in this subcontinent .
USD 631 mn Approved for India Coastal Industrial Corridor The Asian Development Bank (ADB) has approved USD 631 mn in loans and grants to develop the Vishakhapatnam-Chennai industrial corridor in India. The 800 km corridor is a key part of the planned 2,500 km East Coast Economic Corridor that will ultimately extend from Kolkata in West Bengal to Tuticorin in Tamil Nadu. The Visakhapatnam-Chennai corridor will be the first industrial corridor to be developed along India’s coast. The loans and grants approved by ADB include a $500M two-tranche facility for the construction of key infrastructure and a $125M two-tranche loan to support industrial policies and business promotion. The funding also includes a USD 5 mn grant from the multi-donor Urban Climate Change Resilience Trust Fund managed by ADB for the construction of climate change resilient infrastructure, as well as USD 1 mn technical assistance to help the Andhra
Pradesh local government manage the corridor. Additionally, the project, estimated to have an overall cost of USD 846 mn, will receive a contribution of USD 215 mn from the government. Manoj Sharma, Principal Urban Development specialist at ADB’s South Asia department, said: “By combining state-of-the-art industrial clusters, efficient transport, and reliable water and power supplies with a skilled work-
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force and good business policies, we expect the Visakhapatnam-Chennai industrial corridor to become a favoured investment destination. “We estimate that by 2025, annual industrial output along the corridor will increase fourfold to USD 64 bn from about USD 16 bn in 2015 if investment opportunities are maximized over the coming 10 years.”
Tirupati Airport Gets Award of Best Tourist Friendly Airport Airports Authority of India’s Tirupati Airport has been awarded as ‘Best Tourist Friendly Airport’ under the category for ‘State Annual Excellence Awards for the year 2015-16’ by Andhra Pradesh Tourism. The award was presented on the eve of World Tourism Day by the Chief Minister of Andhra Pradesh Chandrababu Naidu. The State Annual Tourism Excellence Awards under various segments of travel and tourism industry are awarded by Department of Tourism, Government of Andhra Pradesh for maintaining excellent customer friendly relations with tourists and passengers, coinciding with World Tourism Day Celebrations.
L&T Construction Wins Contracts in Saudi Larsen and Toubro’s construction unit has secured contracts worth Rs 14.58 bn (USD 218 mn) across its various business segments. The company’s power transmission & distribution business has won engineering, procurement and construction (EPC) contracts worth Rs 6.54 bn (USD 97.8 mn) in the international and domestic markets. The business has been awarded a contract by the National Grid Saudi Arabia — a subsidiary of Saudi Electricity Company — for the construction of a 132kV double circuit transmission line and a 132kV cabling in the Rafah, Arar, and Sakaka areas of Saudi Arabia.Furthermore, the business has won an order, under the Integrated Power Development Scheme (IPDS), from Kanpur Electricity Supply Co Ltd (KESCo). The Urban Electrification project involves the
design and construction of new substations and feeders and the upgrade of electricity network of Kanpur. The business has also won a contract from Power Grid Corporation of India for the construction of gas insulated substations in Vadodara, Navasari, Pune, and Gwalior cities. The building & factories business has been selected for projects valued at Rs 5.18 bn (USD 77.4 mn) in the domestic market. It has won an order from a paint manufacturing company for the construction of a new manufacturing facility in Karnataka. The scope of the project includes civil and allied structural works. Additionally, the business segment has secured a residential project at Bengaluru. The contract includes civil and structural works for the construction of seven towers of G+14 and 11 towers of G+15 with two levels of common basement.
EESL Assures of High Quality LED Street Lights Energy Efficiency Services Limited (EESL) strongly refutes all claims of having installed faulty LED street lights in their project in the South Delhi Municipal Corporation (SDMC) area. Under the Government of India’s Street Lighting National Program (SLNP) over 1.98 lakh conventional street lights have been replaced with LED street lights in Delhi. A social audit of about 4,500 people was conducted by Price Waterhouse Coopers (PwC) in SDMC area in May 2016. The audit shows that at an average 99.5 percent people feel that the LED street lights have contributed in enhancing the security of the vulnerable groups during nights. About 99.75 percent of the people responded that the intensity & the brightness of the LED street lights is better than the earlier street lights. EESL procurements conform
to maintain an uptime of 95 percent, which in the present case is more than 97 percent. This is one of the highest in the country.
to BIS specification & carry a 7-year warranty against technical defects. EESL conducts appropriate quality checks right from the bidding stage to the field level. This has resulted in the LEDs’ overall technical fault being less than 2 percent in the 14 lakh lights installed by EESL in the country. As per the contract, EESL is required
EESL is also taking proactive measures for grievance redressal, such as use of social media platforms, BSES toll free helpline, email complaint system and use of mobile vans for night patrolling. EESL is installing Centralized Control and Monitoring System (CCMS) at a fast pace to enable remote operation and monitoring of the street lights across the Nation. EESL has guaranteed reduction in energy consumption by 53%. This project will result in annual reduction of 26.2 million kWh of energy during peak hours. SDMC will benefit by Rs. 41.47 crore over the said period without having to invest any capital upfront.
October 2016 | CONSTRUCTION TIMES | 15
cover story
Sailing Towards a New Horizon The shipping and ports sector has been witnessing a peak in award of port development projects attracting investments due to the government’s thrust on port-led development.
T
he Indian coastline has 13 major ports and about 200 non-major ports. According to the Ministry of Shipping, the sector is the carrier of around 95 percent of India´s trade by volume and 70 percent by value. The sector being a major driver of the economy, the government has taken initiatives to chart a new growth trajectory. The government has envisaged ‘Sagarmala’ project with the objective of strong and vibrant ports along the coastline connected through an efficient evacuation network with the hinterland, leading to port-led development. This port-led development model intends
to integrate ports with hinterland hubs and industrial clusters or corridors, with emphasis on employment generation, skill development, tourism promotion, port-based urbanization and maritime service. While talking about the project, Anil Diggikar, (IAS), Chairman, JNPT, says, “Sagarmala is aimed at accelerating economic development in the country by harnessing the potential of integration of supply chain, India’s coastline, and river network. The prime objective of this program is to promote port-based or port proximate industrial and manufacturing clusters. These
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clusters would be developed in line with the three archetypes of energy, materials and discrete manufacturing. Reducing logistics cost and time for domestic & EXIM cargo are other objectives of this national program which would provide the most optimal mode of evacuation to/from ports for both EXIM and domestic cargo.” Stating ‘Sagarmala’ as the first step in the right direction to address the key issues plaguing the sector and unlocking the potential for port-led development which has long been constrained in India, Rajiv Agarwal, Managing Director, Essar Ports, avers, “The
initiative will not only lead to increased expenditure in the sector and private sector participation but also pave the way for creation of facilities which can deliver world-class parameters and compete with world’s best.” Government Initiatives According to India Brand Equity Foundation (IBEF), in order to change the landscape of infrastructure in the country, the government has taken following initiatives in the sector. • The Ministry of Shipping’s National Perspective Plan (NPP) aims at comprehensive and integrated development of Indian coastline by identifying potential geographical regions to be called Coastal Economic Zones (CEZs) extending 300-500 km along the coast and 200-300 km inland. • A high decibel pitch was made for aggressively developing the country’s port sector at a two-day Maritime India Summit (MIS) which was held in Mumbai in April 2016, and received firm commitments worth USD 12 billion and another USD 60 billion in the pipeline for projects in the sector. • The Union Cabinet is planning to propose amendments to the Multi Modal Transportation of Goods Act, 1993, with a view to increase transparency in the shipping and logistics sectors and to discourage container freight stations from overcharging both importers and exporters.
• The Government of India plans to introduce a new framework on renegotiation of Public Private Partnership (PPP) contracts, which will allow renegotiations based on sector-specific issues, especially for national highways and ports, and provide greater flexibility to the parties involved. • The Ministry of Shipping, India and the Ministry of Oceans and Fisheries, Korea have signed a Memorandum of Understanding (MoU) for cooperation in terms of sharing technology and experiences in port development and operation, and joint port-related construction, building and engineering projects. • The Union Minister stated that the Government of India has set an ambitious target to convert 101 rivers across the country into waterways to promote water transport and propel economic growth. • The government plans to establish two new major ports, one at Sagar in West Bengal and the other at Dugarajapatnam in the Nellore district of Andhra Pradesh.
• The Cabinet Committee on Economic Affairs (CCEA) has approved the Mechanisation of East Quay (EQ) Berths-1, 2 and 3 at Paradip Port on Build, Operate and Transfer (BOT) basis, under Public Private Partnership (PPP) mode, which will increase their coal handling capacity from existing 7.85 million tonnes to 30 million tonnes. • The government is considering a proposal to set up an Integrated National Waterways Transport Grid (INWTG), which covers primarily five national waterways. The INWTG plan involves the development of these national waterways with at least 2.5 metres of least available depth (LAD), upgrade/setting up of priority terminals, and establishment of road connectivity (wherever feasible) and rail and port connectivity. • The Central Government has approved amendments to ‘The National Waterways Bill, 2015’ which will provide for enacting a Central Legislation to declare 106 additional inland waterways, as the national waterways.
• Prime Minister Narendra Modi has laid the foundation stone for the Fourth Container Terminal of Jawaharlal Nehru Port at Mumbai, which is expected to increase the existing capacity of the container terminal by more than twice.
As per IBEF, the Government is undertaking the following measures for the ports’ capacity expansion:
• The Ministry of Shipping, in collaboration with Rajasthan Government, has planned to develop an Inland Shipping Port at Jalore, Rajasthan.
• Income tax incentives would be allowed as per the Income Tax Act, 1961.
• Up to 100 per cent FDI would be allowed under the automatic route for port development projects.
October 2016 | CONSTRUCTION TIMES | 17
cover story • An expert panel of the Union Environment Ministry has recommended approvals for projects worth Rs 20,500 crore (USD 3.04 billion) in the aviation and port sectors. • Minister of Road Transport and Highways, and Shipping, Nitin Gadkari is hopeful of bringing a ‘blue revolution’ in five years which will include developing eight major ports, making 27 industrial clusters, developing rail and road connectivity with ports and will entail investment of around Rs 400,000 crore (USD 59.3 billion).
• Bidding documents such as RFQ, RFP and Concession Agreement have been standardised. • The Shipping Ministry’s power to delegate finances has been enhanced to accord investment approval for PPP projects. • Security clearance procedures have been streamlined. • The major ports’ developmental projects are being closely monitored. Due to these initiatives, the sector has gained momentum. “Export trade can become substantially competitive via cost efficient and timely logistics and this will also become one step forward for success of our Prime Minister’s ambitious campaign ‘Make in India’,” asserts Diggikar. Taking note of these steps, Agarwal hopes, “The vision also takes forward the government’s core philosophy of bringing all round development of the region. It will lay the founding stone for sustainable development of the sector.” Investments and Developments • Inland Waterways Authority of India (IWAI) and India Ports Global Private Limited (IPGPL) have signed a Memorandum of Understanding
(MoU) for implementation of three additional works worth Rs 476 crore (USD 70.56 million) in the Kaladan Multi-modal Transit Transport Project (KMTTP) in Myanmar. • The India Ports Global Pvt Ltd plans to set up a Special Purpose Vehicle (SPV) in Iran with participation from private Iranian and Indian firms to develop and operate the Chabahar port project, which is expected to give India a sea-land access route into Afghanistan through Iran’s eastern borders. • Maersk Line India Pvt Ltd, has expressed confidence in Government of India’s policies like Sagarmala project, and stated that the company is keen on taking Indian ports on lease.
• The Maritime India Summit 2016, which was held in Mumbai attracted investments worth Rs 82,905 crores (USD 12.29 billion) across 141 Memorandum of Understanding (MoU) and business agreements, which were signed by various players in the maritime sector. • JM Baxi Group, an integrated logistics, services and transportation conglomerate, has initiated talks with Private Equity (PE) funds to raise around USD 150-200 million, which will be invested in its assetheavy businesses such as port terminals and container handling facilities. • DP World Pvt Ltd, world’s fourth biggest container port operator, plans to invest over USD 1 billion in India, which will be used for augmenting its port-related operations. • Government of India plans to invest
Status-wise PPP Projects Summary Select
Number
Cost (In Crore)
Capacity(In MTPA)
Pipeline
4
1 830
35
Construction
26
13 651
156
RFP/ Under Bidding
11
12 835
143
RFQ/ EOI Stage
15
4 447
63
Under Operation
30
9 456
208
Total
86
42 218
605
Source: Ministry of Shipping
18 | CONSTRUCTION TIMES | October 2016
Rs 70,000 crore (USD 10.38 billion) in 12 major ports in the next five years under ‘Sagarmala’ initiative.
•
•
•
Government of India is planning ports Apr, 1999 to set up low-cost non-major Apr, 1999 along coastline under the Sagarmala Feb, 2002 Feb, 2002 project and has asked all the12 major 30/102006 ports to accord priority berthing 30/102006 June-2004 to such vessels and to encourage June-2004 quicker movement of cargo. 30/4/1998 30/4/1998 14/12/2006 Jindal ITF plans to invest nearly Rs 14/12/2006 500 crore (USD 74.12 million) to 01/03//200 01/03//2001 further transloading operations in 12/02/200 Haldia. The company, which 12/02/2004 already 446.54 03/2007 transports imported coal in barges 446.54 03/2007 to NTPC’s power plants in Farakka 21/12/1999 21/12/1999 and Kahalgaon from the Sandheads, 26/06/2003 26/06/2003 plans to transload cargo at the deep EQ8-23 Ju drafted location at Kanika Sands EQ9- Sept EQ8-23 July, 04 EQ9- Sept 6, 2005 27/08/1999 and transport it to Haldia. 27/08/1999 37.32 A memorandum of understanding 1 (MoU) has been signed between 1 25.13 the Inland Waterways Authority of 40.00 India (IWAI) and Dedicated Freight Corridor Corporation of India 500 (DFCCIL) to create logistics hubs 20 with rail connectivity at Varanasi and 7/03/2007 other places on national waterways. The joint development of state-of the-art logistics hubs at Varanasi and other areas would lead to the convergence of inland waterways 07/12/2003 with railways and roadways, thus providing a seamless, efficient and 29/01/2002
cost-effective cargo transportation solution.
• The state-run Shipping Corporation of India Ltd (SCI) is expected to purchase five vessels from the state- owned Cochin Shipyard Ltd. It is also likely to issue tenders to buy two used Liquefied Petroleum Gas (LPG) carriers as it looks to re-start ship purchases that were frozen after poor financial performance.
• Kamarajar Port Limited (KPL, erstwhile Ennore Port Limited) has signed an agreement with M/s Toyota Kirloskar Motor Pvt Ltd to export automobile units through Kamarajar Port. The agreement primarily includes a clause that
Construction of Captive Jetty for handling Coal by M/s. NPCL
New Mangalore Port
75
75 16/01/2009 (operationa 480 Development of an IRON Ore Terminal on 2.2.2011 (PH-I – 360) BOT basis at Ennore. (PH-I – 120) 2 399.13 Development of Coal terminal for users 2.2.2011 other than TNEB on BOT basis at Ennore. ICTT at Cochin Vallarpadam 2118 11.2.2011 (Ist Phase 1262) (ist phase) 03/12/2007 230.00
3.0
Captive
Source: Ministry of Shipping
would restrict original equipment manufacturers (OEMs) to use KPL as their primary port. KPL would in
turn offer volume-based discounts on the tariffs on certain facilities for the smooth functioning of operations.
October 2016 | CONSTRUCTION TIMES | 19
September
cover story • The Visakhapatnam Port Trust (VPT) has outlined an Rs 3,000 crore (USD 444.72 million) expansion-cum-modernisation plan aimed at enhancing the port’s capacity by nearly 50 percent. The port is estimated to invest Rs 800 crore (USD 118.6 million), a fourth of the planned investment, while seeking private partners to invest the remainder by way of publicprivate partnerships (PPPs). • Maharashtra’s Jawaharlal Nehru Port Trust (JNPT) plans to build a satellite port at Wadhwan near Dahanu (bordering Gujarat), which is estimated to cost Rs 10,000 crore (USD 1.48 billion) to build and likely to ease the congestion of ships at JNPT. Stumbling Blocks The sector also has its own challenges. Port projects require long gestation period. Development of these projects has higher implementation risk like high financing cost, land acquisition issues and ensuring hinterland connectivity for evacuation of cargo. In the past, many projects were not able to see the
day of light due to lack of clearances like environment, security in place. “Lack of infrastructure for evacuation of cargo at Indian Ports leading to a suboptimal transport modal mix, limited hinterland linkages and its impact on transportation costs, low penetration of coastal and inland shipping, and lack of deep draft at ports also contributed to the skewed growth. A major issue was delay in implementation of
Port-wise PPP Projects Summary
projects, especially that of greenfield ports, on account of the protracted process of receiving clearances, like environmental clearance, security clearance, litigations during tendering process and after awarding the project. Obtaining clearance for such projects was the most challenging,” says Diggikar. “The government is now working on the reforms suggested by the experts like more freedom to major ports, improvement in port efficiencies, improvement in ports basic infrastructure, modernization and connectivity,” he further adds.
Select
Number
Cost
Capacity(In MTPA)
(In Crore)
Capacity
1 830
35
(In MTPA)
26
13 651
156
KOLKATA
7
2 135
33
PARADIP
10
3 106
71
VISAKHAPATNAM
13
3 106
66
ENNORE
4
2 535
38
CHENNAI
6
4 731
71
Way Forward
VOCPT
11
1 760
47
COCHIN
6
8 409
69
NEW MANGALORE
2
526
10
MORMUGAO
4
1 427
21
MUMBAI
1
1 460
9
JNPT
5
9 150
104
KANDLA
17
3 874
67
Total
86
42 218
605
In order to bring port sector on growth trajectory, it is essential that the risks are equitably shared. The government needs to undertake modernization of facilities. “The singular focus of the Govt towards building mega ports with creating international benchmarking is itself a big achievement and we are sure that Govt’s support will make it bigger in the times to come,” concludes Diggikar.
Source: Ministry of Shipping
20 | CONSTRUCTION TIMES | October 2016
Additionally, the projects bid out under major ports are under tariff regime of TAMP which caps the revenue that escalates the risk when the market sees a downward trend. Agarwal asserts, “This has led to reduced interest of private sector participation in recent years.”
Article
Cover Story
A Global Growth Partnership Compa
Analysis
Setting the Sail
Maritime logistics accounted for 90% of foreign trade by volume through 200 ports, as of FY 2015. D to the importance of the maritime sector in supporting national growth agenda, priority is given implementation of Maritime Agenda (2010-2020) through the right mix of policies, which are targe toward improving investment climate, easing administrative hurdles, modernizing existing p facilities, and developing new port infrastructure to improve capacity and efficiency of mariti logistics. This article analyzes preparedness of Indian ports for massive capacity augmentation in context of recent trends in capacity additions and investment, key challenges, and the prospects preparedness of sector. Indian ports for massive capacity future growth in the port
The article gives a glimpse of augmentation in the context of recent trends in capacity additions and investment, key Traffic Trends challenges, and the prospectsPort forCapacity futureandgrowth in the port sector. aritime logistics accounted for 90 percent of foreign trade by volume through 200 ports, as of FY 2015. Due to the importance of the maritime sector in supporting national growth agenda, priority is given for implementation of Maritime Agenda (2010-2020) through the right mix of policies, which are targeted toward improving investment climate, easing administrative hurdles, modernising existing port facilities, and developing new port infrastructure to improve capacity and efficiency of maritime logistics. This article analyses preparedness of Indian ports for massive capacity augmentation in the context of recent trends in capacity additions and investment, key challenges, and the prospects for future growth in the port sector. Port Capacity and Traffic Trends The capacity at major ports is estimated at 965.36 million ton (MT) in 2016. Nearly 220 MT of capacity was added between 2013 and 2016; Kandla, Paradip,
Ennore are some of ports, which have Port (JNPT) Mumbai, New Mangalore, increased their capacitiesExhibit during this of 1: Capacity Major Ports, Cochin, and2013-2016 Kolkata. Container period. Port Capacity (Million Ton)
M
The capacity at major ports is estimated at 965.36 Million ton (MT) in 2016. Nearly 220 MT of capac was added between 2013 and 2016; Kandla, Paradip, Visakhapatnam, Jawaharlal Nehru, Hald Visakhapatnam, Jawaharlal Nehru, contributions coming their fromcapacities ports during t Tuticorin, Mormugao, and Ennore are some of ports, which have increased Haldia, Tuticorin, Mormugao, and located in Chennai, Jawaharlal Nehru period.
140.0 120.0 100.0 80.0 60.0 40.0 20.0 0.0
Capacity as on 31 March 2013
Capacity Addition (2014-2016)
Source: Port Authority of India
Source: Port Authority of I
capacity is expected to increase in these In 2015, port traffic was estimated at 1.05 Billion Ton with ports demand contributing ports due non-major to increasing for44% of it has grown at the CAGR ofhas 5.1%increased between 2010containerization. and 2015 with non-major ports located in Gujar Container tonnage The Indian Maritime from 3.3 Million TEUs inand2010 to contributing to most of the increase in traffic during t Maharashtra, Andhra Pradesh, Kerala 3.8 Million TEUs in 2015 with main period. Capacity of Major Ports, 2013-2016
22 | CONSTRUCTION TIMES | October 2016
cut travel time and unit transportation costs for manufacturers by 40 percent. Freight transported through DFC is expected to grow from 140 MMT in 2016-17 to 182 MMT in 2021- 22 at a CAGR of 5.4 percent. There will be 14 Coastal Economic Zones, out of which eight are to be located in the Eastern coastal region including Tamil Nadu, Andhra Pradesh, Odisha, and West Bengal. These zones will focus on the development of apparel, electronics, leather, steel, petrochemicals, cement, and shipbuilding industries in the coastal economic zones, which is likely increase demand for sea freight Challenges Agenda plans to create port capacity of around 3,200 MMT for handling the expected traffic of about 2,500 MMT by 2020. As per the plan, major ports are expected to contribute 1,459 MMT, which is 48 percent of the capacity by 2020. Investment Trends in the Port Sector In order to raise the capacity to meet the increasing demand for freight traffic, the Government has taken a number of initiatives to improve investment and regulatory environment to attract investment from the private sector. As a consequence of these initiatives, Foreign Direct Investment (FDI) of upto 100 percent under the automatic route for port and harbor construction and maintenance project and also a 10-year tax holiday to enterprises that develop, maintain, and operate ports, inland waterways, and inland ports have been facilitated. Other initiatives include improving transportation infrastructure such as Sagarmala, which aims to reduce high logistics costs by investing in capacity expansion of port-related infrastructure and develop industrial clusters along the coastal zones. Investment requirement is estimated at about USD 58 billion (Rs 4 lakh crore) over the period 2016-2025. Sagarmalarelated infrastructure development is expected to increase exports by
USD 110 million and increase coastal shipping volumes to 330-420 MT per annum. These projects are likely to be completed by 2025. Key Features of Sagarmala, 2016 Port Modernization: Under the port modernization drive, 53 projects are expected to be undertaken to ensure that the port handling capacity is increased by 1,000 MT per annum. This includes six new mega port projects. Port Connectivity and logistics: Hinterland connectivity and multimodal logistics with 10,000 km of new connectivity infrastructure projects as well as seven new dry ports. Port Lead Industrialization: 27 industrial clusters will be developed by investing USD15 Billion. Smart port industrial cities, coastal industrial clusters, and free trade warehousing zones will be developed. Ports are expected to witness large capacity expansions due to improved connectivity to industrial and consumption centers in the Northern, Western, and Eastern regions. Dedicated Freight Corridors (DFC) connect the ports located in Western and Eastern coastal areas with production centers located in MumbaiDelhi and Amritsar-Kolkata Industrial Corridors. These DFC are expected to be completed by 2019 and are expected to
Manufacturing and export competitiveness are affected by infrastructure bottlenecks such as poor ports facilities, road conditions resulting in traffic delays, and congestion in entry-exit points. Although Logistics Performance Index of India has improved from rank 54 in 2014 to 35 in 2016, the country lags behind in terms of hinterland connectivity between major ports and industrial centers. Administrative hurdles relating to maritime logistics include delays resulting in high number of forms used for customs clearance. Some of other key challenges facing port infrastructure development are listed below: • Transportation bottlenecks, lack of seamless connectivity, administrative controls, and procedures contribute to delays and increase transit time. Inadequate road and rail connectivity with ports has contributed to underutilization of port capacities. Poor connectivity with industrial centers adds to production costs as raw materials have to be shipped from ports to industrial centers and finished goods have to be shipped from production centers to ports. • Poor physical and communication infrastructure, high dwell time at ports, low levels of containerization,
October 2016 | CONSTRUCTION TIMES | 23
Cover Story
Analysis
and a multi-layered tax system lead to significant delays at border crossing points and add to the complexity of sea freight movement. • Containerization levels are low compared to international standards due to poor port container terminals. Port capacity is not adequate to accommodate large container vessels, which have increased reliance on other regional ports. The average size of a container vessel calling at Indian ports is 5,000 TEUs compared to 12,000 TEUs in China. As a result of this lower capacity of container terminals, around 25 percent of India’s container cargo is transshipped through regional transshipment ports. In an increasingly connected world, modernization of current port infrastructure is critical for improving maritime logistics efficiency. • Port congestions, service disruptions due to labor issues, inadequate capacity to handle cargo volume due to truck bottlenecks, etc are some of the factors contributing underutilization and inefficiencies in cargo loading and unloading, and leading to increase in logistics costs. Scope for Further Growth and the Way Forward Industrialisation
without
adequate
infrastructure development is likely to affect competitiveness of the manufacturing sector and, hence, port development initiatives are likely to gain support from the Government in terms of policy support, which will attract investment from the private sector. The Government of India’s Foreign Trade Policy (2015-2020) aims to increase the value of trade to USD 900 billion by 2020, by aligning with Government initiatives such as Make in India, Digital India, and Skills India to promote exports growth. Government initiatives to promote the manufacturing sector and increased exports are likely to increase the demand for port capacity and improve logistics connectivity between production centers and major ports. Trade with Asia, Europe, and North America are likely to remain the major drivers for freight forwarding services in the next decade. The Shipping Ministry has proposed a new model concession agreement (MCA), which will replace the existing agreement to attract more private sector investments in the development of port infrastructure. Key features of the prosed MCA include equitable allocation of project risks, handling of unforeseen circumstances, removal of ambiguity in existing provisions, and attract more private sector investments. The Sagarmala initiative is likely to transform coastal freight and is expected to generate additional demand for logistics infrastructure
such as capacity expansion in inland container depots, container freight stations due to expansion on portled industrial development, and coastal economic zones. Connectivity across modes of transport and logistics parks is expected to increase multi-modal transshipments. Portled industrialisation, improved connectivity to major ports, and port modernisation initiatives are expected to transform coast regions through increased trade opportunities. Private sector participation in port modernisation is likely to reduce port congestion. Improving weak infrastructure connectivity and distribution networks, developing specialty storage facilities, bringing in uniform regulations, and removal of administrative hurdles to prevent loss of time to deliver across borders are required to improve maritime logistics efficiency. Container freight stations (CFS), cargo villages, and air freight stations are expected to strengthen infrastructure and contribute to improvement in system performance. Planned logistics parks, free trade warehousing zones along DFC, and multi-modal logistics hubs, including a mega trans-shipment hub in southern India, are expected to benefit from increase in port capacity. To meet the targets of Maritime Agenda 2010-2020, the Ministry of Shipping plans to raise USD 14.82 billion to modernise existing ports and develop new ports, build ships, and improve inland waterways in the country. Nonmajor ports are expected to contribute nearly 50 percent of the planned increase in capacity during this period. India’s port sector is expected to see high levels of growth due to increasing levels of private sector participation as a result of recent initiatives undertaken by the Government. (This article has been authored by By T J Sivan, Senior Consultant, Supply Chain & Logistics Transformation, Frost & Sullivan.)
24 | CONSTRUCTION TIMES | October 2016
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cover story
interview
“Need to Upgrade Basic Infra to Improve Competitiveness” Anil Diggikar, (IAS), Chairman, JNPT says the singular focus of the Govt towards building mega ports with creating international benchmarking is itself a big achievement and we are sure that Govt’s support will make it bigger in the times to come in an interaction Supriya Oundhakar. Please throw light on the current scenario of the sector? India’s maritime logistics, which is the world’s 16th largest maritime with a coastline of about 7,517 km, has been playing a vital role in sustaining the growth in trade & commerce. Ports & ports-led activities in the country have showcased a tremendous rise in the recent years, navigating India on to a preferred ranking in the world. The cargo traffic handling by major 12 ports in the last financial year has grown upto 4.3 percent at 606.37 million tonnes. The growth in container raffic, which reflects largely trade in manufacturers and components, has grown up by 3.1 percent against previous year. Jawaharlal Nehru Port Trust (JNPT), India’s no 1 container port, handles 46 percent of total container capacity and 55 percent of total major ports’ capacity. The coming years would be very exciting
for the ports as the container traffic is estimated to go upto 21.5 million TEUs by 2025 on the back of Government’s constant encouragement towards the infrastructure creation, mega investments, international standard systems and bigger participation from the trade. What are the initiatives taken by the government to generate the momentum in ports and shipping sector? What are the opportunities generated for the sector due to the government’s policies & reforms? Do you think that the government’s initiatives helped the sector to achieve the success to some degree? The Ministry of Shipping has laid great emphasis on improving India’s container logistics to international benchmarks and identified several ‘Ease of Doing Business’ initiatives required to create a very competitive logistic platform. These initiatives are taken
26 | CONSTRUCTION TIMES | October 2016
to simplify cargo clearance process, reduce congestion and dwell time. They include integration of import general manifest (IGM) system with terminal operating system, extending of direct port delivery facility to all accredited client programme (ACP) clients, installing of container scanner, implementation of e-delivery orders and Radio Frequency Identification Device (RFID) based gate automation system among the total 14 initiatives. In line with the government’s directive, JNPT has taken initiatives to create modernisation and taken up capacity building characteristics for future. The port has taken various measures to improve its performance parameters like gate policies, yard planning, maximize twin-lift handling, reducing idle time. As a result of these initiatives the performance parameters of JNPCT (owned by JNPT) has improved to a large extent. JNPCT handled container traffic 1.43 million TEUs in FY 2015-16, which is all time highest since inception
of the terminal, and registered a growth of 10.45 percent. All the three terminals of JNPT has eliminated Form 13 & 11 manual documentation process by introducing web based eForm 13 to save time and resources. To reduce delays for gate transaction and seamless flow at container gates port is implementing the RFID based gate automation system. The government has drawn up projects with an investment potential of Rs 1,20,000 crore including 27 port-based clusters, coastal shipping and inland waterways. How will these project help to bring efficiency in port operations? With identified projects and initiatives, the total capacity of ports in India is expected to grow from the current 1,400 million tonnes to 2,500 million tonnes by 2025. In addition to building capacity, these projects and initiatives will improve the performance of ports and the turn-around time is estimated to reduce from 4-5 days to less than 2 days. As you know, Govt’s special focus towards building mega ports in India is well under construction and existing ports are undergoing a seachange advancements with a view
to create a convenient, economical and environmental-friendly society. A robust maritime logistic sector and a modern and efficient port infrastructure can be a strong catalyst of economic growth. Export trade can become substantially competitive via cost efficient. This will also become one step forward for success of our Prime Minister’s ambitious campaign ‘Make in India’. The Government has embarked on Sagarmala infrastructure development program. How will it help the Indian Port sector to elevate its position on the global port map? Sagarmala is aimed at accelerating economic development in the country by harnessing the potential of integration of supply chain, India’s coastline, and river network. The prime objective of this program is to promote port-based or port proximate industrial and manufacturing clusters. These clusters would be developed in line with the three archetypes of energy, materials and discrete manufacturing. Reducing logistics cost and time for domestic & EXIM cargo are other objectives of this national program which would provide
the most optimal mode of evacuation to/from ports for both EXIM and domestic cargo. new port development under Sagarmala: Six new locations have been identified for new port locations based on three themes. a) Port Saturation, b) Non-Availability of a port on the coastline stretch and c) Strategic location. Wadhawan and Paradip south satellite port and Sagar Port have been identified in places where existing ports have saturated. The port at Wadhawan near Dahanu in Thane District with a depth of 20 metres, will act as a satellite port for JNPT, which is mainly expected to cater to container traffic from north hinterland. What challenges do you face during the execution of port projects? How do you overcome those challenges? A major issue was delay in implementation of projects, especially that of greenfield ports, on account of the protracted process of receiving clearances, like environmental clearance, security clearance, litigations during tendering process and after awarding the project. Obtaining clearance for such projects was the most challenging. The government is
October 2016 | CONSTRUCTION TIMES | 27
cover story
interview
now working on the reforms suggested by the experts like more freedom to major ports, improvement in port efficiencies, improvement in ports basic infrastructure, modernization and connectivity. To ensure the success of the port sector in India what we need is an interface and co-ordinated efforts across various infrastructure departments at central and state levels to address infrastructure developments and connectivity issues. What are the projects in pipeline? How did you raise the funds for these projects? JNPT has planned to invest in creating world-class infrastructure facilities with bracing innovative technologies, encouraging cleaner environment and supporting social up liftment. JNPT is in the process of creating the 4th Container Terminal, which is the biggest FDI project in port sector, with an investment of Rs 7,915 crore. The Terminal, awarded to an SPV of Port of Singapore Authority and BMCTPL, will develop 2 km of jetty in two phases by November 2017 and November 2022 respectively and would have handling capacity of 4.8 million TEUs. The other plan is to deepen the harbour channel from 14 meters to 15 meters to cater bigger vessels at an estimated cost of Rs 2,029 crore. Our forward vision includes setting up of a new port at Wadhavan. This all-weather satellite port is a joint
venture of Maharashtra Maritime Board and Jawaharlal Nehru Port. It would be developed in a phased manner. Once the project is completed, it could be having more than 100 million tons of annual cargo handling capacity with 14 to 15 terminals. The total project could be about Rs 10,000 crore. This port is being developed as an international port which would cater to all future vessels with international standards. This new port would have 20 meters of natural draft which could firmly place India on the global maritime map. Another enterprising plan of the port is development of two dry ports- one in Wadhawan and the other in Jalnaboth in the state of Maharashtra, in
28 | CONSTRUCTION TIMES | October 2016
India to boost industrialisation, trade and commercial activity in the region. Recently, we have raised USD 400 million through ECB route. What are your expectations from the government to bring the sector on track? The growth of infrastructure development in port sector was low in past few years due to general economic slowdown. With the signs of revival of economic growth, there is a need to upgrade the basic infrastructure to improve the competitiveness of Indian companies to reduce logistic cost. The port sector requires huge investments for construction of jetties, berths, etc, deepening of channels, procurement, replacement and/or upgradation of port equipment and to improve hinterland connectivity or last mile connectivity. Lack of infrastructure for evacuation of cargo at Indian ports leading to a sub-optimal transport modal mix, limited hinterland linkages and its impact on transportation costs, low penetration of coastal and inland shipping, and lack of deep draft at ports also contributed to the skewed growth. The singular focus of the Govt towards building mega ports with creating international benchmarking is itself a big achievement and we are sure that Govt’s support will make it bigger in the times to come. ď Ž
cover story
Interaction
“LNG is Expected to be a Game Changer” Essar Ports specialises in development and operations of ports and terminals for handling liquid, dry bulk, break bulk and general cargo. It is one of the largest private sector port companies in India by capacity and throughput. Rajiv Agarwal, Managing Director, Essar Ports gives a glimpse of changes in MCA, Essar Port’s expansion plans, the government’s initiatives for ports in a candid conversation with Supriya Oundhakar. Please throw light on the current scenario of the sector? Indian ports traffic has grown at 7 percent CAGR in the past with nonmajor ports taking the lead in the last decade. Non-major port’s traffic has grown at 12 percent CAGR and they have increased market share from 24 percent (in 2001) to ~43 percent (in FY 2016). POL, bulk cargo and containers have been driving the growth story and going forward LNG is expected to be a game changer. What is the USP of your ports? Essar Ports Limited (EPL) has world class assets at strategic locations and is in the process of expanding its capacity in India from 140 MMTPA to 170 MMTPA by end of 2017 and to 194 MMTPA by 2019. Its state-of-the-art mechanized facilities are all weather, deep draft and offer round the clock operations. They are designed to deliver the best in class industry standards. (Higher parcel sizes, highest loading or unloading rates, lowest turnaround times and environmental friendly handling) What are the initiatives taken by the government to generate the momentum in ports and shipping
sector? What are the opportunities generated for the sector due to the government’s policies & reforms? Do you think that the government’s initiatives helped the sector to achieve the success to some degree? The potential for port-led development has been constrained by high logistics cost, long lead-times and poor linkages between industrial and logistics infrastructure for long. Government’s initiative is the first step towards a new era of port-led development in India by involving all key stakeholders and focusing on projects relating to port
30 | CONSTRUCTION TIMES | October 2016
development, port modernization, port led development, shipbuilding & repair, inland waterways transportation & coastal shipping, hinterland connectivity & multi-modal logistics (port connectivity), tourism & capability development measures. The vision also takes forward the government’s core philosophy of bringing all round development of the region. It will lay the founding stone for sustainable development of the sector. The government has drawn up projects with an investment potential of Rs 1,20,000 crore including 27
port-based clusters, coastal shipping and inland waterways. How will these project help to bring efficiency in port operations? The Government has embarked on Sagarmala infrastructure development program. How will it help the Indian Port sector to elevate its position on the global port map? The key underlying principle of these projects is to substantially reduce export-import and domestic trade costs with a minimal investment. The plan leverages on optimizing multi-modal transport to reduce the cost of domestic cargo, minimizing the time and cost of export-import cargo logistics, lowering costs for bulk industries by locating them closer to the coast, and improving export competitiveness by locating discrete manufacturing clusters near ports. This is first step in the right direction to address the key issues plaguing the sector and unlocking the potential for port-led development, which has long been constrained in India. It is important that strong focus is now laid on execution of the plan which will determine its success. The initiative will not only lead to increased expenditure in the sector and private sector participation but also pave the way for creation of facilities which can deliver world-class parameters and compete with world’s best. According to you, which model is better for development of port projects? What changes would you like to incorporate in new Model Concession Agreement (MCA)? How will it enhance private investments in the sector? Land Lord Port Model and awarding projects through public private
partnership is the preferred model for development in India. However, in case there is a need of captive facilities then the same should be also promoted which can be seen through the recent captive policy. The same provides for handling of commercial cargo at captive facility in case there is a user, thus, promoting all round development. Draft MCA should be amended for captive projects. The concessioning authority should be given more powers like providing for flexibility when dealing under various contracts in case of change in market and policies making more customer centric approach and thus helping in mitigating risks and boosting confidence in the sector. What challenges do you face during the execution of port projects? How do you overcome those challenges? What are your expectations from the government to bring the sector on track? Projects in India are prone to higher implementation risk in terms of high financing cost, securing various approvals, land acquisition issues and ensuring hinterland connectivity for evacuation of cargo. Additionally, the projects bid out under major ports are under tariff regime of TAMP which caps the revenue that escalates the risk when the market sees a downward trend. This has led to reduced interest of private sector participation in recent years. However, the National Perspective Plan issued by Ministry of Shipping highlights the focused approach of Government and their vision to resolve these issues plaguing the sector. To spur the growth in port sector, boost investor confidence and private sector investor investment, it is important that the risks
are equitably shared, modernization of facilities are undertaken and decision making is expedited. The same can be achieved through: • Ensuring access to low cost long term funding solutions for infrastructure sector • Tax exemption for import of capital equipment for development • Tax exemptions for boosting LNG import traffic in India for both LNG and FSRU • Flexibility with concessioning authority when dealing under various contracts under stress • Remove tariff restrictions and allow market forces to determine tariff for services offered • Bidding of projects after receipt of all approvals to avoid any delays • Reservation of land for port and connectivity projects and simplifying land acquisition process What are the projects in pipeline? How did you raise the funds for these projects? Essar ports has cargo handling capacity of 140 MMTPA and we are in the process of increasing the capacity to 194 MMTPA. Capacity addition will be through various terminals across the country like terminal at Hazira, Visakhapatnam port, Paradip port etc. Total investment required is approximately Rs 2,000 crore and the funds will be raised through combination of internal accruals and long term project debt. Expansion projects are expected to be completed by 2019.
October 2016 | CONSTRUCTION TIMES | 31
cover story
Interaction
“We Hope to See an Increased Demand for Port Equipment” Anil Bhatia, Head – Sales & Marketing, TIL Limited says we remain committed to providing cutting edge technology in our products and total solutions with the ultimate aim of enhancing customer-value in an interaction with Supriya Oundhakar. The Government has embarked on Sagarmala infrastructure develop ment program. How do you envisage the equipment demand projecting with government’s initiatives for revival of infrastructure? Sagarmala is a long-term program. The objectives of the Sagarmala Program are port modernization & new port development, enhancing port connectivity to hinterland, portled industrialization and coastal community development. It involves the drawing up of a National Perspective Plan (NPP) for port modernisation & new port development, port connectivity enhancement, port-led industrial development and coastal community development as a first step for an integrated approach
to port-led development. As the program gathers steam, we hope to see an increased demand for port and construction equipment.
requirements for equipment that offer the latest technology and are more efficient and productive apart from being environment-friendly as well.
The government has drawn up projects with an investment potential of Rs 120,000 crore including 27 port-based clusters, coastal shipping and inland waterways. What kind of opportunities will it generate for the port equipment vendors?
What are technological innovations incorporated in your products in order to make them more energy and cost efficient?
The opportunities are expected to be substantial. Majority of the ports, container freight stations (CFS), inland container depots (ICD) and container train operators (CTO) will h a v e
32 | CONSTRUCTION TIMES | October 2016
TIL Limited manufactures and markets products in India in alliance with some of the best technology leaders in the world. Our products embody the very latest technology in their respective categories, with superior focus on efficiency and environment friendliness. For example, the HysterTIL® ReachStacker, which is the market leader in its category in India. It has the unique features of power on demand and regenerative cycle that make the equipment consume less energy, yet perform better. The machine truly lives up to its tagline – No one moves more containers than the HysterTIL® Reach Stacker.
Please brief us about your company’s equipment catering to port sector? TIL is engaged in the design, manufacturing and marketing of a comprehensive range of material handling, lifting and port equipment solutions. Acknowledged as a market leader in mobile cranes and ReachStackers, our portfolio of products catering to port sector includes Hyster-TIL® ReachStackers, heavy-duty Diesel Fork Lift Trucks, and Paceco Rubber Tyred Gantry Cranes (RTG), we also offer the full range of Mobile Cranes (Industrial Cranes, Truck Cranes, Rough Terrain Cranes, All Terrain Cranes), Lattice Boom Crawler Cranes and Container Handlers. Over the past seven decades, TIL has been partnering India’s infrastructure growth and has emerged as one of the leading providers of a wide range of equipment that represents some of the finest in global technology. As a responsible nation builder, we remain committed to providing cutting edge technology in our products and total solutions, with the ultimate aim of enhancing customer-value.
The Indian port equipment industry is undergoing a rapid transformation by moving from a low volume, intensive use of equipment structure to high volume, and specific use one. Please comment. With globalization and increased competition, the nature of demand for equipment has expanded beyond the usual parameters of productivity and efficiency to also encompass environment-friendliness and energyefficiency as important attributes. There is also an increased level of specialization. In keeping with these trends, TIL has enhanced its offerings to focus more intensively on customer requirements, with add-on features to address specific or unique applications. Please apprise us about the valueadded services offered by the company? To complement its wide portfolio of products, TIL offers a range of valueadded services and integrated product support with a view of enhancing customer profitability. Backed by a
pan-India network of offices and over seven decades of expertise in material handling and port equipment solutions, TIL sets the standard in quality, performance, durability and value. What policy changes do you expect from the government in order to bring the construction equipment industry on growth trajectory? The Government is taking a lot of policy action to revive stuck projects and activate others on the ground. Several project developers have been facing liquidity issues over the last few years. In this regard, the newly incorporated easy exit clause and innovative funding avenues like the National Investment and Infrastructure Fund (NIIF) show a lot of promise. In addition, the recent shift in the mode of project awards from the conventional PPP to the Hybrid Annuity Model is also very encouraging. Owing to these policy changes, the infrastructure sector as a whole is expected to see a lot of fresh investment going forward. And that spells good news for the construction equipment industry.
October 2016 | CONSTRUCTION TIMES | 33
Renewable Energy
Analysis
Emerging Dominance of Solar Energy
India has embarked on a journey towards a significant increase in renewable energy capacity. Solar will dominate the renewable energy basket. However, it needs to provide policy support covering various measures to domestic manufacturers.
I
ndia’s sustained economic growth is placing enormous demand on its energy resources. With its large population and rapidly growing economy, India needs access to clean, cheap and reliable sources of energy. In order to meet growing demand and keeping in view the climate change, India has embarked on a journey towards a significant increase in renewable energy capacity. Solar will dominate the renewable energy basket. Government of India (GoI) has set an ambitious target of achieving 100 GW solar energy by 2022. Currently, India’s renewable energy (RE) capacity has exceeded 39 GW as on March 2016 of which solar energy contributes ~ 13 percent. GoI with an intent to boost investment in solar space, initiated Jawaharlal Nehru National Solar Mission (JNNSM) scheme to develop the solar parks. With focused efforts of GoI, JNNSM scheme witnessed impressive biddings from project developers, both domestic as well as
international developers. Initially, under JNNSM phase I (batch 1) and (batch 2) the average tariff discovered under bidding process stood at Rs 12.16/kWh and Rs 8.77/kWh respectively. However, over the period, the bidders have been aggressive in quoting the tariff as low as Rs 4.34/ kWh. Industry players raised concerns over sustainability of projects with risk of debt servicing for lenders over such low tariff. These concerns, however, are vanishing with solar equipment price crashing in China, which has impacted the landed module price in India. The demand supply imbalance in China has led to oversupply and further price reductions may be a good possibility. Indian developers who had submitted the tariff bids keeping in view the price at the time of bid will witness substantially improved returns with low cost procurement. Solar power tariffs, which have fallen below Rs 5/kWh are expected to fall further as globally the module prices which
34 | CONSTRUCTION TIMES | October 2016
forms ~ 60 percent of the project cost has fallen in the first half of 2016. Progressive Policies: Impetus for growth In order to meet record ambitious target, Government of India has taken number of policy initiatives, such as: • Implementation of a scheme for development of solar parks and ultra-mega solar power projects in the country • Scheme for setting up of 15,000 MW of grid-connected Solar PV Power plant through NTPC Ltd / NVVN under National Solar Mission • Setting up of 750 MW grid connected solar PV projects under JNNSM with Viability Gap Funding support from National clean Energy Fund • Implementation of scheme for setting-up of 1000 MW GridConnected Solar PV Power Projects
by CPSUs and GoI organizations • Guidelines for Selection of 3000 MW Grid – Connected Solar PV Power Projects under Batch-II “State Specific Bundling Scheme” • Scheme for setting up of 300 MW Grid Connected & Off-grid solar power projects by defence establishments under Ministry of Defence and Para Military forces with viability funding (VGF) under phase II/III of JNNSM during 201415 and onwards • Grid Connected Rooftop and Small Solar Power Plants program • Guidelines for capital subsidy scheme of government of India for promoting solar photovoltaic (spv) water pumping systems for irrigation purpose. • Installation of 10,000 solar photovoltaic water pumping systems for irrigation purpose implemented through National Bank for Agriculture and Rural Development (NABARD) throug hout the country • Off-grid and Decentralized Solar Thermal Application Scheme Challenges Key challenges in achieving the target of 100 GW are grid infrastructure, scarcity of land and utility’s financial health. Land acquisition is a time consuming process leading to delay in implementation of projects. To fast track the process of land acquisition, government has introduced the concept
of solar park facilitating the developers. The UDAY program of the government is targeted at improving the health of the distribution utilities. Also ensuring smooth integration with the grid is extremely important as the capacity of renewable energy grows in the system. Developments in electricity storage technology also hold lot of promise for growth in solar capacity. Targets seem achievable! While GoI has set the target of achieving 100 GW solar energy by 2022, question is whether the target is achievable? For now, the target for 2016-17 seems possible to achieve as the 15 GW solar projects have already been approved of which 12 GW is likely
to be in operation before March 2017. While India is on track of achieving its annual solar target, GoI will have to focus its attention on demand for solar energy. However, the global decline in solar equipment prices will have negative impact on the domestic manufacturers. Though, GoI is keen to boost large scale solar production facilities, it needs to provide policy support covering various measures to domestic manufacturers. (The article has been authored by Umesh Agrawal, Director – Energy, Utilities & Mining PwC and Pinal Mehta Manager, Energy, Utilities & Mining, PwC.)
October 2016 | CONSTRUCTION TIMES | 35
Renewable Energy
Ind-Ra Special Report
RE Projects Losing Steam Due to Counterparty Delays In the backdrop of several developers embarking on capital market transactions, counterparty delays could not only jeopardise bond potential issuances, but also erase the confidence of stakeholders.
S
tate power utilities’ (major power purchasers) insensitivity to projects’ debt service commitments and delays in making payments problems specific to conventional energy developers – are now plaguing renewable energy projects, says India Ratings and Research (Ind-Ra). The Central Government’s initiative - Ujwal Discom Assurance Yojana (UDAY) aims to lessen the cash flow strain on power distribution companies through the transfer of debt loads to states. However, before all states implement the scheme, the projects are compelled to tide over the elevated liquidity strain in the interim. Dire Need to Nurture Capital Market Instruments Although several renewable energy projects are embarking on capital market transactions, the counterparties’ insensitivity to the projects would not only jeopardise the potential issuances that can help deepen the infra-debt markets, but also add a premium, which has become an accepted practice for renewable energy projects. Counterparties’ timely payments are inevitable to nurture the nascent
nonrecourse instruments.
capital
market
debt
Skewed Risk-Return Relationship The financial weakness of distribution companies in general is a fact. Although their obligations towards power purchase are considered senior to their debt commitments, many counterparties delay payments beyond six months. The debt market factors this aspect in the pricing of these issuances needlessly skewing the risk-return relationship, especially at a time when the government has mega plans for renewable energy projects and is aiming at grid parity between thermal and renewable energy projects. In many cases, the credit profile of renewable energy projects is constrained by the weak financial health of the counterparties rather than operational and supply related risks. The risks in these cases are manifested in the form of uncertainties relative to the timings of receipt of payments for power purchases more than the delays. Therefore, this uncertainty is
36 | CONSTRUCTION TIMES | October 2016
factored into the pricing of infra bonds, causing a burden on the projects’ cash flows. The agency believes this would not have been considered by bidders while quoting an aggressive tariff for bid based projects. In other words, the financial costs of counterparties are being subsidised using project cash flows which will cause a heavy damage to the capital markets in the longer run. It also strips the equity holders of their returns, resulting in a disincentive to embark on more such renewable energy projects. Central Government’s Initiatives Challenged Any event of default on the capital market instruments or invocation of a security or credit enhancement would have an adverse impact on the federal government’s hard work and effort in building and deepening infra bond markets. Such an untoward event not only will derail the efforts to diversify and derisk the predominant bank loan market; but also could hamper the government’s efforts by vitiating spreads in the much-sensitive masala bond markets and the dollar bond
Infrastructure & Project Finance Weakening Standalone Profile: Unpredictable counterparty behaviour will cause a strain on those project developers that have ventured into the uncharted territory of the bond market considering the receivable period of the counterparty at the time of issuance, along with an implicit assumption that the receivable days will remain stable. Although the bond structures and conventional bank loans feature a debt service reserve equivalent to three or six months of debt service obligations as a line of defence, the continued strained liquidity could dent projects’ standalone credit profile.
borrowings by Indian companies. Infrastructure investment trusts and their capital raising plans could also take a beating. On one hand, the government of India has been implementing various measures to build an effective infra-debt market. On the other hand, the energy distribution companies exhibit a callous attitude in honouring their obligations towards power purchase in a timely manner. Unless discoms understand the importance of timeliness, which is crucial for the survival of the bond market, the government’s initiatives will remain challenged. Weakening Standalone Profile Unpredictable counterparty behaviour will cause a strain on those project developers that have ventured into the uncharted territory of the bond market considering the receivable period of the counterparty at the time of issuance, along with an implicit assumption that the receivable days will remain stable. Although the bond structures and conventional bank loans feature a debt service reserve equivalent to three or six months of debt service obligations as a line of defence, the continued strained liquidity could dent projects’ standalone credit profile. During the agency’s review of the ratings of renewable energy projects, it was observed that that the Maharashtra
During the agency’s review of the ratings of renewable energy projects, it was observed that that the Maharashtra State Electricity Distribution Company Limited has delayed payments to wind projects by about a year. Although the direct impact of delayed payments will be apparent on the projects’ liquidity, the ultimate impact could be on the investors/lenders if the situation exacerbates. However, the payable days of other discoms remain static compared to the previous years.
State Electricity Distribution Company fail to support such projects. It is indeed Limited has delayed payments to wind that historical the federal and state Deceptive Historical Receivables Period: Givenan theirony reasonable payment record of projects by about a year. Although the governments have been insisting on thea Maharashtra State Electricity Distribution Company, many sponsors failed to anticipate direct impact of of delayed payments energy placing receivable period over three to four will months. importance The agency of in clean its rating and and stress cases be apparent on the projects’ liquidity, more marketexperienced. issuances assumes a long delay, however not the kind of importance delays beingon actually the ultimate impact be on the debt through infrastructure debt funds Notwithstanding projects’could operational strength, service could be impaired on a prolonged investors/lenders thefromsituation infrastructure delay in the payment ifperiod state utilities,and should the sponsors investment fail to supporttrusts such projects. It is indeed an irony that federal and state have been insisting on the exacerbates. However, the thepayable whilegovernments the counterparty’s behaviour is importance of clean energyremain and placing importancetoon and marketcounterproductive issuances through days of other discoms staticmoreoblivious infrastructure and infrastructure investment trusts while the counterparty’s behaviour compared todebt the funds previous years. of these developments. However, the is oblivious to and counterproductive of these developments. However, the agency believes agency believes that there would be Deceptive Historical Receivables that there would be an improvement in the liquidityan of distribution companies afterliquidity UDAY is fully improvement in the of Period in place. distribution companies after UDAY is fully in place. Given the reasonable historical Figure 1
Snapshot of Payable Days Payable days Less than 30 days 30 days to 60 days 60 days to 120 days 120 days to 240 days More than 240 days
Utilities Gujarat Discoms, Bangalore Electricity Supply Company, Chamundeshwari Electricity Supply Company, Andhra Pradesh Discoms, NTPC Vidyut Vyapar Nigam Limited Hubli Electricity Supply Company Limited Haryana and Punjab Discoms Madhya Pradesh Discoms Rajasthan, Maharashtra and Tamil Nadu Discoms
Source: Ind-Ra
State Utilities Payment Record - A Mixed Bag:State It is noteworthy that in newly formed states Utilities Payment Record -A payment record of Maharashtra State such as Andhra Pradesh and Telangana, state utilities not only pay renewable energy projects Mixed Bag Electricity Distribution Company, on time but also claim the rebate delineated in power purchase agreements. Although the receivable period may vary, Tamil Nadu and Rajasthan state utilities’ that uneven records many sponsors failed to anticipate It is noteworthy in payment newly formed heavily on the respective risk profile. FYE16,asINR98.96bn of UDAY aweigh receivable period of overprojects’ three to statesAt such Andhra worth Pradesh and bondsmonths. were issued severalin states. Ind-Ra expects the impact to utilities be direct but be four Thebyagency its rating Telangana, state not may onlynotpay instantaneous, given the stateagovernments’ process lags. projects on time and stress cases assumes long delay,administrative renewable energy however not the kind of delays being but also claim the rebate delineated in No Easy Solution in Hand: One temporary solution could be to prioritise payments for actually experienced. Notwithstanding power purchase agreements. Although renewable energy projects; but, this does not have a strong rationale and may not help in the projects’ operational strength, debt the receivable period may vary, Tamil longer run. Whatever is the number of days of delay, at least defining these delays in terms of service could be impaired on a Nadu and Rajasthan state utilities’ certainty and imposing a soft cap on the receivable days would go a long way towards prolonged delay in the payment period uneven records weigh heavily achieving the government’s focus in developing capitalpayment markets for infrastructure and in from state utilities, should the sponsors on the respective projects’ achieving the tall aim of capacity addition in respect of renewable energy projects.risk profile.
October 2016 | CONSTRUCTION TIMES | 37
Renewable Energy
Ind-Ra Special Report
At FYE16, INR98.96bn worth of UDAY bonds were issued by several states. Ind-Ra expects the impact to be direct but may not be instantaneous, given the state governments’ administrative process lags. No Easy Solution in Hand One temporary solution could be to prioritise payments for renewable energy projects; but, this does not have a strong rationale and may not help in the longer run. Whatever is the number of days of delay, at least defining these delays in terms of certainty and imposing a soft cap on the receivable days would go a long way towards achieving the government’s focus in developing capital markets for infrastructure and in achieving the tall aim of capacity addition in respect of renewable energy projects. Ind-Ra’s rating experience suggests there is no easy solution to the current quandary of Maharashtra-based projects unless prudent practices such as a strong cash reserve or sponsor support are put in place for these projects. A line of working capital credit would certainly help in avoiding delays in debt service; but borrowing a debt to pay off another debt may not be a wise solution. Also, without a certainty regarding the number of months of delay, availing working capital is infructuous. Although a majority of
power purchase agreements mentions a letter of credit as a backup for payment
wherein the revenues from a particular customer segment is escrowed to a
On one hand, the government of India has been implementing various measures to build an effective infradebt market. On the other hand, the energy distribution companies exhibit a callous attitude in honouring their obligations towards power purchase in a timely manner. Unless discoms understand the importance of timeliness, which is crucial for the survival of the bond market, the government’s initiatives will remain challenged. delays, it is rarely established by discoms. However, Uttar Pradesh utility in a few thermal power projects has entered into default escrow agreements
default account which is marked to the power generators’ escrow accounts. A similar structure in addition to the letter of credit has been proposed by Uttar Pradesh for several renewable projects. After the establishment of an escrow agreement, the receivable days of these projects have reduced substantially. While the Central Government has set ambitious targets in creating new capacities, the projects remain hostage to state utilities’ behaviour. This could inflict reputational damages to state utilities that may be difficult to correct, with severe financial and economic consequences for the entire renewable projects ecosystem and the infra debt market. Before state utilities stray further and cause hard landing for renewable energy projects, there is a dire need for them to take a balanced step.
38 | CONSTRUCTION TIMES | October 2016
Cement
interview
“Our Capacity will Reach in Excess of 13 Million MTPA by End of FY 17” Dr Shailendra Chouksey, Whole Time Director, JK Lakshmi Cement Limited expects that the thrust on infrastructure development will get momentum by the end of current financial year and reach its peak by late 2017 or early 2018. India has been witnessing significant interest from international investors in the infrastructure space since NDA government’s inception at Centre. Many Spanish companies are keen on collaborating with India on infrastructure, high speed trains, renewable energy and developing smart cities. What kind of opportunities do you look forward for your company with the government’s emphasis on revival of infrastructure?
on infrastructure development will get momentum by the end of current financial year and reach its peak by late 2017 or early 2018 and then sustain for next 3 – 5 years. What are the initiatives taken by the company to achieve green and sustainable production? As a company as well as the group, we are concerned about our responsibilities as a responsible corporate. We emphasise
Cement consumption in infrastructure mainly roads, railways, irrigation, and power accounts for more than 20 percent of total cement consumption and is growing at faster pace than other cement consuming sectors such as housing and commercial real estate. We expect the focus on inland waterways and ports development to further add to growing demand in this sector. Our plants are located in Northern, Western, and Eastern part of India and in position to cater to demand across India barring four southern states and Northeastern states. Hence, this sector is a very important and major opportunity for us. We are already present in these market segments and have good business relationships with all the major players in this segment. Our hopes from this sector is very high and we expect that this thrust 40 | CONSTRUCTION TIMES | October 2016
on conserving energy, conserving water, conserving natural resources, and maximising use of industrial waste products. We use petcoke in our kilns, which is an industrial waste of petroleum refining process. Low grade lime stone can be used for making cement clinker.
Our plants are located in Northern, Western, and Eastern part of India and are in position to cater to demand across India barring four southern states and Northeastern states. Hence, this sector is a very important and major opportunity for us. We use fly ash a by-product of thermal power plants and blast furnace slag a by-product of steel plants to the maximum possible extent. In addition, our AAC blocks use fly ash to the extent of 70 percent by weight and help in conserving top soil for agriculture. The blocks not only save the top fertile soil but consume less energy in production as compared to red clay bricks widely used in construction, and also save energy throughout life cycle of the product. Our other products such as block & brick jointing mortars,
dry mix plasters etc conserve use of river sand. Do you use fly ash in your cement/ concrete blends? To what extent? As I have already explained that the regulations are limiting for use of fly ash in cement. One cannot go beyond 35 percent at the moment and try to go the maximum possible permitted by the quality of available fly ash. Most of the power plants in India are generation old and have lower temperature of burning coal. As a result, fly ash quality is not upto the mark sometimes and hence, it provides a limitation in blending. However, we try to overcome this by balancing blending ratios and also by classifying fly ash in order to improve its quality. What are the benefits of blending fly ash in cement? Reaction
of
cement
with
water
We have currently 11 million MTs of operation cement capacity spread across four states. Our integrated units are in Chhattisgarh and Rajasthan and they supply clinker to our grinding units in Gujarat and Haryana. produces CSH gels which provide the bonding upon hardening. Though fly ash reacts slowly, it provides secondary bonding with the lime released in chemical reactions. Hence, cements with fly ash gain strength slowly. But, it has ultimately higher strength and durability. In addition, fly ash also reduces heat of hydration in cement reducing possibility of thermal cracks due to rapid expansion and contraction of CSH gels. In mass concreting structures such as dams, pile foundations, ship building jetties
etc fly ash cement is better than other variants of cement. What is the current capacity? Do you have any expansion plans? Please brief about them. We have currently 11 million MTs of operation cement capacity spread across four states. Our integrated units are in Chhattisgarh and Rajasthan and they supply clinker to our grinding units in Gujarat and Haryana. In addition, we also give clinker to our contract manufacturing units in UP and J & K, who manufacture and pack cement for us. Very soon we will have some arrangements in Bihar & West Bengal and will also have another integrated cement plant in Rajasthan at Udaipur. We are also debottlenecking our plants at Chhattisgarh. All these initiatives will take our cement capacity in excess of 13 million MTPA by the end of FY 17.ď Ž
October 2016 | CONSTRUCTION TIMES | 41
Project Update
Bangalore-Mysore Infra Corridor: Boon for Urbanisation Woes Currently, India needs development of corridors in most viable manner to steer the country towards overall growth. No doubt the corridors integrate the rural development with urban and most of the benefits transferred to rural sector which is very much needed in our country in present state.
T
he IT revolution while bringing prosperity to Bangalore city has led to breakdown of urban infrastructure including choked and narrow roads unable to cope with growing vehicular traffic, power and water shortages and severe air, water and noise pollution. The main theme of this infrastructure corridor is to disperse the development over a wider area to relieve concentration of activity within the city. The constant traffic jams, growing water scarcity and increasing cost of bringing water to Bangalore from river Cauvery have prompted the state government to promote shifting of economic activity to the south of Bangalore i.e. towards Mysore, where river Cauvery originates.
corporate Infotech development for world leaders. In addition, the corridor will also link the fast growing industrial area at Bidadi on the way to Mysore where some the large MNCs are located. The south side of Bangalore which the project is going to impact also houses the large trading markets of Bangalore (and Karnataka). The Economic Development Corridor aims to link these three economic centers of Karnataka to each other with a safe and fast transit corridor
The project aims to accelerate the development of area widely perceived as the economic backbone of Karnataka. This Economic Development Corridor proposes to link the Electronic City at Hosur Road (NH 7), with Peenya industrial area at Tumkur Road (NH 4). Electronic City is a housing and 42 | CONSTRUCTION TIMES | October 2016
thus catalysing the growth of the region. The plan recommends the development of a premium transit system utilising the existing corridor and its rightof-way. The transportation strategy is predicted on the vision that the region will be redeveloped into a high density, transit oriented, urban center and that the larger corridor, distinguished by the design and arts and entertainment districts and will become growing magnets for businesses, entertainment and tourism. This development,
incorporating the highest, most modern international standards is expected to make Township I the corporate and residential hub of Bangalore. Besides decongesting Bangalore, the Project aims to reinstate its position as the destination for knowledge based industries by providing a clean, healthy working and living environment. The project would benefit Bangalore and its surroundings in a number of ways: • Creation of world class infrastructure facilities • Peripheral road to help heavy truck traffic bypass the city of Bangalore leading to decongestion of city • Environment friendly project as the level of noise and air pollution will drop significantly • Reduction in fuel consumption for all users of the toll roads as well as Bangalore citizens due to less congestion on city roads. • Reduction in travel time and accident rate. Considerable number of people loose their lives in road accidents every year in Bangalore • Saving maintenance cost on existing city roads for the municipal corporation • Creation of opportunities
employment
• Induced economic growth in the regions due to the corridor • Arresting of rural to urban migration • Availability of newer markets to farmers for their produce • Better housing, clothing and recreational facilities, which will act as counter magnet to urban centers. • Upliftment of educational status of the rural population and incentive to progress Benefits of the Corridor Bangalore, the Silicon Valley of the East, is the fastest growing metropolis in India
View of Cloverleaf interchange bridge with a population growth rate stands third in the country. The city originally created to house a population of 3-4 million is today home to more than 11.5 million people. The population of the city on current growth rates is expected to cross 15 million by the year 2030. This on rush is led in large measure by the infotech revolution sweeping through the country with Bangalore by far the most preferred destination, given its skilled manpower pool and salubrious climate. This revolution while bringing prosperity to the city has led to breakdown of urban infrastructure including choked and narrow roads unable to cope with growing vehicular traffic, power and water shortages and severe air, water and noise pollution. There is now a growing realisation that if Bangalore has to retain its status as the destination for knowledge based industries it must disperse the development over a wider area to relieve concentration of activity within the city. The constant traffic jams, growing water scarcity and increasing cost of bringing water to Bangalore from river Cauvery have prompted the state government to promote shifting of economic activity to the south of Bangalore i.e. towards Mysore, where river Cauvery originates. In addition to the advantages already explained in above section, this corridor also recommends the development of a premium transit system utilising the existing corridor and its right-of-way. The transportation strategy is predicted on the vision that the region will be redeveloped into a high density, transit oriented, urban center and that the larger corridor, distinguished by the design
View of Peripheral Road alignment avoiding the lakes and arts and entertainment districts and will become growing magnets for businesses, entertainment and tourism. This development, incorporating the highest, most modern international standards is expected to make Township I the corporate and residential hub of Bangalore.
Ariel View of Interchange at Electronic city in Bangalore as start of Peripheral Road
Ariel view of Interchange at Tumkur Road-Jindal in Bangalore as End of Peripheral Road Besides helping achieve the economic growth of the region, the project will also help to alleviate the problem of the commercial traffic traveling on the busy NH 4 and NH 7 (linking Chennai in the southern region to Mumbai in the western region-two of the five metro cities of India) without crossing downtown Bangalore while moving from Mumbai to Chennai or
October 2016 | CONSTRUCTION TIMES | 43
Project Update vice versa by providing a fast, grade separated bypass. This not only saves the commercial traffic valuable time spent at check points and traffic intersections but also fuel and other operating costs. This will reduce the pollution levels in the city of Bangalore since commercial traffic will no longer travel on the city roads.
• 9.1 kms Link Road linking city centre to Outer Peripheral Road • 12 kms Expressway upto Bidadi
• Service area for resting, refuelling, repairs etc.
• Development of Interchanges at Hosur Road, Tumkur Road, Link Road and other Interchanges.
• Fencing on expressway to eliminate ribbon development and unauthorised entry-exits
• Township I
Expressway Corridor will be expandable to six lanes and contain utilities for the project. The expressway component of the Bangalore Mysore Infrastructure Corridor will be an efficient, reliable and safe toll road that represents a key link in the India National Highway system. The roadways will be constructed of high quality material and designed to take advantage of state-of-the-art highway engineering and construction techniques. At limited access highways, underpasses and overpasses will be constructed to accommodate stream, river, ravine, road and cattle crossings. All roads crossing the expressway will be grade seperated by bridges or underpasses. Access to the expressway will be interchanges only.
Link Road 9.80 km of Link road to be constructed with expressway standard and 60 meter right of way. Ensure optimisation of benefit from expressway by providing fast link to the city center. It shall be connected by elevated corridor of 3.10 km length for access to Bangalore city center. This will reduce travel time from downtown Bangalore city to Township no-1 to less than 15 minutes Peripheral Road Peripheral road to connect National Highway NH 4 coming from Mumbai & NH 7 going to Chennai. Expressway standard facility with 75-meter right of way. Initial 4 lane structure with provision for expansion to 6 lanes. International class development of working and living habitats The project is anticipated to be harbinger of international class development of working and living habitats, essentials for attracting and retaining talent for the knowledge based industries by providing employees with congenial environment. The added social benefits for the people of the region would be the environment friendly development as the project will create green areas out of barren and non-cultivable lands. This corridor aims to reinstate its position as the destination for knowledge based industries by providing a clean, healthy working and living environment. Project Components Phase -A Components • 41 km Outer Peripheral Road linking Hosur Road NH7 to Tumkur Road NH4
without formation of queues
Substantial traffic is expected to get diverted to this facility due to an alternate route for trucks bypassing Bangalore city is available. General congestion prevailing on the city roads will reduce resulting in decongestion of the city & reducing the level of air & noise pollution.
As a limited-access expressway with a continuous barrier on either side, the road will prevent ribbon development, increase efficiency of individual travel and cargo movement and improve vehicle safety. Townships
Express-way The main features of Expressway are • A world class high speed corridor connecting Bangalore and Mysore • 90 meter right of way with initially 4 lane construction expandable to 6 lanes in future • Designed for safe travel at a speed of 120 kmph • Suitable provision for grade separated interchanges to serve as link for townships • Toll plazas for collection of toll
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The development of townships will be with clean, high technology industry within landscaped industrial parks. The consortium will build five selfsustainable townships each with a population of 100,000. Each one of the new townships will have its own unique economic base and will be directly served by the infrastructure corridor.
Each township has a primary town center with supporting neighborhood centers. The residential areas are planned to include a range of housing models and are situated so that the walking distances to work, school, or shopping are not greater than 0.9 km (½ mile). Elementary schools are located in each neighborhood. Parks and recreation facilities are generously allocated to neighborhoods and town centers. Transportation access to the expressway and internal vehicle and pedestrian circulation patterns are considered carefully. The results are unique communities that are built on a strong foundation of proven town planning principles.
Corporate Center will be the home for the region’s increasing number of corporate headquarters, offices and research & development facilities. Commercial Center will be a residential suburb of Bangalore dedicated to retail, light industry and municipal support services. It will represent world famous Mysore silk and local handicrafts. Industrial Center will specialise in clean manufacturing, including ‘white’ durable goods and industrial research and development.Heritage Center will feature a central lake surrounded by buildings, which will house arts and crafts and cultural heritages including varieties of food, clothing and uniqueness of the different states of India. It will be pilgrimage site with conference and traditional healing facilities. Eco-tourism Center will become a destination for Indians and foreign travelers who wish to learn about the region’s rich history, national
reserve forests, environmental and water resources, fine and performing arts and historic temples and churches. Utilizing the principles of sustainable development, each township will be designed to address the economic, environmental and social needs of the population. In so doing, the townships will provide citizens with a high quality of life in healthy, efficient world-class communities. In addition, the townships will help move consumers closer to the region’s farming communities, thus creating an integrated economic development and a stronger market for farmers. Project Opportunities
This project offers many opportunities for investor participation. Some of these opportunities include: • Outer peripheral road development • Expressway Development • Five self-sustaining townships with population of 100,000 each • 400 MW power generating facility • Telecommunications system • Water supply system • Sewage treatment facility • Tourism, theme parks, amusement and recreational facilities Conclusions As per appeal by the past President of India Dr Abdul kalam in one of his addresses, “Providing urban amenities in rural areas (PURA) is another example for creating rural wealth
and prosperity. The model envisages a habitat designed to improve the quality of life in rural places and makes special suggestions to remove urban congestion also”. This is achieved only by the development of infrastructure corridors, which traverses through rural areas connecting well-developed urban regions. Similar way Bangalore- Mysore Infrastructure Corridor, in addition, to solving the urban infrastructure problems largely helps in creating rural wealth and prosperity. Ever since India embarked on economic reforms in early 1990s, infrastructure development has remained top priority for successive governments. With the economy clocking a growth rate of over 8 percent, it is estimated that a staggering investments would be required by all infrastructure sectors over next coming years. Today, it is no exaggeration to say that Urban Infrastructure integrated with corridors development holds the key in economic development and open gateways to smart cities development. Efficient infrastructure with corridors development, combined with liberalization and harmonization of transport markets, is a prerequisite for economic growth. It is very well established that currently our country needs development of corridors in most viable manner to steer our country towards overall growth. No doubt the corridors integrate the rural development with urban and most of the benefits transferred to rural sector which is very much needed in our country in present state. Basic economic and investment policy must also go hand in hand in the Indian context, particularly, so that more urban and rural transport systems, which are environment-friendly, like BangaloreMysore Infrastructure Corridor developments, should be supported in the competition among other systems. (This article has been authored by D Prasad – Project Director, IIIE Ltd and a member of ISDO (India Smart City Development Organisation.)
October 2016 | CONSTRUCTION TIMES | 45
Smart Cities Development
Guest Column
Managing Construction Waste The construction industry that contributes significantly to the GDP has to tighten its belt and quickly implement robust and efficient waste management policy across its entire spectrum of small contractors, small and large builders, developers and involve the most significant contributor to this problem ‌their customer.
C
ontribution of around 8 percent to its GDP, and generating lakhs of direct and indirect employment, the construction sector periodically goes through its highs and lows. This is the good news. At the end of any activity (or at the beginning! As in the case of construction), there remains the questions who, how and when and where of managing the waste generated. Even after many years of construction, the question largely remains unanswered.
town in the ever increasing demand for office and residential space. Many green spaces inside and outside the city areas have been taken over and buildings of all kinds and shapes have mushroomed. The mantra of ‘Make in India’ is providing a new fillip to this industry with policies of 100 percent FDI, Smart Cities, Swachh Bharat Mission, etc. Construction Waste And Demolition
Construction Activity One of the largest infrastructure sector encompassing organized and the even larger unorganized employment generators in our country, Construction has been making steady progress over the past many years. Post liberalization, and the IT revolution, developers and builders have changed the landscape of many a city and 46 | CONSTRUCTION TIMES | October 2016
The Construction Waste and Demolition Waste Management Rules, 2016 was notified by the Government of India vide its Notification No 288 dated April 27, 2016. A new set of rules separated from the Solid Waste Management Rules, specifically to address the growing Construction Waste Management crisis. This crisis largely brought upon by the stakeholders themselves, viz. owners, builders, contractors, workers, and surrounding eco-system, construction waste and debris have filled lakes and storm water drains, contaminated water sources, and left a trail of dust and debris in many open places, rendering some places unusable. A failure on part of the stakeholders to assume responsibility for disposal (let alone re-use and recycling) has affected environment and unless steps are taken for effective management, the crisis can only deepen. Sadly, the new rules
do not encourage recycling or reuse of construction waste in any big way. While there are guidelines as to how a C&D (Construction and Demolition) disposal site should look like, little or no importance is actually given to the waste itself. Some countries, like Switzerland, I understand have introduced mandatory re-use of construction waste, specifically in case of redevelopment. However, waste segregation guidelines have been introduced and the submission of a waste management plan has been mandated. Construction Waste Generation & Composition
tenets of recycling, reduce, reuse, recycle and recreate.
By the same token, design and implementation of a construction waste management system would also need to take into consideration these four tenets while designing and implementing a waste management system. Composition
Construction waste generally arises in all forms of construction activity, be it new construction, redevelopment, renovations, etc. Individual households making way for multi-storey buildings or redevelopment of apartment societies. Composition of waste in construction have been categorized into four streams, viz concrete, soil, steel, wood and plastics, bricks and mortar under the rules. However, the guidelines issued by Bruhat Bengaluru Mahanagara Palike on Construction Waste and Demolition Management also identifies a few more in its Annexure 3. In a broader sense, peripheral hazardous and nonhazardous waste, too, get generated during construction activity. These include tarpaulins, electrical items, items containing mercury, paints and chemicals, pesticides and the like.
other inert and probably organic waste materials such as plants, trees, wooden materials, etc. A construction waste management policy would first need to ensure that pre-construction addresses organic waste material generated and appropriate steps for its composting and other useful methods are applied. Remodeling or renovation including partial may also generate organic waste. Remodeling/Renovation which could be partial or complete would involve generation of most of composition of non-hazardous construction waste and provides for opportunities for significant re-use and recycling, prior to transportation to collection centers and landfills Demolitions, either government authorised or ownership driven would generate significant quantity of construction waste and debris. Apart from steps to be taken to address dust pollution that gets generated due to fine dust and gravel, these would include most of the categories of waste including glass, wood and possibly hazardous waste material. Waste generation from natural disasters such as earthquakes, while wreaking havoc, can also become toxic and lifethreatening when animal or human bodies are not retrieved for a long time and stand exposed. Waste management under these circumstances become more challenging given the quantity of assets that are lying beneath the rubble. Process
Construction Waste Management
Composition of construction waste is generally arrived based on the type of construction activity being carried out.
Any waste management system by design has to necessarily address four
New construction would involve excavated sand, stone, gravel and
Like many other rules that have been framed in our country, the C&D rules too lack a framework for effective closed-loop implementation. While approval mechanisms for large generators have been mentioned, there are no requirements for large waste generators to commit to re-use/recycling. No reporting requirements are prescribed from which data of re-use or effective recycling methodologies applied can be tracked.
October 2016 | CONSTRUCTION TIMES | 47
Smart Cities Development
A typical process of management of construction waste would need to start with the level of contamination in the waste. A chemical-mineralogical appraisal of the waste would help to reveal chemical and constituent mineralogical phases of the waste. It would also help to reveal contamination levels to arrive at best management method, being re-use or incineration or landfill. Source segregation is a mandatory requirement for any effective construction waste management system. This would ensure that a system to address non-construction wastes generated at source itself and mixed waste is sent out. Post verification, a robust collection mechanism with end-to-end tagging of handover from site to collection center or recycler needs to be introduced to track waste movement. As most of this waste transportation is expected to happen at night, it is more imperative that adequate in-built safety measures are introduced and implemented.
Guest Column
Disposal to specified unused quarry areas is what has been prescribed in Bengaluru. Guidelines indicate a total area of 224 acres of land have been identified spread over 7 locations outside Bengaluru for receiving construction waste and debris.
recycling facility for construction waste at this time could be an expensive proposition. All stakeholders in this construction ecosystem need to realize that waste management is an integral part of their activity and cannot be ignored.
Recycling Opportunities
Re-use of available construction either on as-is where is or with minimal change to specifications can result in waste reduction and probably save costs too. Structural concrete from construction debris can be considered for non-secure walls such as compound walls, parapet walls, filling material, etc., Recycling technologies in construction waste industry continue to evolve with opportunities for manufacturing pavement blocks, roof tiles, mixed with masonry or concrete aggregates. Utilizing construction waste in manufacturing of pre-cast concrete blocks, use of glass of in roads, are some immediately available solutions from construction waste.
Construction waste recycling industry in the formal sector in our country is very nascent. Currently, the informal sector plays an active role, addressing valuable waste such as steel, wood (doors/windows), furniture, electrical wires, etc, that is handled by them. However, as these collections are not regulated, effective recycling still remains untracked. With little or no support from either the regulatory bodies or responsible recycling practices from the waste generators, the industry is largely seen as a non-viable commercial enterprise. Research support from universities and institutions too are minimal to support entrepreneurship. Consequent to unregulated practices and lack of visibility, establishing a
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Even while recovery solutions continue to evolved in the construction and demolition waste industry, this sector is poised to grow leaps and bounds in the coming years and if we do not pay enough attention, it will soon bigger than burgeoning solid waste management mess that we, as a country, are facing. Conclusion The construction industry that contributes significantly to the GDP has to tighten its belt and quickly implement robust and efficient waste management policy across its entire spectrum of small contractors, small and large builders, developers and involve the most significant contributor to this problem ‌their customer.
Common materials that are found at construction site for preparing plan for c & D waste management Sr. No.
Stage
Materials
1
Explosives and related products and equipment used in excavations
2
Fuels and heating oils and other volative / flammable liquids such as coolants and grease
3
Pesticides
4
chemical admixtures, sealants, adhesives, solvents
5 6
Excavation & foundation works, super structures
Plastics, acrylics, silica and PC Electronic Ballasts, PCBs, transformers, capacitors, switch gears, lead cable and oil filled/gel-filled cables
7
Tar and tar products (bitumen, and water proofing compounds)
8
Centering oil and form work oil
9
Asbestos products-insulations, tiles
10
Product packaging (cement bags, cartons, containers & plastics cover)
11
Tapaulin
12
Compressed gases/cylinders
13
Batteries
14
Wood dust
15
Paints, pigments, dyes and primers
16
Mercury containing lamps and tubes; fluroscent lamps intact and crushed, halogen lamps, arc lamps, UV lamps, high pressure sodium lamps, mercury vapour lamps, neon lamps, incandescent lamps
17
Finishing and Interiors
Mercury containing devices, relays, regulators, thermostats, thermometers, manometers and debris containing mercury
Source: Guidelines for Construction and Waste Management issued Bruhat Bengaluru Mahanagarpalike - 18.03.2016
to address this issue. Recycling companies interested in end-to-end construction waste management need to invest in exploring processes for re-use/ recycling and divert as much waste as possible from landfills to better worthwhile uses. Regulatory authorities which pay a significant role in the construction industry, as well as the construction and waste management industry, need to take a more holistic approach to managing this problem. Else, the future generations will pay a price for ineffective policies and irresponsible recycling practices of construction waste management.ď Ž Smart city developers should have responsibility and accountability towards construction waste generation
and their waste management plans and programs should include policies, procedures and execution capabilities
This article has been authored by Ramanathan Narayanan, a member of ISDO (India Smart City Development Organisation) and CEO & MD of 4R Recycling Private Limited.)
October 2016 | CONSTRUCTION TIMES | 49
Construction Software
Use of IoT in Smart Commercial Building As BIoT supports eco-friendly building designs and energy management initiatives, HVAC and lighting control can be the biggest cost savers in a retrofit.
G
lobally, the Smart Buildings market has witnessed an upsurge in demand over the past few years in part due to growing awareness and need for energy efficient buildings, the increased need for integrated security & safety, because of growing initiatives by the government authorities and in part because of the rising adoption of IoT platforms within building automation technologies. In fact, a report by Market And Markets forecasts the smart building market size to grow from USD 5.73 billion in 2016 to USD 24.73 billion by 2021, at a Compound Annual Growth Rate (CAGR) of 34.0 percent during 2016–2021. With buildings consuming 40 percent of the world’s energy, there is a need for energy efficient solutions. In addition, the myriad, disparate systems such as HVAC, lighting, security, etc. that form the crux of a smart commercial building have also ushered in the need for integration and effective utilization of resources. Use of IoT and cloudbased applications make it possible to achieve these two objectives – making buildings energy efficient, comfortable, automated and truly smart. By deploying sensors, actuators and CCTVs which are in constant conversation with cloud based algorithms. Building Intelligence solutions can sense, predict and proactively manage the needs of the building occupants.
registering a double-digit growth rate and is expected to grow from a value of INR 51.85bn in 2014 to INR 288bn in 2021. The advent and increased adoption of smart green energy efficient commercial buildings along with increased demand for comfort by the occupants will further catapult this building automation market toward a stellar growth paradigm. IoT Comes into Play Energy efficiency, profitability, business continuity, optimization and protection of assets or goods in a building, physical security and surveillance, etc all form an integral part of today’s business objectives when it comes to
The Indian Smart Building Market India is one of the key building automation and control system markets 50 | CONSTRUCTION TIMES | October 2016
smart commercial buildings and IoT enables all of these at a much lower cost & a much more user-friendly way than before. Commercial Building Internet of Things, hitherto referred to as BIoT, is quickly becoming an indispensable business resource. If the business objective is to reduce cost and maximize resource utilization while ensuring a better ROI, BIoT fits the bill perfectly. BIoT will automate a multitude of significant tasks, monitoring and analytics and make available complete and real-time views into entire operating environments within a building. Systems such as HVAC, lighting control & automation, security and surveillance, monitoring utilities, energy management, and other specific tasks such as parking garage fare taking,etc. are efficiently managed with BIoT. BIoT gathers and analyses data, formulates and recommends future actions making the building automated and truly smart. In the background, this gathering and analyzing work is done by automation technologies, network solutions and machine-to-machine (M2M) communication. All of these work in
centric with occupant’s comfort and preferences being given utmost priority • Building IoT will be expansive From paper and soap dispenser in restrooms to air quality and cooling, all will be inter-connected and automatic • Interoperability commonplace
tandem as a single integrated unit. Tools facilitating this include sensors, controllers that wirelessly connect devices, and smart objects linked together and monitored with a chip or a software. Examples of such connected items include CCTVs, CO2 and smoke detectors, smart electrical plug-ins and even televisions and music systems. Then, it also includes appliances meant for specific purposes, such as AHUs. All of these get connected, automated and programmable in a BIoT environment.
such as room occupancy, the position of the sun, the geographical orientation of the building and weather patterns to make continuous adjustments to the plan as needed.
Thus, BIoT systems make buildings aware and future ready. Take, for example, 75F’s award winning ‘Dynamic Air flow Balancing Technology”. Leveraging IoT technology and the power of cloud computing, the 75F solution achieves what was once thought to be only theoretically possible – continuous commissioning or real-time air balancing. Wireless Zone Controllers sense and collect hundreds of data points from the room every minute and send the data to the Central Control Unit & from there to the servers in the cloud. Each night cloud computing algorithms analyse thousands of data points, including the weather forecast & daily usage patterns that allow the system to predict future conditions. Post which, a new set of instructions are sent to the Central Control Unit and the motorised dampers are modulated a few degrees at a time to achieve the perfect balance. The system also factors in real-time events,
Even retrofitting of legacy or traditional building systems is now possible. More often than not, IoT systems can be easily integrated with existing building infrastructure thereby enabling them to reap the benefits offered by BIoT at an affordable cost. As BIoT supports ecofriendly building designs and energy management initiatives, HVAC and lighting control can be the biggest cost savers in a retrofit. Once integrated with BIoT, lighting in a building can be turned off and on depending on building occupancy or lights can be dimmed and brightened to suit the mood of a meeting or an event or based on time of day, and weather conditions. These steps will automatically bring electricity bills down, impact the bottom line from the very start, bringing in better ROI against investments.
BIoT can also bring in considerably energy savings by active energy cost control through time of day energy usage thereby programming the building to consume minimal energy during peak demand limiting and more during non-peak hours.
Trends in the commercial buildings domain • Buildings are becoming people-
will
become
• Role of automation in buildings will further increase - self-sensing, selfoptimizing network of systems with minimal human interventions will become the order of the day. • Air quality in buildings is being given increasing importance with the correlation between air quality & employee health & productivity now becoming more clear. • Many of today’s traditional architectures will buckle under the increasing demand for all the connected devices. • Buildings are becoming 24x7 operations – upgrading to newer technologies like BIoT needs to happen without disruption • To ensure security of IoT environments, intelligent routing, and analytics, networking layers will be needed as IoT lay a lot of cyber threat vulnerabilities bare Energy use in buildings is a USD 400 billion to USD 500 billion a year problem and this explains why BIoT is riding the industry growth. Energy wastage too is a real problem and BIoT is fully equipped to negate this concern. Besides lighting and HVAC, it has several applications within a building environment which can not only reduce costs but also add to convenience. With costs of BIoT tools like sensors coming down by the day, upgrades and retrofits will become more commonplace. (This article has been authored Gaurav Burman, VP & Country President, 75F )
October 2016 | CONSTRUCTION TIMES | 51
Real Estate
Analysis
Setting Trends
and an office-like look-and-feel to potential start-ups. Some of the co-working places also work as incubation centres for the urban centres they are based out of. Interestingly, start-ups buying/ leasing real estate to sub-lease it to such tenants is also on the rise. At a rough estimate, over a 100 of such players are already active across India. This trend is slowly and surely catching up in India. Crowdfunding Beginning to Take Hold Crowdfunding helps innovators and inventors raise money for launching their products or services through the Internet. The practice involves raising small amounts of money online, from many people across the globe, to finance a project or venture. While other industries have seen the emergence of a more dynamic crowdfunding scene, real estate’s popularity still has a lot of catching up to do.
Among the many different factors influencing the way real estate in developed, transacted and used in India, there are big major emerging trends that have both real-time and long-term significance.
W
ith the growing start-up ecosystem across India and the central government creating an enabling environment for entrepreneurship, demand for office spaces matching such firms’ requirements has gone up in the last few years. Also, due to the rising number of freelance professionals or consultants in today’s globalised workforce, office communities or co-
working spaces are gaining popularity. Co-working spaces are popping up across Indian metros as well as tier-II cities, and are helping many start-ups get flexible working options at prices they can afford. These spaces offer desks at cheaper rentals and some also allow a rent-free period to tenants apart from utilities
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Some experts have pointed at the maturing crowdfunding scenario in the USA, where the amount of money raised and size of deals as well as the speed at which they occur have all steadily increased. In China, the real estate industry is no longer the exclusive preserve of big investors, and property developers have turned to crowdfunding to help finance the construction of commercial and residential projects. Although in nascent stages in India, crowdfunding can pick up here as well because the financials of many developers are stretched. With increased digitalisation and transparency, investors can be expected to open up to this way of investing if they can expect good returns. Already, non-resident Indians can invest in the country’s real estate under the same conditions applicable to residents. Moreover, a marketplace is already bringing together real estate investors as also listing premium plots, apartments and villas. This sector is likely to evolve and grow in the coming years.
Infrastructure: A Catalyst For Affordable Housing One of the major initiatives taken by the Modi government is to promote housing for all by 2022. India has a shortage of 18.8 million urban homes for the 12th five-year plan (2012-17) period[1]. This includes housing the economically weaker and lower income groups, an area where developers hardly focus due to low margins. Translating the affordable housing initiative into actionable targets would involve the construction of close to 2 million homes every year. Compare this with the actual delivery of 1.2 million homes annually during the 11th five-year plan period (ending March 2012), the target clearly appears formidable. Raising the delivery targets of central or state housing boards may not be the way to go, given the lack of availability of large land holdings within city centres with such agencies and their slack delivery track records. One effective alternative appears to be the expansion of the infrastructure network, thereby opening up new and relatively cheaper land parcels for real estate development that will attract private participation.
cities. Although new airport projects are considered catalysts for opening up new areas in city peripheries, they may not guarantee the development of affordable housing because their gestation period is huge and connectivity to existing established locations improves only gradually. By that time, speculative activity already makes the location relatively unaffordable. On the other hand, projects such as the metro rail, ring roads and highways, etc. offer improved connectivity to the existing city establishments and are more suitable to the immediate needs of the budget-conscious homebuyer. The following table identifies seven ongoing infrastructure projects in each of the top seven cities that have the potential to promote affordable housing:
Homebuyers typically prefer to stay closer to locations near established commercial developments that also have good social infrastructure. An alternative for those who cannot afford homes in such areas is to look for locations that have good connectivity to the more established sub-markets. Often, such affordable housing options have skipped established locations and have come up in sub-markets that do not have adequate trunk infrastructure.
The table above clearly shows that new residential corridors emerging from the construction of a metro line or ring road are almost half as expensive as the more established residential corridors in the vicinity. They offers a good opportunity not only for people seeking a house at affordable prices but also investors and developers who seek new opportunities for growth. Thus, with minimal interference from the central and state housing promotion boards, affordable housing gets created naturally and profitably. Both affordable housing and infrastructure development are mandates of the government, although the creation of the latter in a focused, time-bound and consistent manner can spur the former too.
JLL’s recent research report ‘Indian Real Estate: Coming to terms with varying speeds of growth’ studied 30 infrastructure projects that became operational in recent years across the leading seven
(This article has been authored by Suvishesh Valsan, AVP Research & Real Estate Intelligence Service JLL, India)
Transparency to Increase and Help Attract More Funding Two-thirds of the real estate markets globally have shown progress in their levels of transparency over the past two years, according to JLL’s Global Real
Estate Transparency Index (GRETI) 2016. India too made improvements in overall transparency scores by moving up four places, and its tier-I cities are expected to break into the transparent category in the 2018 rankings.
Out of 109 countries, the top 10 highlytransparent markets alone corner 75% of global investment into commercial real estate (CRE), highlighting the extent to which transparency drives real estate investment decisions. At a time when capital allocations to real estate are growing globally, investors are expecting transparency standards in real estate to be at par with other asset classes. Capital allocations in excess of USD1 trillion will be targeting CRE within the next decade, compared to USD 700 billion now. This growth means investors will continue to demand further improvements in real estate transparency. There’s also mounting pressure from the world’s growing middle classes to weed out corruption from real estate, which will speed up this pace of change especially in the semi-transparent markets. Social media will also help mobilise people in this direction.
October 2016 | CONSTRUCTION TIMES | 53
Real Estate
Analysis Technology Tech-enabled workplaces are becoming more common across the globe. In USA, research on the budgets of clients’ interior build-outs are showing very interesting results, with IT costs as a proportion of overall construction budgets increasing rapidly. Earlier, they were around 5 percent of the overall construction budgets over the last decade.
Retailers Looking Favourably at Office-Retail Complexes For quite some time now, retailers have been roadblocked by a lack of available quality retail space. At such a time, office-retail complexes (ORCs) are emerging as alternatives to high streets, and even malls, for some categories of retailers such as F&B (quick service restaurants, coffee shops, fine dining, pubs, etc.) or BFSI (bank branches, ATMs, broking services, etc.). Since most part of the day of a working individual is spent at the office during weekdays, retail services benefit immensely by locating themselves close to, or within, business districts. Retail categories such as telecom services, office formals, leather bags and
accessories, high-end fitness centres, premium salons, eyewear and mobile manufacturers are now all looking favourably at ORCs. Of the total retail presence in office buildings across major tier-I cities, a dominant 26 percent is occupied by F&B and a significant 23 percent is occupied by retail BFSI outlets. While retailers get the dual advantage of paying lower rents compared to premium spaces in Grade A malls and closer access to their main target segment of office-goers, developers are also open to experimenting more with a mixed-use format rather than a standalone retail format. This way, they can allow for quality retail on the lower floors and commercial spaces on the upper floors.
54 | CONSTRUCTION TIMES | October 2016
More recent build-out budgets show the expansion of IT services from cabling and wiring to more than a dozen items for technology, including access devices, infrastructure, mobility, connectivity, data security systems, wireless connections and upgrades, business-specific apps, companyspecific conferencing and presentation capabilities. All of these items can add up to 35 percent or more of a budget for a truly technology-focused company. This theme is seen in every tenant buildout today, from traditional law firms to new campuses built by companies like Facebook and Apple. The aesthetics and prestige of an office, which were formerly the primary considerations, are beginning to take a back seat to the technology and the connectivity within buildings. Some corporate occupiers in India are starting to invest more in expansion of their IT infrastructure.ď Ž (This article has been authored by Anuj Puri, Chairman & Country Head, JLL India)
ARK Events & Media Pvt. Ltd. S-02, Haware Fantasia Business Park, Second Floor, Near Inorbit Mall, Sector 30-A, Vashi, Navi Mumbai - 400 703, Tel: 022 650 67220/22/23/24 June 2016 CONSTRUCTION TIMES
39
Real Estate
interview
“19 Projects are in Pipeline” Keshav Modi, Director, Business Development – Modispaces Real-Estate Pvt Ltd states the one critical challenge would be the constantly changing MCGM policies which make it difficult for us to prepare project estimates, thereby creating problems and delays in an interaction with CT.
How do you envisage growth of real estate sector with the government’s focus on development of ‘100 Smart Cities’ & ‘Housing for All’? We appreciate the government’s efforts in this regard. However, it is a long term plan and the process is going a little slow. These developmental practices should help in reducing prices in the real estate sector and ultimately benefit the end user, but we do envisage some difficulties for first time movers and buyers. What are the initiatives taken by the government to generate the momentum in real estate? What are the opportunities generated for the sector due to the government’s policies & reforms? Do you think that the government’s initiatives helped the sector to achieve the success to some degree? Yes, some of the recent initiatives have been really helpful for us in the real estate sector. First up, the cutting down of red tapism and fastening of the approval process has made doing 56 | CONSTRUCTION TIMES | October 2016
business easier. The government’s focus on increasing connectivity within cities has caused prices across cities to be standardized and increased affordability for all buyers. Moreover, the overhaul of the slum rehabilitation scheme and development of the SRA to make our cities better has also aided our work. What are the projects under implementation? What kind of challenges do you face during the execution of these projects? We have four projects under construction currently, and another 19 in the pipeline in the Malad, Borivali and Kandivali areas of Mumbai. As stated before, with the faster approval processes encouraged by the government, the real-estate sector has such has seen an upheaval. The one critical challenge would be the constantly changing MCGM policies which make it difficult for us to prepare project estimates, thereby creating problems and delays. What is the USP of your project? We at ModiSpaces believe wholehe artedly in our promise of “Badhiya ghar lijiye, Parivar ko khushiyan dijiye”. For four generations now, we have been working to provide homeowners in Mumbai with the best houses. Our USP is our planning and design; we create houses with maximum space use and minimum wastage in carpet area, and maximum cross ventilation for a healthy ambience. The ceilings in all our houses in Modispaces Pearly Shell have a internal height of 11ft which adds to the spaciousness. All our projects are in locations with great connectivity to major hubs, and our ready-to-possess houses come with guaranteed OC. Now a days green or energy efficient has become a mantra. Do you have plans to develop green building projects? What are the features that you would like to incorporate in your projects so that it will be energy efficient?
We have been in this business for 45 years, and as a company we are completely onboard with practices that guarantee a healthy and better lifestyle for everyone. In our projects we strictly avoid using river sand for construction, and bricks because both of these spoil the environment. Rain-water harvesting techniques are mandatory in all of our buildings, and most importantly by designing our houses cleverly we maximize cross ventilation so that brings down the use of fans and ACs to keep the house cool.
How do award functions like CT Awards Builders 2016 help to generate momentum in the realty sector? Well, everyone likes to be rewarded for their hard work right? These awards help boost our morale, and increases motivation and self-confidence. They also help the buyers who have a plethora of options to choose from – now they can easily differentiate between the good, and the best. But mostly, they help us to know what our peers are doing so we can up the ante and provide only the best to all our customers.
October 2016 | CONSTRUCTION TIMES | 57
Plant Visit
BKT Bhuj Poised to be a Game Changer
A World-Class Facility....
commitment, by developing new products and solutions that are able to meet the growing needs of our customers; this has been done with humility and resolution for the purpose of achieving newer milestones.” Rajiv Poddar, Joint Managing Director, BKT
5
00-million-US-dollar investment state-of-the-art BKT manufacturing plant at Bhuj was inaugurated at the beginning of December 2015. The Bhuj site stretches over an area of 300 acres (121 hectares) in a geographically strategic position near major communication roads and commercial ports with presently 150 MT rolling off the production line every day. While talking about Bhuj facility, Rajiv Poddar, Joint Managing Director, says, “By always venturing on newer paths; this has been done with passion and
Today the company is recognized as one of the brand leaders in its field. Move by move, we are going to unfold our strategy and you will see how BKT has first conceived and then achieved this objective and today is poised to become the Game Changer,” he further adds. Manufacturing facilities Bhuj represents the state-of-the-art in modern industrial plants. It has been designed for a production output of 120,000 ton per year at full capacity. The production units are provided with modern compound mixers, advanced
equipment for the production of steel rings and the latest vulcanizing presses even for large tire sizes, to name but a few. Like all BKT plants, Bhuj has obtained the ISO 9001:2000 Quality Certification for its Quality Management system and operates in full compliance with the highest level of international standards regarding production parameters, quality control and environmental regulations. Within the production division, an entire area for OTR Giant tires stands out. Yet, one can’t overlook the brand new Earthmax SR 45 Plus for rigid dumpers with its virtually giant dimensions. It made its debut at Bauma 2016, the World’s Leading Trade Fair for Construction, Building Material and Mining Machines and Vehicles. R&D Center As talent for innovation is one of BKT’s core competencies, the new and modern R&D Center in Bhuj hosts all facilities for developing top-
58 | CONSTRUCTION TIMES | October 2016
of-the-range solutions. Researchers, engineers, and technicians deal with anything related to the technical product development from designing a new tire, over developing new compounds, to improving product performance as well as production
stretches over a total area of about 25 acres (10 hectares) including tracks for tire performance tests in wet and dry conditions, an asphalt track as well as an inclined concrete track. Thanks to a large variety of tests, many relevant features such as
per day, BKT is currently producing 600 MT per day, which will eventually reach 800 MT per day by 2017. From 200 SKUs, the company currently offers a complete product portfolio consisting of over 2,400 SKUs. From 100 molds a year, BKT is currently making over 300 molds to ensure final product quality and design, along with a very short time to market. “Investments in infrastructure have also gone beyond our national borders, leading to the opening of our four overseas offices: 1 in Europe, 2 in US and 1 in Canada to support the local markets,” says Poddar. BKT is always one step ahead in terms of innovation, thanks to: • Carefully assessing tire quality before launching new products on the market. • Testing new compounds to improve product performance.
processes. Substantial investments in R&D are the key to success. In a nutshell, always better performing and high-quality Off-Highway tires for an increasing range of applications. A cutting-edge tire testing track! BKT has been the first tire manufacturer to build an outdoor tire testing track in India: with 6 different tracks, the circuit
traction, handling, comfort, noise, fuel consumption, braking, rolling resistance, soil compaction and many more can be measured by means of high-precision devices and instruments. As a result of this unique source of information, BKT is able to further enhance tire performance and optimize user-specific solutions. From an initial production of 10 MT
• Checking prototype development before industrialization. Today, BKT products are sold in over 130 countries across the world through network of channel partners. To this, Poddar says, “We have been growing, including our partners and customers, in line with our mission of: Growing Together.”
October 2016 | CONSTRUCTION TIMES | 59
Report
Lokmat Infra Conclave
Sharing Vision on Infra Development working towards it and in the next five years we plan to bring down the number of road accidents by 50 percent.”
Lokmat YES Bank Infrastructure Report launched by Union Minister Nitin Gadkari, Vijay Darda, Chairman, Lokmat, Sanjay Palve, Sr. Group President-Corporate Finance, Govt. Banking & Loans Syndication, YES Bank, Capt. BV JK Sharma, JMD & CEO, JSW Infrastructure, Raghav Chandra, IAS, Chairman, NHAI, Jayant Mhaiskar, Vice Chairman & MD, MEP Infrastructure and Abhay Lodha, Chairman, Topworth
L
okmat organised ‘Lokmat Infra Conclave – A Roadmap to the future’ as a part of Lokmat Knowledge Forum. Through this conclave, Lokmat highlighted the opportunities and obstacles for India and Maharashtra in terms of infrastructure development. Industry stalwarts across various sectors through three panel discussions presented their issues, challenges and the future roadmap. The Conclave has been powered by Topworth, supported by Ministry of Road Transport and Highways, Ministry of Shipping, Government of Maharashtra, Knowledge Partner – YES Bank. The Lokmat YES Bank Infrastructure Report was launched by Union Minister Nitin Gadkari, Vijay Darda, Chairman, Lokmat, Mr. Sanjay Palve, Sr. Group President-Corporate Finance, Govt. Banking & Loans Syndication, YES Bank, Capt. BV JK Sharma, JMD & CEO, JSW Infrastructure, Raghav Chandra, IAS, Chairman, NHAI, Jayant Mhaiskar, Vice Chairman & MD, MEP Infrastructure and Abhay Lodha, Chairman, Topworth Highlighting the objective behind this conclave, Vijay Darda, Chairman, Lokmat Media Pvt Ltd, said that, “We at Lokmat are privileged to host this special event and would like to thank Nitin Gadkari, Devendra Fadnavis
& other key guests and delegates for making it a success. We have always voiced the opinions and concerns of our readers and today’s Lokmat Infra Conclave is a unique platform to help our readers understand the challenges and concerns regarding Infrastructure Development in India. Through this conclave we intend to provide a platform, bringing Government and Industry leaders together and come up with the future roadmap along with some rare unique announcements to redefine infrastructure in India.” Delivering keynote address at the Conclave, Nitin Gadkari said, “A platform like this helps us connect with the common people and address their concerns. India stands second in terms of road sector. The first revolutionary decision taken by our government was to increase the length of the road for national highway from 96,000 kilometers to 2 lakh kilometer. With this step, we aim that most of the traffic is on national highway. There has been an increase in the number of accidents by four percent when our government took over and road engineering is one of the main reasons behind the increase in the number of accidents. We are
60 | CONSTRUCTION TIMES | October 2016
Nitin Gadkari further added that, “We have also introduced e-governance in our system, which has led to fast approvals, time efficiency, and less dependency. On January 1, 2017 we are starting the construction of Baroda – Mumbai expressway worth Rs 12,000 crore, which will connect Mumbai and Ahmedabad. We are also starting work on Butibori in Nagpur and Ratnagiri road worth Rs 12,000 crore. By 2018, we plan to complete construction of four-lane Mumbai – Goa road. We are constructing Alandi-Pandharpur and Dehu-Pandharpur four lane cement concrete Palkhi marg worth Rs 10,000 crore with amenities available for pilgrims. We are also making 6 new ports in India.” Talking about Maharashtra’s infrastructure Mr. Devendra Fadnavis said that, “With the development of roads, highways and ports in India we have also contributed and ensured progress of around 6 lacs small villages in the country. The Nagpur –Mumbai Expressway is a milestone and will take India 20 years ahead. Following PM’s Make in India concept, we will be introducing integrated public transport ticket along with 1200 wifi hotspots in the city. Redefining Mumbai city we will be launching the safe city project for Mumbai city on 2nd Oct, 2016 with
a focus to introduce elevated road corridors over the suburban railway network. The government departments are closely working together for the betterment and positive growth of Maharashtra.” A stock of infrastructure facilities in the state and their future planning was taken during this conclave. Sanjay Palve, Sr. Group PresidentCorporate Finance, Govt. Banking & Loans Syndication, YES Bank; Capt BV JK Sharma, JMD & CEO, JSW Infrastructure, Raghav Chandra, IAS, Chairman, NHAI, Jayant Mhaiskar, Vice Chairman & MD, MEP Infrastructure and Abhay Lodha, Chairman Topworth discussed on the road infrastructure of the Maharashtra. This panel was moderated by Tarun Nangia of News World. Highlighting importance of the Port infrastructure in India Sanjay Bhatia, IAS, Chairman, Mumbai Port Trust; R K Agarwal, Joint Secretary, Minister of Shipping, Vinod Behety, President & MD – Corporate Finance,
Yes Bank; Neeraj Bansal, IRS, Deputy Chairman, JNPT and Pravir Pandey, IAS, Vice Chairman, Inland Waterways Authority of India, discussed port connectivity, costal shipping and inland waterways. Sanjay Sethi, CEO, MIDC; Bhushan Gagrani, MD, CIDCO; U P S Madan ,
Metropolitan Commissioner, MMRDA, Kiran V Kurundkar, JMD, MSRDC; Ashwini Bhide, MD, MMRCL, Milind Mhaiskar, Secretary, CM – Government of Maharashtra discussed on ‘Vision Maharashtra’ and steps that can be taken on infrastructure development of the state.
October 2016 | CONSTRUCTION TIMES | 61
international
talk
Plans for Kuwait Real Estate Project The Kuwait Projects Company and its partners have unveiled details of the Hessah Al Mubarak real estate development in Kuwait. The project, with a total built up area of 381,000sq m, will feature 82 plots for residential buildings, serviced apartments, offices, clinics, health clubs, retail space, and food and beverage outlets. It will also feature public services and amenities such as gardens, urban plazas, streets, and a multi-story car park. Gardens and green areas will cover an area of 23,400sq m. Tawfiq Al Jarrah, the development’s Executive Director, said, “More than 70 percent of the built up area of the development project is dedicated to residential units. These
are strategically located within the master plan to allow residents to benefit from public spaces and amenities. “The master plan also includes a business district stretching between two anchor nodes, the food and beverage cluster to the north, and the retail and community services cluster to the south.” Ahmadiah Contracting and Trading Company has secured the infrastructure contract for the project, while Al Mutawir Real Estate Company will serve as the project’s development manager. The first phase of the development will be completed within 36 months. Hessah Al Mubarak is expected to be inhabited by 2020.
Hyundai wins USD 5bn Russia Construction Deal A Hyundai Engineering-led consortium has secured a USD 5 bn construction deal in Nakhodka, Russia. The consortium, which includes Hyundai Engineerng & Construction (E&C) and Japan’s Toyo Engineering, signed the deal with the Nakhodka Mineral Fertilizers Factory to build fertilizer plants in Kozmino, a port located near the city of Nakhodka. The consortium will be responsible for the construction of two ammonia production plants with a combined daily capacity of 6,600t, two urea plants with a combined daily capacity of 6,000t and one methanol plant with a daily capacity of 3,000t, according to Korea Times. The factories are expected to be complete within 62 months.
Chinese Contractor Wins USD 1.2 bn Laos Railway Contract
China Railway Group, through its subsidiaries, has won a RMB8.1bn (USD 1.2bn) contract for the construction of a large railway section in Laos. China Railway No 5 Engineering Group, China Railway International Group and China Railway No 8 Engineering Group will build sections I, II, and III
of the Boten-Vientiane Railway Project. The project will run 414 km — including 258km of bridges and tunnels — from Boten on the Laos-China border, in the north, to Laos’ capital, Vientiane, on the border with Thailand, in the south. The project’s design includes the
62 | CONSTRUCTION TIMES | October 2016
construction of 31 stations along the entire line, with a designed speed of 160km/h. It will be constructed as an electrified railway according to China’s GB railway standard grade 1. Construction on the project is expected to be completed in five years.
international
talk
New Road Deal for N Carolina
Dubai Residential Twin Towers Unveiled The two 48-floor buildings — to be located just off Sheikh Zayed Road, next to Ibn Battuta Mall — will also include a podium-level health and recreation complex, a gym, and four levels of car parking with 900 spaces.
A team comprising a Flatiron Constructors -Blythe Development Company joint venture and HDR Engineering has been awarded a USD 99.2M contract for the reconstruction of a 1.9 km stretch of motorway in Winston-Salem, North Carolina. The North Carolina Department of Transportation (NCDOT) awarded the contract for the design-build project — known as Business 40 improvement project – along the Interstate 40 Business -US 421. The scope of the work will involve the upgrade of entrance and exit ramps and the replacement of bridges on and over Business 40 with new structures. It will also involve the replacement of existing pavement with new pavement, and visual enhancements to the roadway and the bridges.
Dubai-based developer Nakheel has unveiled luxury residences in Dubai. Ibn Battuta Residences will feature 531 luxury apartments — 395 two-bedroom and 136 three-bedroom apartments — with access to over 400 shops, restaurants and entertainment facilities.
The development will be in close proximity to the Dubai Metro, Ibn Battuta Bus Station and Jebel Ali park. Nakheel Chairman Ali Rashid Lootah said: “Ibn Battuta Residences are strategically located at one of the fast-growing areas in Dubai. “The apartments — the highest standard of accommodation available in Jebel Ali — are ideally placed for people who work at the nearby Jebel Ali Freezone or Dubai South, and, being less than an hour by car from Abu Dhabi, offer a convenient address for those who regularly travel to the capital.” The project is expected to be complete in the fourth quarter of 2019.
Saudi KAD to Deliver Gas Pipeline Projects
Saudi Arabia based contractor Saudi KAD has secured a contract from Saudi Aramco to deliver strategic pipeline projects related to the Master Gas Program Phase II, and the Fadhili Gas Program. The scope of the projects will involve the engineering, procurement, construction and commissioning of a pipeline network totalling 1,118km in length. The sizes of the pipeline will vary, with the biggest diameter reaching 56 inches and extending over a distance of more than 1,000 km. The projects also include the provision of engineering, procurement and construction (EPC) services for valve stations, metering systems, launcher and receiver stations, and fiber optic cables, as well as road and rail crossings. Saudi KAD’s Chairman Ahmad Al-Jabr said: “We are deeply honoured by the trust placed in Saudi KAD by Saudi
Aramco’s award of these strategic projects. It clearly demonstrates Saudi Aramco’s commitment towards supporting and growing national contractors for the greater benefit of our national economy.
64 | CONSTRUCTION TIMES | October 2016
“Saudi KAD will reciprocate this trust through meeting every commitment on the awarded projects, and continuing to pursue our aggressive localization agenda.”
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international
talk
Contract for US Gas Pipeline Project Harrison County, West Virginia, to Robeson County, North Carolina. SRC Project Director Dan Plume said, “SRC is pleased to have been selected by ACP as the constructor of this vital project which serves to strengthen the nation’s energy infrastructure. “The members of SRC are aligned in purpose with the common goals of safe construction practices, a commitment to environmental stewardship and quality construction.
Spring Ridge Constructors (SRC) has been selected as the lead contractor by the Atlantic Coast Pipeline for a USD 5 bn natural gas transmission pipeline project in the US. SRC is a joint venture of Price Gregory International, US Pipeline, SMPC, and Rockford Corporation. The 965.6 km Atlantic Coast Pipeline will run from
Linde for Expansion Project in Delaware Linde is set to expand its industrial gases plant in Claymont, Delaware. USD 100 mn expansion project will involve the installation of a new air separation unit (ASU).
“The SRC team leads the industry with a combined 200 years of expertise and leadership in the construction of large diameter pipelines that encompass all regions and terrains across North America.”
The plant will produce 1,200t daily of liquid oxygen, nitrogen and argon, as well as 400t daily of gaseous products, serving customers across the Delaware Valley and beyond. Linde Americas President Pat Murphy said: “As a company, our top priority remains to safely and reliably deliver our products and services to meet customer needs and fuel their growth.
The project is pending approval by the Federal Energy Regulatory Commission (FERC). Construction work is expected to commence in late 2017 and create more than 17,000 jobs in the region.
“This new plant represents Linde’s continued commitment to investment in the Americas to meet demand for our essential products and services.
New Wind Farm to be Built in Senegal
The Overseas Private Investment Corporation (OPIC) and Lekela Power have signed an agreement for the development, construction and operation of a 158MW wind farm in Taiba N’Diaye, Senegal. OPIC has committed USD 250 mn in financing and USD 70M in reinsurance to Parc Eolien Taiba N’Diaye. OPIC President and CEO Elizabeth
Littlefield said: “This is a transformative project for many reasons, principally for the new and clean energy it will supply to Senegal. “OPIC partnering with Lekela illustrates the opportunity for renewable resources to make a significant contribution to total energy needs. OPIC is proud to support the Taiba wind project and its role in advancing Senegal’s
66 | CONSTRUCTION TIMES | October 2016
economic prosperity.” Lekela CEO Chris Antonopoulos said, “Energy is critical to the African continent and its continued growth. Lekela is uniquely positioned as a long term investor to provide clean, secure, reliable and competitive renewable energy in Senegal and across Africa.” The project is expected to boost Senegal’s available power capacity by 24 percent.
JV Selected for Australia Road
Aecom Picked for Australian Wind Farm said: “We selected the Aecom team on the basis of their track record with recent Australian wind farm projects, and on the basis of our long working relationship with them on other Ratch development projects.
A joint venture of Seymour Whyte and Fulton Hogan has secured a USD 442M design and build contract for the Caloundra Road to Sunshine Motorway section of the Bruce Highway upgrade in Queensland, Australia. The project will include the widening of the highway to six lanes, and major upgrades to interchanges at each end of the project. Seymour Whyte Managing Director and CEO John Kirkwood said: “This is a significant contract that supports our strategic plan to continue diversifying into major design and construct projects. “We look forward to working collaboratively with the Department of Transport and Main Roads, Fulton Hogan, other partners and local communities to deliver an innovative design with quality execution on this important project.”
Aecom has been selected by Ratch Australia as the owner’s Engineer for the AUD360M (USD 270M) Mount Emerald Wind Farm in North Queensland, Australia. Aecom will be responsible for managing all key technical aspects, key risks and challenges of the 180MW 53-turbine wind farm. Ratch Executive General Manager Business Development Anthony Yeates
“Another key aspect of their selection was their strong North Queensland presence, for example we have been working with Aecom’s Cairns office on local road access arrangements for the project.” The project is expected to be concluded by late 2018, subject to final approvals. It has already secured the go-ahead from the Queensland and Australian governments in 2015 after four years of on-the-ground studies. Vestas and Downer Group have been appointed as the preferred contractors for the project. In May 2016, Ergon Energy agreed to purchase all of the electricity generated by the wind farm until 2030.
Italy Inc Shows interest in ‘Make in India’ scheme
After having understood the potential of the Indian market, a slew of Italian majors are on an expansion spree across sectors including infrastructure, energy, automobile and food processing among others. Ahead of the visit of a large business delegation from Italy in the first half of 2017, both India and Italy are keen on expanding trade and investment cooperation between both the countries. In a recent meeting with India, Italian majors including infrastructure firms like Italcertifer; Ferrovie dello Stato Group; Astaldi; Dabsi in railways. BTelectronics; ENEL SpA; Ducati Energia, Archimede Solar Energy in the energy sector; Chocolate maker Ferrero and other food processing giants such as D’Orsogna; Radicci Spa, are looking at expanding their presence in India. The Indian ambassador to Italy, Anil Wadhwa said, “The Italian companies are keen to be part of Prime Minister
Narendra Modi’s Make in India initiative. At a meet India-Italy Business Forum in cooperation of Confindustria, the apex commercial chamber of Italy was attended by 140 Italian companies.” “We are also in discussion with regional chambers of industrial cities of Florence, Bologna, Napoli, Ancona, Palermo, Venice, Turin and Genoa to organise sector specific events in near
future with participation of officials from different ministries and Indian companies,” the Indian envoy added. Italy just like India is home to large number of SMEs. “Italian companies should explore India for investment for advantages which India offers in terms of low cost labour, high skilled work force and low operating cost to make products for both domestic and world markets,” said senior officials.
October 2016 | CONSTRUCTION TIMES | 67
events EVENTS
calendar CALENDAR
National Inter Solar India International Conference Roadtech Date: -21th October 2016 Date: 19th August 12-2016 Venue: Exhibition Center, Mumbai Venue: Bombay New Delhi Website: Website: www.intersolar.com www.assocham.org
UMEX 20162016 MET+HTS Date: August 10-12, 2016 Date: 12 -14 October, 2016 Venue: New Delhi Venue: CIDCO Exibition Centre, Navi Mumbai Website: Website: www.umexonline.com www.methtexpo.com
REDECON Tech India2016 Expo 2016 Date: 09th -12th NOVEMBER Date: August 10-12, 2016 2016 Venue: Venue: NIMHANS New Delhi Convention Centre, Bengaluru, India Website: Website: www.accehq.net www.techindiaexpo.com
BRICS TRADE TRADE FARE FARE BRICS Date: October 12-14, Date: Oct 12-14, 20162016 Venue: New New Delhi Delhi Venue: Website: www.ficci.com Website: www.ficci.com
The Big 5 Construction India2016 2016 India Infrastructure Summit Date: 16 September 28-30, Date: November 20162016 Venue: BEC, Goregaon, Mumbai Venue: New Delhi Website: www.thebig5constructindia.com Website: www.indiainfrastrucutresummit.com
Wire & Cable India 2016 Date: October 5-7, 2016 Venue: Mumbai Website: www.mdna.com
The Tube Tube India India International International 2016 2016 The Date: October 5-7, 2016 Date: October 5-7, 2016 Venue: Mumbai Venue: Mumbai Website: www.tube-india.com www.tube-india.com Website:
Powder Powder & & Bulk Bulk Solids Solids India India 2016 2016 Date: October 13-15, 2016 Date: October 13-15, 2016 Venue: Venue: Mumbai Mumbai Website: Website: www.powderbulksolidsindia.com www.powderbulksolidsindia.com
Metallurgy India 2016 Metallurgy 2016 Date: October 5-7, 2016 Date: October 5-7, 2016 Venue: Mumbai Venue: Website:Mumbai www.metallurgy-india.com Website: www.metallurgy-india.com
Bauma Conexpo India Bauma Conexpo India Date: Dec 12-15, 2016 Date: December 12-15, 2016 Venue: Gurgaon Venue: Gurgaon Website: www.bcindia.com Website: www.bcindia.com
India Essen Welding & Cutting 2016 India Welding & Cutting 2016 Date:Essen October 5-7, 2016 Date: October 5-7, 2016 Venue: Mumbai Venue: Website:Mumbai www.india-essen-welding-cutting.com Website: www.india-essen-welding-cutting.com
1st Buildings India 2017 Expo 1st Buildings India 2017 Expo Date: 10-12 May 2017 Date: May 10-12 May Venue: Pragati Maidan,2017 New Delhi Venue: Pragati Maidan, New Delhi
IMEX 2016 IMME 2016 10-12, 2016 Date: August Date: 16th-19th November 2016 Venue: New Delhi Venue: ECO Park, Rajarhat, Kolkata, India Website: www.imexonline.com Website: www.immeindia.in
3rd Smart Cities India 2017 Expo 3rd Smart Date: 10-12Cities May India 2017 2017 Expo Date: May 10-12 May 2017 Venue: Pragati Maidan, New Delhi Venue: Pragati Maidan, New Delhi
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