Infrastructure todaymarch2016

Infrastructure ®

March 2016 Ɣ Vol. 13 No. 8

` 150

It’s a shame that both coastal shipping and inland waterways have lagged the growth in roads and railways. The good news is water transport may be finally getting its due. //P24

FEATURE

Project Management //P38 Aviation Infra //P50 Mass Urban Metro //P62

BUDGET SPECIAL Analysis //P58

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Chairman, Editorial Advisory Board 6XPLW %DQHUMHH 6XPLW#$6$33LQIR*/2%$/ FRP *Assistant Editor 5RXKDQ 6KDUPD 5RXKDQ#LQIUDVWUXFWXUHWRGD\ FR LQ Managing Director 3UDWDS 3DGRGH Chief Sales Manager $QRRS 6LGKDUWK $QRRS#,QIUDVWUXFWXUH7RGD\ FR LQ Subscription 6XE#,QIUDVWUXFWXUH7RGD\ FR LQ 7HO Published by $6$33 0HGLD 3YW /WG $ 1DYEKDUDW (VWDWHV =DNDULD %XQGHU 5RDG 6HZUL :HVW 0XPEDL 7HO )D[ Branch Offices Ć 'HOKL 7HO Ć %DQJDORUH 7HO Ć 3XQH 7HO Ć &KHQQDL 7HO Representative Offices Ć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At last, a Budget for the villager? â€œâ€Ś.quite like the manufacturing and services sectors depend on quality of infrastructure for their competitiveness, our agriculture also will be able to make a difference, in terms of productivity and competitiveness, if supported by proper facilities like irrigation, rural roads, access to markets, electricity and telecommunicationsâ€? – this is what we had to say in one of our editorial pieces last year. Therefore, it goes without saying, that we are delighted to see all the rural investments and initiatives the government has proposed in Budget 2016/17. This has to do with irrigation, roads, sanitation, electricity connections, public transportation systems – all in our villages. Add to this the large monies and/or effort earmarked for the Panchayats, MNREGA, interest subvention on agricultural loans, Crop Insurance Scheme, rural LPG connections for poor women, direct beneďŹ t transfer for fertilisers, PURA and many more such small and big proposals, and we have a Budget that is ďŹ nally designed for the hitherto forgotten villager. We truly wish that collectively, we succeed in implementing these initiatives, and thereby achieve the goal of doubling our farmers’ income by 2022 (do not know if it is nominal income or real (ination adjusted) income))!

The only discordant note in this rural thrust, is the absence of anything of substance for the schools and health centres in villages, on the facile pretext that this is now in the states’ territory.

We think that the central government of a large, diverse and developing country like India can ill afford to take a hollow and superďŹ cial position like that. Instead, it should go about formulating health and education strategies and developing recommended model policies for the states to implement, with much more urgency. The government will fail in its duties if it were not to mentor the states in this matter of truly national importance.

Where does this leave our manufacturing or services sectors, or for that matter, our slogans of Make in India, Skill India and Smart Cities? What happens to Start Up India or AMRUT or Sagarmala? Other than roads and highways, the Budget has disappointed all other infrastructure segments like ports, airports and urban infrastructure. Take, for example, the pet project Smart Cities, where a provision of `3,200 cr has been made, against a requirement of `10,000 cr. Take AMRUT, where money provided is `4,000 cr against an estimated requirement of `15,000 cr. Against a demand of `33,000 cr for metros all over the country, only `10,000 cr has been allocated. In the current year, the roads and highways sector has done reasonably well even in the face of headwinds, and has been amply rewarded with a provision of upward of `1 lakh cr. This augurs well not only for travellers but also for road contractors and developers in the immediate term.

With the emphasis on roads, railways, housing, irrigation (and not so much directly on Make in India), one can safely expect a spurt in demand of skilled construction workers. There are two or three serious implications of this. One – this will further increase the bias of employment opportunities in seasonal/informal/unorganised sectors, which are very weak on welfare measures and protection of workers’ rights. Secondly, construction projects may get delayed due to shortage of skilled labour, caused by demand – supply imbalance in the labour market. On one side, we have a potential growth in construction projects, and on the other side, possible improvements in wage opportunities in villages. The construction companies will have to ďŹ nd answers to this complex issue.

Sumit Banerjee Chairman, Editorial Advisory Board www.InfrastructureToday.co.in

contents BUDGET SPECIAL Analysis

58

Sandeep Upadhyay, MD&CEO, Centrum Infrastructure Advisory Manish Agarwal, Partner and Leader Infrastructure PwC India.

24 &29(5 6725< Indian Waterways (A route canal treatment)

24

6327/,*+7 Interview

It’s a shame that both coastal shipping and inland waterways have lagged the growth in roads and railways.

The good news is water transport may be finally getting its due.

Legalese

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Project Management

38

Make in India

50

Smart Cities

Supporting infrastructure has to catch up with the growth envisaged for Indian aviation.

Urban Mass Transport

68

The legal eagles from DSK Legal, Advocates and Solicitors, comment on the bankruptcy code.

It’s the little things that matter. Ignore planning and project management at your own peril.

Airports

67

Rajat Seksaria, Vice President & Business Head, Punj Lloyd Infrastructure, discusses the company’s plans and competitive advantages in solar.

70

The first Make In India Week was held in Mumbai and was the biggest ever show of the country’s manufacturing prowess.

72

The event kicked off in Mumbai in the wake of the government’s announcement of the first 20 cities selected for the Smart Cities Mission.

62

If all the proposed metro and monorail projects were to be executed effectively and started rolling on time, Mumbai - the city of dreams - would soon be a commuters’ paradise.

PSU Special

66

Captain Ajay Chauhan, CEO, GUJSAIL, talks about the plans to develop aviation infrastructure within Gujarat.

72 50 Scan this code with your smartphone* to stay tuned with the latest happenings in the world of infrastructure. *QR code application required.

,1'(; Editor’s Page...........................4 Updates Policy.....................................8 Telecom & Urban Infrastructure.......................10 Finance................................12

Project .................................14 Transport .............................16 Maritime .............................18 Energy .................................20 Power...................................22 Tenders ................................82

Disclaimer: Communication Feature content provided by respective companies.

6 Infrastructure Today March 2016

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32/,&< IN BRIEF REGULATORY FRAMEWORK FOR MINING, CONSTRUCTION? The government may soon come out with a separate transparent regulatory framework for construction, mining and earthmoving equipment sectors, according to media reports.

“The proposed regulatory framework is required to bring in more clarity as the concerns of the construction, mining and earthmoving equipment are not adequately addressed as per the current legislation under the Central Motor Vehicle Act,” Vishvajit Sahay, Joint Secretary, Department of Heavy Industry said.

INCLUDE SURAT UNDER POLICY, DEMANDS MP A member of the consultative committee for Ministry of Civil Aviation and Navsari MP, CR Paatil, has sought inclusion of Surat airport under the National Civil Aviation policy to cap fares at `2,500 per passenger for a one-hour flight.

The ministry, in its internal meetings, has given a go-ahead to the proposed regional connectivity scheme. Through the scheme a fund will be formed by levying 2 per cent cess on all domestic and international tickets from next year.

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Registered name of Publication: Infrastructure Today; Place of Publication: Mumbai (Maharashtra); Periodicity of publication: Monthly; Name of Printer and Publisher: Tarun Pal; Address: A-303, Navbharat Estates, Zakaria Bunder Road, Sewri (W), Mumbai - 400 015.

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8 Infrastructure Today March 2016

Power firms await coal linkage policy Power producers have made a fresh appeal to the Centre to release a coal linkage policy soon. They have argued the coal linkage policy announced by the previous UPA government had covered 78,000 MW to be commercially operational by March 31, 2015. It did not include capacity addition of another 78,000 MW, of which 20,000 MW

have valid coal linkages, which are due to be commissioned in 2016-17 and beyond.

Union Minister for Power and Coal Piyush Goyal has said a new coal linkage policy will be declared soon. He, however, did not indicate a date. “‘The fuel supply agreement policy framework announced earlier was limited to 78,000 MW, with the expected commercial

DGCA likely to issue guidelines on block hours Aviation regulator DGCA is likely to come out with fresh guidelines on block hours, a yardstick for on-time performance, to remove disparity among airlines. Block hours refer to the moment a commercial aircraft leaves the departure gate until it lands and reaches the arrival gate, or till its engines are working. An

airline’s on-time performance as well as facilities and financial compensation to a flyer in case of delay are determined on the basis of block hours. Block hours differ from route to route.

Some airlines report good ontime performance by showing additional hours for a particular flight compared to same flights of competing airlines.

Aviation policy to focus on regional connectivity: Pres The government is working on a new civil aviation policy which seeks to provide connectivity to the smaller cities even as domestic air traffic has been on a growth path the last year, President Pranab Mukherjee said. Last October, the Ministry had unveiled an elaborate and revised draft National Civil Aviation Policy and stakeholders were given time till November 30 to give their feedback. The Ministry had proposed a raft of measures to bolster regional air connectivity, including levying of ad-

ditional cess and providing viability gap funding. The draft policy also focuses on proposals for tax sops and over 50 per cent FDI for Indian carriers. It moots setting up no-frills airports, VGF for airlines to enhance regional connectivity and talks about reviewing the decade-old 5/20 norm. Under the proposed policy, fares are to capped at `2,500 for an hourlong flight under the regional connectivity scheme for places currently not covered. This may be finalised next month and implemented next fiscal.

operation date set at March 31, 2015,” said Ashok Khurana, DG, Association of Power Producers. “For projects beyond 78,000 MW, there is no policy. These include projects with coal linkages, projects that lost mines due to the Supreme Court order, and projects that have achieved their commercial operation date but have no coal,” he added.

Use green finance for cleaner coal The Economic Survey 2015-16 has warned against a system of green financing in India that focuses solely on renewable energy and instead also wants investments in greening of coal power. “For a developing country like India, poverty alleviation and development are of vital importance and resources should not be diverted from meeting these development needs. Green finance should not be limited only to RE”, the survey said.

Ex-civil aviation Min defends 5/20 Former Civil Aviation Minister Praful Patel, under whose watch the Civil Aviation Ministry had framed the 5/20 rule, has strongly defended the regulation that insists that Indian airline companies must operate within the country for five years and have a fleet of at least 20 aircraft before they fly on the more lucrative international routes. Patel said the government brought in the rule as it felt there should be “reasonable restrictions”. www.InfrastructureToday.co.in

85%$1 ,1)5$ IN BRIEF MATTANNUR TOWN ON THE VERGE OF DEVELOPMENT Mattannur, a grade-3 municipality in Kannur district, located 25 km east of the district headquarters, is looking forward to a major facelift in the coming years, as it is located close to the Kannur International Airport project site. Various projects are in the pipeline to improve the town’s infrastructure to cater to the anticipated upsurge of people and traffic.

METRO TUNNELLING WORK ZOOMING AHEAD Chennai Metro Rail authorities are in the process of making the stretch between Tirumangalam and Nehru Park, Egmore, operational by October. This will be the first underground section of the Chennai Metro to be commissioned. It will be commissioned after work between Little Mount and Chennai Airport is completed.

To boost revenue, airport Metro to carry cargo After slashing fares to bring in more commuters, the Delhi Metro Rail Corporation is trying other ways of increasing revenue on the Airport line.

From March 1, DMRC will start cargo services on the Airport Express line on an experimental basis. The cargo,

said Metro officials, will be carried in the area earmarked for luggage. Currently, this space is kept for commuters who may be travelling with luggage. “The agency will utilise the Airport Express line for transporting cargo between the New Delhi and IGI airport

Metro stations on a trial basis for three months,” said a Delhi Metro spokesman. This, Delhi Metro says, will be the first time that a Metro system in India is to be used for cargo.

“Based on this, a tender for long-term arrangement shall be floated,” added the official.

Vishvaraj plans `6,000 cr investment in waste water projects Vishvaraj Infrastructure plans to invest around `6,000 crore over the next five years to tap the growing market for waste water treatment.

It expects to garner around `2,500 crore in revenue from this business, the company’s

CMD Arun Lakhani said.

Vishvaraj Infrastructure, which started off with BOT road projects in Maharashtra, has diversified into integrated water supply, waste water treatment and reuse segments.

“Around 38,250 MLD of

waste water is generated by tier I and II cities, which is estimated to grow 3.5 times to 1,32,250 MLD by 2050. We see this as a huge market for sewage treatment and reuse for commercial purposes,” Lakhani told PTI.

7(/(&20 IN BRIEF GOVT TO TAKE STAND ON INTERNET CALLS AFTER TRAI SUBMISSION Government is awaiting telecom regulator TRAI’s recommendations on voice-calling apps, called Over-the-Top players, to take a stand on internet-based calls, Union Minister Ravi Shankar Prasad said. “TRAI issued a consultation paper on March 27, 2015, which includes regulatory treatment of voice over Internet protocol (VoIP). Government will take a position on this aspect after the outcome of this consultation process of TRAI,” Prasadsaid.

“Govt policy on net neutrality shall be finalised after taking into account recommendations of committee constituted at DoT, recommendations of TRAI and other inputs to the government,” Prasad said.

10 Infrastructure Today March 2016

Delhi HC upholds penalty on call drops; telcos may appeal in SC The Delhi HC, in late February, upheld the telecom regulator’s rules set last October that mandate telcos to pay Re 1 per call drop to consumers, capped at `3 a day. The judgement by Chief Justice G Rohini and Justice Jayant

Nath, now means carriers will be required to pay customers, while allowing the Telecom Regulatory Authority of India (TRAI) to take action against telcos who don’t comply.

Telecom companies are disappointed with the ruling and

are exploring means to challenge the order in the Supreme Court. “We’re disappointed with the order. We will have to see the details of the order to take a call on filing an appeal (in the Supreme Court),” Rajan Mathews, DG, COAI, said.

Mega sale of airwaves by July: JS Deepak Telecom Secretary JS Deepak said the government is working towards a mega sale of 2G, 3G and 4G airwaves by June-July and would a take a call next month on the starting prices of seven bands, including the coveted 700 MHz 4G

band, recommended by the sector regulator. “I would be surprised if we are not ready by March,” Deepak said. TRAI’s spectrum pricing suggestions need to be ratified by the DoT and the Cabinet. The DoT wants the spectrum sale to be

“a triple win - customers should get reasonable good quality networks, operators should get business and the government should get revenue. I have been talking to the private sector that seems bullish on India,” Deepak said. www.InfrastructureToday.co.in

),1$1&( IN BRIEF

LIC stars in NTPC stake sale show

MACQUARIE INFRASTRUCTURE RAISES $3 BILLION FOR ASIA Macquarie Infrastructure and Real Assets (MIRA) has raised $3.1 bln to invest in infrastructure companies in Asia, including India. Investments will be made via its Asian regional infrastructure platform, which includes the Macquarie Asia Infrastructure Fund, and specialist investment vehicles. “The Asian region provides a compelling investment environment for institutional investors. Strong fundamentals underpin the growing demand for real assets including infrastructure”, Martin Stanley, MIRA global head, said.

The `5,000-crore stake sale by the government in NTPC saw demand for almost twice the shares on offer, led by a big-ticket application by insurance giant Life Insurance Corporation of India. The 330 million share offering, excluding the 20 per cent retail quota, received 596 ml bids, with nearly a fourth of them from insurance companies,

DELHI, MUMBAI AIRPORTS COLLECT OVER `10,000 CR FEE Delhi and Mumbai airports have collected more than `10,139 crore in user development and passenger fees till Dec 2015 since their privatisation in 2006-07. Minister of State for Civil Aviation Mahesh Sharma said DIAL has collected `7,740.52 crore in user development fee/ passenger service fee (facilitation) and parking fee from March 2007 till Dec 2015. Of the total, `7,375.42 crore came from UDF/PSF (facilitation) and the rest from parking fees, he said.

Germany’s Fraport is looking to sell its entire stake in DIAL, a joint venture operating the IG International Airport in the national capital.

Fraport holds 10 per cent in Delhi International Airport Ltd (DIAL), a three-way JV where the majority is held by GMR Infrastructure. Citing sources, media reports said Fraport is looking to exit from DIAL amid concerns it is not getting expected returns on investment. A Fraport AG spokesperson said, “It is not our

ADANI PORTS Q3 NET PROFIT JUMPS 26% TO `645 CR Adani Ports and Special Economic Zone Ltd (APSEZ) reported a 26 per cent jump in its consolidated net profit to `644.96 core for the quarter ended December 2015. Total income from operations rose to `1,717.86 crore as against `1,548.45 crore in year-ago quarter. Total expenditure declined to `934.70 crore as against `869.90 crore. “We would now also look to the development of industrial clusters and end-to-end logistics”, Adani Group Chairman Gautam Adani said.

12 Infrastructure Today March 2016

mainly LIC. Most of the bids came in at around `122.2 per share compared to the base price of `122 set by the government. Despite weak market conditions, NTPC’s offer for sale was fully subscribed within hours. The sale saw participation from all categories of investors, including foreign ones, said Disinvestment Secretary Neeraj Gupta. “In

Fraport looks to exit Delhi International Airport venue policy to comment on speculation regarding our business partnerships”. A DIAL spokesperson also declined comment.

Currently, GMR holds 64 per cent in the airport venture while Fraport has 10 per cent and the remaining 26 per cent shareholding is with the Airports Authority of India (AAI). Early last year, Malaysia Airports (Mauritius) Pvt Ltd exited the joint venture by selling its entire 10 per cent stake to GMR Airports, a subsidiary of GMR Infrastructure.

GVK reaches out to JSW Group for stake sale: Reports The Reddy’s, founder promoters of GVK, have reached out to JSW Group with an offer to sell their controlling stakes in their crown jewels the two airports in Mumbai and Bangalore. Citing sources, media reports said Sanjay Reddy, the group’s VC, recently met Sajjan Jindal to discuss the matter. Reddy is also the MD of Mumbai International

Airport. The report said GVK - among the most indebted infrastructure conglomerates in the country with `26,500 crore net group debt in FY15 - has been exploring strategic options including listing its airport vertical or selling a minority 49 per cent at its airport holding company or even an outright sale of its economic interests in Bangalore airport.

the current environment, this is a good response from the market,” he said. Gupta said foreign institutional investors placed bids worth `925 crore, while mutual funds and banks applied for shares worth over `440 crore each. Insurance companies were responsible for 133 per cent of the bids and LIC made an application worth around `3,000 crore, he added.

Shapoorji in talks with Karaikal port Shapoorji Pallonji Group is in talks with the promoters and private equity investors of Karaikal Port, a unit of Chennai-based realty and infrastructure group MARG, to acquire a 51 per cent stake in the company for almost `1,000 crore, a media report said, citing unnamed sources. If concluded, the transaction would be among the largest in the ports sector, which has been battling a drop in outbound and inbound shipments. The deal would also help Karaikal port reduce debt on its books.

IVRCL lenders to convert loans Lenders of debt-ridden infrastructure firm IVRCL have decided to convert part of their loans to the highway developer into a 51 per cent or more equity holding. The joint lenders forum have approved strategic debt restructuring (SDR) in the company. The SDR will be done in tranches at a price of `8.765 per equity share of face value of `2 each, the company said in a BSE filing. www.InfrastructureToday.co.in

352-(&76 IN BRIEF SHRIRAM EPC WINS ORDERS WORTH `430 CR Shriram EPC has bagged contracts worth over `430 crore. Of this, it had received a road contract worth `301.05 crore from Chhattisgarh for executing road works of 50 km under the NHDP-IV on EPC to be completed over 24 months. The company also bagged a contract worth `137 crore from the Jharkhand government for implementation of the rural water supply scheme in three groups of villages within a 33-month period.

COST OF 6 FLYOVERS UP BY 2.5 TIMES IN A YEAR The six flyovers planned by NHAI in Nagpur will go a great way in reducing traffic congestion but they will come at a huge cost. This cost is going up by the day. Last January, the estimated cost of these flyovers was around `1,000 crore, which has now shot up to over `2,600 crore. Change in design of the flyovers and increase in cost of construction material are the two major reasons for the escalation.

JDA INVITES BIDS SANS DPR FOR ROAD PROJECT The Jaipur Development Authority seems to be in a hurry to begin work on the government’s elevated road project proposed between Ambedkar Circle and Sodala.

It has invited bids to construct the `200 crore road without preparing a detailed project report in its effort to ease traffic pressures. JDA will reportedly provide the design.

KATNI IN MP TO BEAT KERALA FOR INDIA’S LONGEST BRIDGE Almost three and a half times longer than Vembanad rail bridge in Kerala, Katni in Madhya Pradesh will have India’s longest bridge, according to a leading English daily. The railway bridge will be 14 km on the up line which will be longer that Kerala’s Vembanad rail bridge which is 4.62 km long. According to reports, the down line of the bridge would be 7 km and its total length would be 21 km up and down-side. The design and survey is complete and it will take five years to complete. It is expected to cost around `600 cr.

14 Infrastructure Today March 2016

Expressway on fast-track mode Maharashtra government has put the `30,000-crore Mumbai-Nagpur super communication expressway on fast-track.The nodal agency for the project is-run Maharashtra State Road Development Corporation (MSRDC). It recently gave the consultancy contract to STUP for the feasibility and detailed project report for the 260 km Amravati

section that entails an investment of `7,800 crore.

Wadia & Co received the consultancy contract for the 115-km Nashik section costing `3,450 crore. MSRDC has invited tenders for the 128 km Nagpur section (`3,840 crore), 165 km Aurangabad section (`4,950 crore) and 80 km Konkan section (`2,400 crore).

The bidders have to submit

Punj Lloyd wins orders worth `2,070 cr in Oman Engineering, procurement and construction (EPC) major Punj Lloyd won orders worth `2,070 crore in the oil & gas sector from Oman Oil Refineries and Petroleum Industries Company (ORPIC) and Oman Gas Company (OGC) earlier in February.

“The scope of work includes the construction of a 300-km natural gas liquid (NGL) pipeline and a 301-km gas pipeline,” the company said.

The first pipeline is part of

ORPIC’s $6.4-billion Liwa Plastic Industries Complex and will travel from the New Fahud NGL Plant to the steam cracker unit at Sohar in Oman.

The scope of work includes construction of block valve and pigging stations. Pipelines need to be completed within 38 and 35 months. The group’s order backlog stands at `25,400 crore. Order backlog is the value of yet-to-be-executed orders on Dec 31, ‘15, plus new orders received after that date.

BHEL bags order for 800MW power plant in TN BHEL has bagged an order from the TN government to set up the state’s first 800 MW thermal power plant. The North Chennai Supercritical TPS Stage III is located in Thiruvallur district. The letter of award for the project was handed by CM Jayalalithaa to Atul Sobti, Chairman & MD, BHEL. The contract placed by TN Generation and Distribution Corporation

(TANGEDCO) is estimated at `2,759 crore. The project is to be commissioned by August, 2019. The key equipment for the project will be manufactured at BHEL’s Trichy, Haridwar, Bhopal, Ranipet, Hyderabad, Jhansi and Bangalore units. The company’s Power Sector, southern region will be responsible for civil works and commissioning of equipment.

bids by February 22 and they will be entitled to download a RFP between February 22 and March 10. The 800 km access controlled NagpurMumbai highway has been divided into five sections. The construction cost for the eight lane expressway is estimated at `30 crore per km which involves six lanes of super communication highway.

L&T bags `1,404 cr international orders L&T said it has bagged orders worth `1,404 crore across various business verticals. The first order, worth `1,014 crore, is for electrification upgrade work in the Middle East.

Another additional international order was for additional third and fourth transformer units for Oman Electricity Transmission Company. L&T also received a `390 crore order from an ongoing metro job in the international market, the company said in its statement.

Kannur airport to be operational in Sept The upcoming Kannur International airport will commence commercial operations in September. The DGCA has given clearance and a defence aircraft is to touch down on February 29, Ports and Excise Minister K Babu told reporters. “Normally, it takes three to five years to construct an airport. All records have been broken at Kannur”, Babu said. Work at the airport had begun in 2014. www.InfrastructureToday.co.in

75$163257 IN BRIEF ROAD TRANSPORT IN PASSENGER SEGMENT TO BE OPENED UP: FINMIN Finance Minister Arun Jaitley in the Union Budget 2016-17, announced the government will open the road transport in passenger segment to the private sector. The minister said the Motor Vehicle Act will be amended to enable entrepreneurship in the transport sector. The proposed move will not only help in facilitating better commuting for the masses but also give a tough challenge to the State Transport Undertakings(STUs), incurring huge losses who need to be more efficient. For the majority of the STUs, it would be question of their survival, considering their poor financial health and for bearing the burden of popular political moves by states.

RAILWAYS WILL NOT BE PRIVATISED UNDER NDA GOVERNMENT: MANOJ SINHA Union Minister of State for Railways S Manoj Sinha said the public enterprise will not be privatised under the NDA rule, though investments from private players will be welcomed for its development. “We are not in favour of privatisation of Indian Railways at all under the NDA rule,” Sinha told reporters in Gwalior.

HYDERABAD SUBURBAN TRANSPORT SERVICES TO GET A FURTHER BOOST The Hyderabad suburban passenger transport services on the busy Ghatkesar section will get a further boost with Railway Minister Suresh Prabhu announcing the MMTS project on a cost sharing basis with Telangana Government.

The state government had earlier requested the Minister to include extension of MMTS services from Ghatkesar to Raigir at the temple town of Yadagiri on a cost sharing basis. It had offered to bear two-thirds of the estimated `330 crore expenditure for the project. The MMTS services have become popular in and around Hyderabad and the second phase of these services is currently underway.

16 Infrastructure Today March 2016

Budget 2016: Total outlay for roads and railways to be `2,18,000 cr Presenting the Union Budget on February 29, Finance Minister Arun Jaitley announced that the total outlay for road and rail development would add up to `2,18,000 crore this fiscal.

He said that `55,000 crore is the budgetary allocation for development of roads in

2016-17 and `15,000 crore is to be raised through government bonds. This added up to `70,000 crore.

However, taken together with the Gram Sadak Yojana, the monies goes up to `97,000 crore. After adding the same to the outlay by the Railways for

Rail budget gets thumbs-up from steel industry Indian steel-makers gave a thumbs-up to the Rail Budget, saying infrastructure spending promised by the government will help increase steel demand. The government hopes to invest `1,21,000 cr on Indian Railways and Rail Minister Suresh Prabhu’s plan includes commissioning 2,800 km of broad gauge conversion and 2000 km of railway electrification, two new

dedicated freight corridors, port connectivity, suburban railway projects and station redevelopment. JSW Steel Chairman Sajjan Jindal said the plans augur well for giving a fillip to steel demand. “We welcome the announcement of a review of freight tariff policy to evolve a competitive freight structure and increase the share of railways vis-a-vis other modes,” Jindal said.

Improve logistics in coastal shipping for savings: Study A study by global consultants McKinsey & Co and AECOM for the Ministry of Shipping says optimising the logistics flow for key commodities by 2025 could save `30,000-40,000 crore. It recommends creation of more capacity at major ports and a logistics aggregator company to consolidate the shipping supply chain. The report says coastal shipping capacity can handle 150-250 million tonnes annually of cargo comprising

coal, cement, iron and steel, food-grain and fertiliser. There is a potential here to save `10,000-20,000 crore by 2025.

By setting up new coastal capacities for bulk commodities for 100-120 mt annually, the saving would be `6,000-8,000 crore. By reducing the time to export containers by five days, another `10,000-12,000 crore can be saved, the study said.

Raising Railways’ share in container traffic would lead to savings of `3,000-6,000 crore.

development of rolling stock and track, the total outlay stands at `2,18,000 crore.

Jaitley said that 10,000 km of national highways is to be flagged off in 2016-17 and 15,000 km of state highways will be taken up by the Centre from the states for development.

Railways to lay 7km tracks per day Railways will lay 7 km of tracks every day in 2016-17 as against an average of 4.3 km per day in the last six years, as part of its capacity augmentation plan. The drive is expected to gather further pace in 2017-18 when rails will be laid in about 13 km every day. Reportedly, the bar will be raised further in 2018-19 to 19 km daily, according to an action plan it has made.

Govt. to invest `25k cr in Assam Union Road Transport and Highways Minister Nitin Gadkari said the Centre would invest `25,000 crore for developing roads, bridges and waterways in poll-bound Assam over the next two-three years. “We have given prime focus in developing road and water infrastructure in Northeast and Assam. The Centre through NHAI, PWD and NHIDCL will invest about `25,000 crore in Assan over the two-three years”, Gadkari said, while in the state. www.InfrastructureToday.co.in

0$5,7,0( IN BRIEF CENTRE TO FLOAT TENDERS FOR COLACHEL PORT The Shipping Ministry will issue tenders by March for the appointment of a consultant for the proposed trans-shipment port of Colachel. Union Transport Minister Nitin Gadkari said Colachel in Tamil Nadu, Sagar in West Bengal and Wadhawan at Dahanu in Maharashtra will be the three new greenfield ports.

“We have already initiated investments worth `80,000 crore for mechanisation, modernisation and computerisation of ports”, he said. Colachel is being promoted as a trans-shipment hub because of a deep draught of 18.5 metres, said N Muruganandam, MD, Indian Ports Association.

JSW EYES PORT ASSET ACQUISITIONS JSW Group is looking for port assets as part of a strategy to expand ports capacity, its CFO Seshagiri Rao said. “We are going for inorganic growth as there are assets that are available and that makes more sense today, and at the same rates or rates much lower than that of organic growth,” Rao was quoted as saying. JSW Infrastructure, the group’s unlisted ports unit, has a port capacity of 33 mt across three ports on the western coast.

JSW plans to increase this more than six-fold to 200 mt by 2020.

GREEN NOD FOR FSRU AT KAKINADA PORT The ministry of environment, forests and climate change (MoEF) has given environmental and coastal regulation zone (CRZ) clearance to AP Gas Distribution Corporation Limited for developing Floating Storage Re-gasification Unit (FSRU) based LNG terminal at Kakinada deep water port. APGDC is undertaking the project with a 3.5 MMTPA design capacity and appropriate operational flexibility.

18 Infrastructure Today March 2016

Cargo traffic up 3.36%: Official Buoyed by pick up in demand, India’s 12 major ports saw cargo traffic increase by 3.36 per cent to 499.23 mt in the first 10 months of the current fiscal. These top ports handled 483.01 mt cargo during April-Jan of the last fiscal. “Our 12 ports recorded higher traffic volumes during April-Jan at 499.23 mt which was higher than last year.

Volume growth was possible due to increased demand from various sectors,” a Shipping Ministry official told PTI. Kandla port handled the highest traffic volume at 82.91 mt in April-Jan current fiscal. Paradip Port was next with 61.67 mt; JNPT at 53.54 mt; Mumbai Port at 51.40 mt and Visakhapatnam at 47.11 mt, the official said. Chennai port handled

Cochin Shipyard to build 4 catamarans: Gadkari All set for its maiden foray into catamaran manufacturing, Cochin Shipyard will build four such popular vessels, used for cruising and other purposes.

This is for the Andaman and Nicobar Islands, Union Minister Nitin Gadkari said.

This follows the company’s recent feat under which it will build cryogenic carriers that transports natural gas frozen in liquid form after it

made a pact with GTT France, the world leader in design, and a technology provider of containment systems for transporting LNG. “The vessels should be ready in approximately two to two-and-a-half years time from now”, Gadkari told PTI. “This is being done under the Make in India drive”, he added. The cost of the vessels is estimated at about `1,400 crore.

ABG Shipyard may get strategic investor end March Debt-laden ABG Shipyard which has been scouting for a strategic investor for quite sometime now is likely to get one by the end of current fiscal.

“We need an investor for our existing projects which has a working capital requirement of `500-700 crore,” Syed Abdi, MD & CEO, ABG Shipyard, told reporters on the sidelines of the Make In India event.

Earlier, the company was in talks with Germany-based firm Privinvest Holding but the

deal did not make much headway. “Privinvest is more for our future projects and so I cannot say it is out of the list.

We need an investor for our existing projects as well,” Abdi said. The company is considering consortiums, along with domestic as well as overseas entities for the majority 51 per cent stake sale. With an order book of over `12,000 crore, ABG Shipyard is looking to bag naval and defence orders as well.

41.52 mt while Kolkata Port, including Haldia, handled 41.14 mt. Commodity-wise, coal, fertiliser, etc. witnessed the highest growth, the official added.

Also in the last three quarters of 2015-16, cargo traffic handled at major ports recorded growth. April-June saw a growth of 4.3 per cent while July-Sept saw a growth of 3.8 per cent.

Oct-Dec growth was 1.4 per cent.

`50,000-cr port projects in pipeline The Shipping Ministry is overseeing 33 projects worth `32,000 crore, while 45 projects with an investment of around `18,414 crore are under operation, Parliament was informed in late February. “As of now, 33 PPP projects with an estimated cost of `32,001.30 crore and 280.97 mt capacity are under implementation stage,” Minister of State for Shipping P Radhakrishnan said in the Lok Sabha.

No deals in shipping, ports for two years Private equity firms have stayed away from investing in shipping, ports and logistics for two years in a row. “PEs have stopped coming into the sector and there is no easy money for the shipping business,” G Shivakumar, CFO, Great Eastern Shipping, said in the third quarter earnings conference call. The company, like its peers, has given a negative outlook for the dry bulk trade division and did not provide valuations for the offshore business. www.InfrastructureToday.co.in

(1(5*< IN BRIEF STRATEGIC PETROLEUM CAVERNS TO BE READY BY MAY The Indian Strategic Petroleum Reserve Ltd (ISPRL) will complete construction of the caverns in Mangaluru and Padur by March and May 2016 respectively.

Dharmendra Pradhan, Minister of State (IC) for Petroleum & Natural Gas said that Visakhapatnam cavern has been commissioned.

“At present, there is existing tankage of 14.8 mt of crude oil and 13.7 mt of petroleum products in the country which provides coverage of approximately 63 days as per consumption. Strategic crude oil reserves of 5.33 mt being set up in phase-I and strategic crude oil reserve of 12.5 mt in phase-II will give coverage of approximately 12 days and 28 days respectively as per present consumption,” the Minister said.

GAIL PROJECT: PROTEST STAGED Members of Social Democratic Party of India staged a demonstration at Karunkalpalayam in late February, urging the Central Government to restrain GAIL from laying natural gas pipelines across agricultural fields in Western region. They demanded withdrawal of The Petroleum and Minerals Pipelines Act. Former Erode MP A Ganeshamoorthy and other speakers fixed the responsibility of safeguarding farmers’ welfare on the Central Government by way of aligning the pipeline route along national highways.

GAIL, IOL TEAM TO VISIT IRAN IN MARCH FOR GAS PIPELINE The long proposed $4.5 mln undersea gas pipeline between Iran and India is likely to get some momentum. A visit is planned by key domestic gas buyers, including Gail and IOC to Iran early March in the backdrop of lifting of Western sanctions. In the visit by the team comprising three gas buyers, including GAIL and IOL, the focus wil be to discuss the cost of the gas that would be acquired through the pipeline and other modalities.

20 Infrastructure Today March 2016

India’s oil demand to be highest: IEA According to the IEA’s World Energy Outlook-2015 report, India’s oil demand is projected to grow by 6 mln barrels per day (mb/d) from 3.8 mb/d in 2014 to 9.8 mb/d by 2040. This is the largest projected for any country’s oil demand, Minister of State (I/C) for Petroleum & Natural Gas, Dharmendra Pradhan,

informed the Rajya Sabha. As per the report, there is scope for gas demand to recover to 68 bcm by 2020, before rising to almost 175 bcm in 2040.

To meet rising demand, the government has taken various policy initiatives to enhance oil and gas production, the Minister said. These include, inter alia, approving the

Budget 2016-17: Clean energy cess doubled to `400

Marginal Field Policy, linking transparent new gas pricing formula to global market, reassessing hydrocarbon potential, appraising 1.5 mln sqkm of basins and setting up the National Data Repository. Further, the government is encouraging FDI to supplement domestic investment and technological capabilities in petroleum.

Govt refiners join forces for oil deals Government refiners are jointly negotiating oil purchase deals with OPEC producers as the world’s third biggest consumer seizes on low prices to wrest better terms. In a sign of the shift in power from oil sellers to buyers, India is reviewing its import policy at a time when OPEC members are focused more on protecting market share than boosting prices that are down some 70 per cent in the last 20 months.

Finance Minister Arun Jaitley has doubled the clean energy cess to `400 per tonne of coal. He also introduced infrastructure cess on petrol, diesel and luxury cars. Jaitley renamed the cess, used to finance clean environment initiatives, as the clean environment cess. In the 2015-16 budget, Jaitley had doubled the clean energy cess from `100 to `200 per tonne. India, the

world’s third largest emitter of greenhouse gases, is among the few countries to have introduced a carbon tax. With India bullish on coal mining, collection of the cess is expected to be substantial. Jaitley also proposed an infrastructure cess of a per cent on small cars (petrol, CNG and LPG), 2.5 per cent on small diesel cars and 4 per cent on luxury vehicles and SUVs (worth above `10 lakh).

ONGC gets green panel nod in Tripura

Coal India’s supply to power sector up 7% in April-Jan

The Centre’s green panel has given approval to ONGC for developing 30 wells and other infrastructure in Tripura, with investment of `758 crore.

The panel specified the company should obtain forest clearance, monitor ambient air quality, control noise from drilling activity and put in place oil spillage mechanisms.

ONGC will develop 30 wells across six gas fields. The depth of wells vary from 2,500 to 3,000 m. ONGC will also construct a gas collection station (GCS) and a pipeline.

CIL’s supply of coal to the power sector rose by 6.7 to 336 mt in the first 10 months of the ongoing fiscal with the government aiming to supply 24*7 electricity. CIL, accounting for over 80 per cent of domestic coal production, had dispatched 314.84 mt of coal April-January previous fiscal, official data showed. The supply by Singareni Collieries Company (SCCL) in AprilJan rose 25.4 per cent to 39.63 mt. The dispatch by CIL in January also rose to

36.84 mt over 34.63 mt in 2015. The rise in coal dispatch is due to rise in output by CIL and SCCL, improvement in evacuation and opening new mines, among other factors.

Strong emphasis on increasing coal production has resulted in a record 9.8 per cent growth in CIL’s production and highest ever output. This has also led to reduced imports, President Pranab Mukherjee said. The government is eyeing to achieve 1.5 bln tonne of production by 2020. www.InfrastructureToday.co.in

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32:(5 IN BRIEF CHANDIGARH: ELECTRICITY DEPT PROPOSES POWER HIKE The Chandigarh electricity department has submitted an Aggregate Revenue Requirement (ARR) and tariff petition to the Joint Electricity Regulatory Commission (JERC). The petition is for raising tariffs up to 35 per cent for the next financial year in different slabs under the multi-year tariff system which will come into force from April 1. The proposal was submitted before the commission on February 29. The administration had last increased tariffs in April 2012.

VIZAG PORT TO RUN ON SOLAR POWER FROM NEXT MONTH Vizag port in APis set to run its entire operations on solar power from March, its chairman MT Krishna Babu said. Visakhapatnam Port Trust has commissioned 2 MW solar capacity and will add another 8 MW by March 20, he said. “We will be the first major port in the country to run entire port operations on solar energy,” Babu said, adding VPT had spent `60 crore to set up the plants. Devendra K Rai, Director, Union Ministry of Shipping, said the target is to have 135 MW of solar power projects operational by 2020 in eight major ports. He said 50 MW of wind energy projects are also planned in three ports.

SUPER CRITICAL THERMAL POWER PLANT TO COME UP The TN Government has laid the foundation stone for 2x800 MW super critical thermal power project in Uppur in Ramanathapuram district, which will be set up at an estimated cost of `12,778 crore. On completion in 2019, the project will generate 38.4 million units of power a day, a press release said, adding that the project would occupy over 995.16 acres. PSU BHEL has been awarded a `5,580 crore contract for the boiler, turbine and generator works, related engineering and procurement, design and other initiatives. CM Jayalalithaa handed over the order to Atul Sobti, CMD, BHEL. She also inaugurated 13 sub-stations in other areas.

22 Infrastructure Today March 2016

Budget 2016: Govt ups spend on power PSUs to `68,256 cr India will invest ` 68,256.70 crore on eight public sector power companies in 2016-17 as against `58,642.89 crore a year ago, according to the Union Budget 2016 document. The biggest allocation for investment has been done for power generator NTPC, followed by transmission company Power

Grid Corporation of India.

NTPC’s capex for 2016-17 is pegged at `30,000 crore, an increase from `25,000 crore a year ago. This comes at a time when most private sector generators are shying to take up new projects in conventional power as they struggle with stretched balance sheets and

Budget 2016: Nuclear gets `3,000 cr yearly allocation Finance Minister Arun Jaitley’s announcement of a `3,000 crore yearly allocation for the next two decades for nuclear power generation is certainly a welcome move, said a top atomic energy official.

“The nuclear power capacity will be built in a steady pace over a time. The plans for capacity addition will be made based on the money on hand.

With the Atomic Energy Act being amended, other public

sector companies can invest in this sector,” Atomic Energy department Secretary Sekhar Basu told IANS. The `3,000 crore per year over the next 15-20 years will be over and above the current annual allocations for the sector, he said.

Basu added the current plan is to build 10 reactors with a generation capacity of 7,700 MW. He said the capacity additions would happen through Indian as well as foreign reactors.

Budget 2016: APP says cess to increase tariff The Association of Power Producers (APP) has said the increase in Clean Environment Cess announced by the government would have an adverse impact on power tariffs and could lead to an increase of 1213 paise a unit.

Finance Minister Arun Jaitley announced the rate of Clean Environment Cess is to be increased to `400 per tonne.

“Looking at the objective, though, no one can have any

quarrel with it,” APP said. It added that the fund collected would go a long way to help companies comply with emission norms for coal-fuelled plants. The industry is likely to spend `2 lakh crore to comply with emission norms for coal-based plants that were notified recently. “Funds from the cess could be used for opening a concessional window of financing for meeting the new norms,” APP said.

loss making power distribution companies are not signing power purchase agreements.

PGCIL will spend `22,500 crore in 2016-17 on capital expenditure, same as last year. The government will invest `5,000 crore via PFC for whom no investment was set aside last year.

Budget 2016: Going under the hammer The government will start auctioning three ultra mega power projects (UMPPs) before March this year, attracting an investment of `90,000 crore, budget documents said.

The power ministry has identified five UMPPs for bidding: at Cheyyur in TN, Bedabahal in Odisha, Deoghar in Jharkhand, Tilaiya, also in Jharkhand and one more in Bihar, it said.

Bidding out three UMPPs this year would get investment of about `90,000 crore.

UP Govt announces Mini Grid policy The UP government has announced a mini grid policy for promoting small power generation units through non-conventional sources in rural areas. Valid for the next 10 years, the policy aims to provide power to 2 crore households without power connection and ensure minimum requirements like light and fan, mobile recharging and entertainment.

Projects to be set up under the mini grid policy will get concessions like stamp duty, etc. IT

&203$1< 1(:6

Press releases BIRLA SHAKTI CONCRETE TO ADD NEW PRODUCTION LINES IN MAHARASHTRA

a real estate hub and production facilities positioned near our demand centres is a critical component of our business strategy that leaves us well-placed for future growth.”

RICHA INDUSTRIES WINS `23 CR ORDER FROM IRCON INTERNATIONAL LINES IN MAHARASHTRA Abhijit Lunkad (centre) with management and officials of Birla Shakti Concrete

Birla Shakti Concrete, Ready Mix Concrete (RMC) is embarking on an expansion drive with new greenfield RMC plants at Chakan & Navi Mumbai in the state of Maharashtra. Full commercial production at the new facilities is anticipated to start in 2018 and the expansion will be funded by internal accruals and borrowings. The total investment in the facilities is estimated at `600 million by 2020 and will add nearly 13 lakh cubic metres annually, taking the company’s aggregate capacity to 20 lakh cubic metres.

In addition to existing customers, the new facilities will also serve new customers in and around the western corridor including places like Hinjewadi, Wakad, Baner, Tathavade, Pimple Saudagar and Balewadi.

Abhijit Lunkad, Franchisee Promoter, Birla Shakti Concrete, said, “Our expansion strategy is aimed at accelerating Birla Shakti Concrete’s organic growth momentum, while enhancing competitiveness and increasing our footprint across Maharashtra. Pune is fast emerging as www.InfrastructureToday.co.in

Construction & engineering major Richa Industries has secured an order from IRCON International Limited, a government-owned company incorporated by the Ministry of Railways, for the construction of five pre-engineered buildings (PEB) at Rourkela, Odisha, for the Indian Railways.

It is a turnkey project and the scope of work includes design and construction of five buildings including the lifting bay, inspection bay, machine shop, wheel lathe and an oil godown.

The construction will be spread over 16,000 sq mt. Starting from now, the project will be completed in nine months. The value of the order is `23 crore.

Dr. Sandeep Gupta, Joint Managing Director, Richa Industries Limited, said, “We are delighted to receive this order from IRCON. This project is a testimony to the quality work showcased by the company in previous projects. We are confident of more such opportunities in the times to come.”

WIRTGEN GROUP AT BAUMA 2016 The Wirtgen Group is growing its portfolio of products and services for

the customer. For the first time ever, the Group will be presenting itself together with Benninghoven at the world’s biggest trade fair for construction machinery. The second largest exhibitor at Bauma, with an exhibition area of 11,712 sqm, roughly 100 exhibits and a new corporate identity, the Wirtgen Group – with its motto “close to our customers5” — will be showcasing innovative solutions in the Road and Mineral Technologies business sector.

Now that Wirtgen has joined forces with Vögele, Hamm, Kleemann and Benninghoven, the Wirtgen Group is the first and only company worldwide to cover the complete process chain in road construction with premium brands and its own technologies: from crushing and screening, through mixing, paving and compaction to milling and recycling.

Each of the five product brands specializes in its own field and focuses on the further development and enhancement of its own technologies.

This generates immense innovative power. Trade visitors can experience this power at first hand in the Wirtgen Group’s exhibition area in Munich. In addition to presenting a cross-section of the complete product range, the exhibition also focuses on several world firsts and new solutions by Wirtgen, Vögele, Hamm, Kleemann IT and Benninghoven.

March 2016 Infrastructure Today 23

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INDIAN

WATERWAYS

A ROUTE CANAL TREATMENT

It’s a shame that both coastal shipping and inland waterways have lagged the growth in both roads and railways. The good news is water transport may be ¿ QDOO\ JHWWLQJ LWV GXH

The first coastal shipment of cars ever in India started their journey from Chennai Port.

24 Infrastructure Today March 2016

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n early February 2016, Link Shipping and its partner Symex Maritime Singapore, whom Link Shipping represents in India, created history by pioneering the first movement of cars on a special category Pure-CarTruck-Carrier (PCTC) vessel, the IDM Symex. For the first time, 800 Hyundai cars were moved on the coastal route. While Hyundai Motor India now has the distinction of becoming the first to take the lead to go green and reduce its carbon footprint via water transport, others are not too far behind.

Binu Joshua Thomas, Director, Link Shipping South, says that in the first week of April, the IDM Symex will transport five Daimler trucks, about 750-800 more Hyundai cars and 100 Nissan cars. “Though Daimler has 150 trucks per month, they will start with five to see how it goes. Ford will also give us some cars but we are in negotiation stages now and the numbers haven’t been finalised yet”, Thomas told Infrastructure Today. Return cargo has always been a challenge on the coastal routes but the shipper hopes to tie down Indian heavy vehicles major Ashok Leyland who want to transport their buses down to Colombo in Sri Lanka from their plant in Gujarat. From Colombo, the vessel will come back to Indian shores in Chennai for the same trip all over again.

The plans may sound exciting but the calculations involved are detailed and explains why water transport

www.InfrastructureToday.co.in

has not picked up yet in a big way. For instance, if it takes nine days to reach the Gujarat coast from Chennai compared to eight days via road transport, Daimler’s dealers will need to calculate the interest cost for an extra day on each truck which is priced between `50-60 lakh. “I have given Daimler a very interesting solution on how to enter Chennai port without needing to queue up which they are happy with and are now evaluating.

As ship owners, our responsibilities are from the ramp right up to the destination ramp”, says Joshua.

Although the company did not receive the rebate of `3,000 per car that it was expecting for the first Hyundai shipment, as per the Scheme for Incentivising Modal Shift of Cargo (SIMSC) that was notified in 2015, Link Shipping South continues to look to tie up more customers and is currently the only shipping company that has finalised business with the auto-makers. “There will be teething troubles but there is no point lamenting on any of those aspects. The need of the hour is for us to present innovative solutions to customers who definitely see the benefits of water transport”, says Joshua.

March 2016 Infrastructure Today 25

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“We need to build an institutional framework of ties for coastal shipping to really takeoff”.

Deepak Shetty, DG, Shipping & Additional Secretary, Government of India, Ministry of Shipping, tells Rouhan Sharma WKDW WKH IUDPHZRUN RI D KXE DQG VSRNH PRGHO XQGHU WKH 6DJDU 0DOD SURMHFW FDQ SURYLGH D ¿OOLS IRU FDUJR PRYHPHQW RQ WKH FRDVWDO DQG LQODQG ZDWHUZD\ URXWHV Hasn’t the recent move to allow foreign vessels on our coastal waters created a condition where the domestic industry is not operating on a level playing field?

This goes back to September, 2015. That was a dispensation provided by the Government of India in relaxation to provisions of section 407 of the Merchant Shipping Act, which otherwise mandates or enjoins the issuance of a license by the DG Shipping. For every foreign flagship which comes in and operates in the coastal waters of the country, it is imperative by statute that they should come to the DG shipping, obtain a license after seeking a No Objection certificate from the Indian National Ship Owners’ Association (INSA).

That’s the procedure and that’s been done away with by one stroke of the pen for categories of vessels which are highly specialised where even INSA, which is the most representative and the largest body, were very clear in their view that in the next 5-10 years, they do not have capacity to be able to cater to this category of vessels. This is all high technology, which, for various reasons, Indian ship owners do not see value in at this time and they feel they will not be able to get into these business areas anytime soon in the next five-10 years. Taking them on board, it was decided if for the next five years the requirements could not be met and serviced by the Indian industry, then we need to open it up for foreign players. This is a non-competitive field, in that sense.

However, you can convert it. That’s a regulatory check which they exercise and as long as you ply the coastal waters, you pay duty for whatever bunker is consumed.

The moment you exit, you reconvert back into ocean-going. You pay duty only on the coastal leg and if there is residual fuel that you have used from the ocean-going leg, then you get the benefit of a refund. That’s something which they are addressing under the fiscal regime and it falls under the Customs Act and the Central Excise Act. We cannot intervene in that. More than the duty part of it, I think there are issues pertaining to conversion and reconversion procedures because of the delays and the interface that is happening based on an individual level with the officers, which is not completely electronic today. These are the challenges which we have raised. There was a committee which was headed by my predecessor and with which I was very closely associated. In November 2014, we submitted a report to the Finance Ministry through the Shipping Ministry. There were about 37 recommendations which we made entirely pertaining to customs regulatory debottlenecking. This is one of them. We said that the Central Board of Excise and the Ministry of Finance must address this and rationalise to the extent possible. This is an ongoing effort. They are looking into it. Some of them have come through and some are still being addressed.

Why do ships plying the coastal route have to go through customs?

There is a requirement for conversion. There are two categories of licenses for any Indian ships. You can have a completely ocean-going or foreign-going voyage which does not do the coastal run or, alternatively, somebody can take a license purely for coastal. The third, which is the most popular category, is both ocean-going and coastal. Now, that is not legitimising the fiscal relief. The customs will come into play and say it’s a foreign going ship and has duty-free bunker.

When you ply the Indian waters, that benefit of duty in the bunker which is available only to ocean-going cannot be availed when you go coastal.

In the case of Link Shipping, why did they not receive the rebate of `3,000 per car as was notified in a scheme in 2015 to promote coastal shipping?

That was an incentive that was initially designed purely as a concept. However, there was a clear decision taken that incentives are in the form of subsidies. Subsidies are not the best thing to happen in today’s regime. We want to do away with subsidies because otherwise, subsidies start becoming habit-forming. It is true that this was conceived; it was thought of but it has not gone through. That’s a simple bottleneck. One is looking at addressing the tax elements to rationalise these issues. That is a better way to do it structurally and more enduringly than a subsidy.

26 Infrastructure Today March 2016

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&29(5 6725< What is the progress on the Indo-Bangaldesh protocol route?

The Indo-Bangladesh agreement on coastal shipping on Indian waterways was inked on June 8, 2015. The challenge was that this was to be rolled out only on the basis of what are called river sea vessels (RSV). It was identified that keeping the topography and the terrain as well as the draft constraints in mind, RSV is the best category to use. RSVs come in four categories of which the fourth type is best, being all-season, all-weather, day and night operational vessels.

The two countries decided that it will be RSV type IV which will be invariably used. In exceptional cases, on a case-to-case basis, if the two DGs agree, then it could probably scale down to type III for rare occasions. The question is we needed to ensure there is an imperative form of maritime safety. Even for RSVs, somebody has to certify the build of the vessel for the purpose of stability. We are comfortable as we have the Indian registrar of shipping, the classification society which certifies all our RSV vessels anyways. The challenge for Bangladesh is that they don’t have a classification society. They have smaller outfits within their DG Shipping office. Initially, there was hesitation as to how to accept this standard, because worldwide there are classification societies which have expertise in certifying the stability of a ship. We have to be very cautious here while we are promoting this. We have to be mindful of the fact that there cannot be situations where there can be vessels which may sink and create problems on all sides later.

The second challenge was to enthuse business communities on both sides to see that there is a business opportunity. We are also looking at shipping cargo to other ports so we can divert it to the north-eastern states. This is what we wanted to build upon. I am happy to say we made a conscious effort in campaign mode wherein we have conducted four workshops since January to propagate this. The first one was on January 21 in Mumbai, January 25 in Paradip, January 27 in Kolkata and February 5 in Visakhapatnam, which I had chaired. We have identified two ports; Paradip and Vizag from our side and at least in Vizag, there is huge enthusiasm. There are already acquisitions of RSVs; people have started to look at this as an opportunity. As is the case with any bilateral agreement, it takes some time for the information to be disseminated and for people to understand the business dynamics and see whether there is value in this as a business proposition. Suffice to say, I think there is enthusiasm.

Last but not least, the idea was also that for the purposes of transshipment and aggregation, we want to draw in our cargo which is mostly getting aggregated either in Colombo or in Singapore. If we pull this back, then Vizag could potentially become a hub for transshipment and aggregation purposes.

Finally, what are your views on what you think will be the enablers for coastal shipping to really make a bigger contribution to the movement of freight?

The clear answer to this is that the primary framework will

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be the hub and spoke model under the Sagar Mala. Unless we are able to move industrialisation closer to the coastal areas, consolidate industries there so that it’s easy to ship, why would somebody sitting in Delhi think of moving his cargo off the road and bringing it suddenly to a port? It doesn’t make sense. The challenge is to get industrialisation hubs, which is what Sagar Mala seeks to do over time so that there is aggregation of cargo which makes it viable for it to be moved along the waterways, whether coastal or inland waterways, depending upon the location.

An illustration I can provide is the movement of raw cotton. This is an area we have done fairly significant work in the last two years. Raw cotton - primarily Shankar 6 variety - is the most popular for the purposes of weaving in Tamil Nadu, a major textile centre. This is grown almost entirely in Gujarat and 90 per cent of the consumption requirement for raw cotton are met from here. This cotton is shipped out of Madhura and Triphala. It is primarily taken through the roads. Since November- December 2014, they have made significant progress in incentivising people to come and take the coastal route. Today, there are three or four companies already who have started moving cargo along this route. What used to be a modest 500 containers has now gone close to about 5,000 containers which is getting moved out. These are 40 feet containers as this cotton is typically shipped in that form.

We are targeting 41,000 FEUs, i.e., aggregate 60 lakh bales which is likely to be moved and which has picked up as an off-take demand during the cotton season from October to April annually.

This time, we had a bit of a challenge because the quality of cotton deteriorated very sharply in Gujarat because there was adulteration. However, this is just an aberration. So, there are ongoing dialogues. What is needed is to build bridges between the shipping communities, coastal shippers; you need volumes and for both ways. The challenge is raw cotton moves down but what do you get on the return leg? I have been taking meetings at my level with the textile ministry officers, the Southern Indian Mills Association (SIMA) based in Coimbatore which represents the cotton textile industry over there and INSA. I had the benefit of being the additional textile commissioner in one of my earlier deputations. I was there for over five years. So, I have steered this and I am happy to say SIMA has now committed at least 25 per cent of return traffic by way of made-ups and ready-made garments so that at least there is viability along the way back. You can’t come empty.

The bottom line I want to emphasize is there is an ongoing dialogue with certain groups of producers, shippers and the shipping companies. We need to build these institutional framework of ties for coastal shipping to really takeoff.

March 2016 Infrastructure Today 27

&29(5 6725<

â&#x20AC;&#x153;In a 100m-dash, roads and rail are about 40m ahead and you are still putting more into themâ&#x20AC;?.

Amitabh Verma, Chairman, Indian Waterways Authority of India (IWAI), tells Rouhan Sharma ,QGLD KDV QR RSWLRQ EXW WR GHYHORS LWV ZDWHUZD\V LQIUDVWUXFWXUH WR NHHS SDFH ZLWK WKH QHHGV RI D JURZLQJ SRSXODWLRQ DQG D GHYHORSLQJ HFRQRP\ +HUH DUH VRPH H[FHUSWV What is the importance and need for development of waterways?

There are various reasons. The first is the growing population that will keep growing till 2040-45. When we stabilize, we shall pass China sometime in between. The bulge of the population from 20 to 45 years of age will mostly be on the roads in the next four-five years. Already, when we have no cargo movement between 7 in the morning and 11 in the night, we are not able to move our passenger vehicles. I donâ&#x20AC;&#x2122;t think there is further scope for constructing 100 more flyovers in Delhi, Noida, or the NCR region.

There is a limitation of expansion capacity that we have reached. It is a similar position with Railways.

The gap between demand and supply on passenger movement alone is going to increase, whatever be the expansion.

Second: the expansion capacity is getting limited and costs are increasing. You have to acquire land for both railways and roads. A km of road requires about 16 m of width. If it is a four-lane road and 1 km length, you need about 15 acres of land. As per the Land Acquisition Act, you have to pay almost four times the circle value. All state governments are increasing their land rates every two-three years to gain revenue. This cost is going up, multiplied four times. You are looking at about `10 crore only for acquiring land for just a single km, plus rehabilitation issues, plus the social impact, environmental impact, time taken in the acquisition, plus road construction cost. You are spending not less than `17crore-`18 crore for a km of road. This is for an average plain area. If it is a mountainous area, then thatâ&#x20AC;&#x2122;s higher. In comparison, infrastructure cost in waterways is so much

FT PaT P[b^ cahX]V c^ XST]cXUh A^A^ bXcTb ^] =F ² 0\XcPQW ETa\P 2WPXa\P] 8F08

28 Infrastructure Today March 2016

lesser. There is no environment or ecology issue, there is no land acquisition; actually, there is very little land acquisition, hence the cost here is much lower at `2-3 crore at best.

What is the per km cost of transportation of cargo?

Transportation cost is cheaper and is operational cost. I am talking about capex. The capital expenditure is so substantially different plus the other inconveniences. Also, the scope of highway expansion is very difficult. These expansion plans are going to have to stop at some time and somebody has to understand this. The other aspect is the growing economy. We shall keep growing by a certain percentage which obviously creates more demand for transportation of coal if we need more power; as we are not self-sufficient in power. We need more steel, fertilisers, cement. All these have to be transported if the economy grows. With a growing economy and a growing population, there is absolutely no option but to spend more on waterways.

How do you see the growth of waterways infrastructure in the coming years?

India started focusing on IWT only as late as 1986 when IWAI was created. Therefore, the country lost 39 good years.

It is not as if water transport was something new. The East India Company used it as did the Mughal rulers. However, post-independence, the feeling was that once we have a faster mode of transport â&#x20AC;&#x201C; a modern network of roadways and railways â&#x20AC;&#x201C; it can put us in league with the developed

However, tying down car and bike makers to longterm contracts is not an easy task. Captain Kiran Kamat, MD, Link Shipping, cites the governmentâ&#x20AC;&#x2122;s ďŹ&#x201A;ip-ďŹ&#x201A;op policy on taxation as one of the central issues. â&#x20AC;&#x153;If a car or bike maker has made an estimate of selling 5,000 vehicles based on certain tax structures and the buying ability of people, the changes in taxation will obviously impact those estimatesâ&#x20AC;?.

For the last six months, Link Shipping had also been plying the Maria India, another special category PCTC www.InfrastructureToday.co.in

&29(5 6725< countries. Probably, in the zeal to provide connectivity through road and rail – constructing road-bridges and rail-bridges – at that time, they did not leave sufficient navigation clearances over the waterways. As a result, there are no vertical clearances or even horizontal clearances (between the pillars). Now, how do I move my barges? This is a very big issue today and is proving a bottleneck.

Second, power lines and telecommunication lines have also been put across the water, creating more problems. With the focus on the green revolution to hold water, water was drawn out of rivers to canal systems for irrigation, and that is perfectly all right, but it wasn’t done in a planned manner. Next, India required hydroelectricity and constructed dams with no navigation blocks, thereby killing the potential of navigation by creating all that infrastructure. A proper balance was never struck. Next, there is the issue of sewage discharge. The quality of water is an issue like in the Ganges, you can’t even stand there for five minutes.

All these issues lead to cost overruns as I have to modify existing structures, leading to coordination issues with state governments and various departments. It leads to social dislocation and to political issues. Modification of structures is a costly thing. It’s a tough job to be done now.

railways? We are already handicapped. In a 100m-dash, they are about 30-40m ahead and you are still putting more into them.

Still, what are some upcoming projects you can tell us about?

It is not that nothing is happening but there is an additional responsibility upon IWAI to also ensure business tie-ups. The problem is that unlike with trucks, for instance, investments here are bigger. You can buy a truck for `25 lakh but the investment for a 2,000 tn barge is at least `10 crore.

Moreover, if you put that on the first national waterway, you can’t just take it out and then put it elsewhere. Therefore, unless there is a long-term commitment, it is not feasible.

Someone has to give me at least six-seven years’ worth of cargo to move around. Unlike the NHAI, I have an additional responsibility of ensuring that I also get business after I create the infrastructure.

So, what’s the status today in 2016?

I just gave you the background. Since Independence, we have declared only five national waterways of which we have started developing three. The fourth and fifth ones have not been touched yet and we are just in the process of starting them. The third waterway is in Kerala which is almost developed.

The first one is the Ganges which is partially developed and the second is the Brahmaputra, also partially developed. Some movement is happening. Three million tonne (mt) is moving on the Ganges and two mt on the Brahmaputra. We are going to start work on the fourth and fifth waterways (Andhra Pradesh, Tamil Nadu and Odisha). This is one aspect.

The second aspect to this is the fact that in 25 years from 1986 to 2010, we have just spent a miniscule `1,117 crore on waterways. Even today, if you perform a comparison, the Railways spends $17 billion in a year while on highways, expenditure is $12 billion. What are you spending on waterways? $30 million a year? How can you say we need to immediately capture the traffic currently plying on roads and

Why don’t you invite public private partnership (PPP) in waterways? You can have PPP based systems, charge toll...

Globally, there isn’t a single waterway that can pay for itself. Even the busiest of waterways in the world have not paid for themselves because it is not cost-effective. There are other modes. For instance, the river Rhone is maintained by the French firm CNR. They have a lease of 40-50 years but their income from water usage by navigation is almost negligible and is, in fact, negative. However, they have many hydel power plants on the waterway. They maintain the waterway for navigation but they derive their income from the power plants.

The maintenance costs still can be covered in some rivers but not on the Ganges or the Brahmaputra. These are two special rivers which are alluvial in nature. Heavy loads come every year. They are very dynamic rivers and move almost 10 meters vertically between the low and the high flood season. They move almost 15 to 215 m or 500 m also, horizontally. You have to dredge which will be about 60 per cent of your cost of capital. Annual dredging costs are too high. We are now giving out assured depth contracts. We floated a tender recently, just about a week back for assured depth. In this type of contract, we give out a stretch wherein we specify the width and the depth to be maintained.

vessel between the Mangalore and Hazira ports, transporting 150 trucks laden with cargo, both ways, every four days. However, an agitated Kamat has now diverted the vessel for exports to “earn some decent money”. The problem arose when he was asked to pay service tax despite the final receiver of the goods also already paying service tax. “This is double taxation and a complete anomaly. I don’t know where to go to sort this out,” says Kamat. He adds, “We will bring her back for coastal eventually as exports are not regular. The

idea is this time we will have some cars also. That is the intention”.

Meanwhile, sources say the ministry is seriously considering a reduction in port charges. Chennai port has taken the lead in reducing the wharfage charges for cars and trucks and has also proposed an increase in the discount in port charges from 40 per cent to 60 per cent.

This is expected to be announced later in March once the board approves. Chennai Port is also planning to develop a dedicated coastal berth with large storage

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March 2016 Infrastructure Today 29

&29(5 6725<

“IWT has suddenly become doubly meaningful”.

Sumit Banerjee, former Vice Chairman, Reliance Cement and MD&CEO, ACC Ltd, tells Rouhan Sharma it is only a matter of time before companies evince more interest in waterways for competitively transporting goods.

How has inland water transportation evolved over time?

From the early days of human civilisation, habitats and trade centres developed around rivers. This was no accident. Rivers provided a source of water, the elixir of life; helped irrigate lands for farming and provided an easy solution for sanitation (although unacceptable by today’s standards). On top of all that, rivers gave humans an avenue for transportation of people and merchandise. However, as newer modes of transport were invented, we favoured railways and roadways over riverine carriage of goods, evidently because we wanted to move things faster, and away from rivers deeper into the hinterland.

As we started neglecting our traditional waterways, they deteriorated in terms of navigability, due to a variety of reasons such as indiscriminate construction of barrages, bridges and dams and consequent siltation, reclamation of river banks, inadequate investments in de-silting and in terminals, geopolitical controversies regarding sharing of waters between countries, etc.

Altogether, the effect of all these factors has been to push the concept of inland water transportation (IWT) into oblivion, at least in our country. Some other countries have fared better. The Fjords in Norway or the waterway systems in Pittsburgh/Great Lakes area in USA have excellent infrastructure for water transportation which can be studied as relevant. In Germany, IWT constitutes 20 per cent [WB, 2005] and in Bangladesh it is 32 per cent [Rahman Mushfequr, 1994] of the total domestic goods movement. In Norway, it is reported to be 42 per cent. However, in India, it has become a very marginal part indeed (0.15 per cent) [Raghuram G, 2004]. Evidently, we have a lot to do.

How is inland water transport relevant today?

Empirically, we say that rail transport costs half of road transport, on per ton – km basis. Water transport, in turn, would cost half of rail transport, simply because it consumes substantially lesser amount of fossil fuel. So, clearly, IWT is highly relevant from a cost perspective, and as the cost of energy goes up, this cost differential is going to go up. It obviously makes business sense for a nation to focus on IWT, from cost or resource conservation points of view. But there is another dimension to this – that of climate change. Out of all the global greenhouse gases emitted, 13-14 per cent are caused by transportation. If we can make a sizeable dent in

30 Infrastructure Today March 2016

this component of GHG, we can contribute more to the global effort in climate mitigation. After the recent Paris Agreement (CoP 21), it has become more important for countries like us to evolve developmentfriendly strategies for CO2 management.

IWT has suddenly become doubly meaningful in this context.

Which industries can benefit from IWT? To determine this, we have to first acknowledge the weaknesses of IWT, which are its relative slow speed and limited reach, restricted to regions adjoining riverine routes. There will be many products (electronic items, white goods, semiprecious metals) whose prices are high enough to afford faster and costlier modes of carriage like road or even air.

Contrast these with bulk commodities like coal, steel, cement, fertilisers, food grains, iron ore and such other items which are comparatively lower in prices, volumetric and bulky in size, heavy in weight, and large in quantity. In these cases, one will be ready to allow it to spend a few days more in transit, if that saves significant amount of freight. It is only a matter of time before cement and aluminium companies also get interested in exploiting this route for competitively transporting coal, cement, clinker, bauxite, alumina, gypsum, etc.

What steps should the Government take to popularise IWT? This will not move without improved and all year round navigability. This is where government investment will have to come in by way of continuous dredging, in addition to building terminals and warehouses along the waterway routes. The move to announce more waterways as National Waterways is most welcome, but this has to be followed through with effective development of infrastructure, which will definitely pay back by way of user fees over time. This budget has provided for raising `800 crore by way of tax free infrastructure bonds, specifically for inland waterways, and this is a commendable beginning. In due course, it may be a good idea to allow companies accelerated depreciation (or some such incentive) for investments in barges and riverside godowns, terminals, material handling equipment and similar infrastructure needed for inland water transportation. Andhra Pradesh took a step forward, when the CM recently announced an incentive of `0.25/ton of water borne cargo, with the aim to achieve a 5 per cent share for IWT in the state.

That is the way to go!

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&29(5 6725< Total and navigable length of waterways in different states: 2013-14 State

Total length of rivers/ canals/lakes (in km)*

Navigable length

Percentage of navigable length

Andhra Pradesh

3579

804

22.5

Assam

5290

1713

32.4

Bihar

2229

1391

62.4

Goa

273

248

90.8

Gujarat

653

102

15.6

Karnataka

2862

1215

42.4

Kerala

2779

845

30.4

Maharashtra

631

462

73.2

Orissa

1378

508

36.9

Nagaland**

937

375

40.0

Mizoram

787

372

47.3

Tamil Nadu

27

12

44.4

Uttar Pradesh**

2345

425@

18.1

West Bengal

4741

4593

96.9

â&#x20AC;ŚNot available ** Pertains to 2007-08, @ Navigable length pertains to NW 1 for Allahabad-Buxar stretch in UP. * The information for has been compiled for only those rivers for which both total and navigable lengths have been reported by the state.

Source: Statistics of Inland Water Transport: 2013-14, Govt. of India, Ministry of Shipping

says Keld Pedersen, MD, APM Terminals Pipavav.

The port caters to bulk shipments of cement and also D][Tbb \^bc XbbdTb PaT bauxite that are regularly sent to other locations in India. Moreover, says Pedersen, â&#x20AC;&#x153;Pipavav Rail aTb^[eTS Tb_TRXP[[h cWT cf^ Corporation, in which we have 38.8 per cent stake, has fPh \^eT\T]cb ^U RPaV^ developed 269 km of rail track from the port to Surendranagar which connects further to Indian R^PbcP[ bWX__X]V fX[[ P[fPhb Railways; thus connecting the port to the inland container depot network and dedicated freight corridorâ&#x20AC;?. aT\PX] P bcadVV[X]V QdbX]Tbb² Sources say many auto-makers (both two and four 2P_cPX] Bd]X[ CWP_Pa 24> wheeler companies) are actively looking at exploring BWX__X]V BTaeXRTb 0[[RPaV^ BWX__X]V 2^\_P]h water transport. Maruti is also reportedly looking at the space for trucks and cars. This is projected to be ready in about a year.

On the west coast at Indiaâ&#x20AC;&#x2122;s ďŹ rst private port, APM Terminals Pipavav, which received the aforementioned shipment of Hyundai cars, has a capacity to handle about 250,000 cars per year, as well as four-ďŹ ve million tonne of dry bulk cargo and two million tonne of liquid cargo. It is currently in the middle of an expansion primarily to increase container handling to 1.35 million TEUs a year. The port commenced the RoRo business in August 2015 and has so far been exporting the vehicles. â&#x20AC;&#x153;We also have surplus land-side and waterside which can be developed further based on the business requirementsâ&#x20AC;?, 32 Infrastructure Today March 2016

Advantages of using IWT Energy Efficiency: 1 horse power can move about 150 kg on road, 500 kg by rail and 4,000 kg by IWT Fuel efficiency: 1 litre fuel can move 24 tonne km (TKM) by road, 85 TKM by rail and 105 TKM by IWT High single unit carrying capacity: 1 barge = 15 rail wagons = 60 trucks Environment friendly: Low air and noise pollution No need for land acquisition Suitable for bulk cargo â&#x20AC;&#x201C; coal, ores, fly-ash, building materials, cement and over dimensional cargo Less capital intensive vis-Ă -vis other competing models Source: Inland Water Transport â&#x20AC;&#x201C; Potential for use in movement of fertilizers, 2010 www.InfrastructureToday.co.in

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&29(5 6725< cargo (Bill of Entry, etc.), idling costs (for lack of berthing) and lack of a nominated area for coastal CWT P\^d]c ^U `' Ra shipments. Also, says Captain Sunil Thapar, CEO, Shipping Services, Allcargo Shipping Company, â&#x20AC;&#x153;With QdSVTcTS U^a _^acb P]S X][P]S respect to the port tariffs â&#x20AC;&#x201C; which is supposed to be 40 fPcTafPhb P__TPab QT[^f cWT per cent of what is applicable to foreign vessels â&#x20AC;&#x201C; they have now made it 40 per cent of the dollar denominated _^cT]cXP[ ^U cWTbT bTRc^ab² tariff. That increases our tariffs to the extent of <P]XbW 0VPafP[ ?Pac]Ta P]S ;TPSTa depreciation in rupeeâ&#x20AC;?.

Multiple handling charges, too, is an expensive 8]UaPbcadRcdaT ?f2 8]SXP affair. Although water transport has the lowest transportation cost, it also has the highest handling option on the Ganges, i.e. the ďŹ rst National Waterway costs. Therefore, both coastal and inland water systems (NW1). â&#x20AC;&#x153;We are talking with Maruti for the waterway fail to attract trafďŹ c due to the local and terminal route. We are going to do a trial run for their cars from costs which erode the cost beneďŹ ts of water transport Varanasi to Haldia. We are going to move it shortly. We to a large extent. The recent decrease in diesel prices have done some pilotsâ&#x20AC;?, says Amitabh Verma, Chairman, has also made road and rail transport that much Inland Waterways Authority of India. more competitive. Moreover, it is not always easy to get cargo for the return trip. Considering the Indian COASTAL CHALLENGES peninsula has most of its production centres in the Even as companies continue to explore the coastal hinterland in the north, securing cargo for the trip up route, thereâ&#x20AC;&#x2122;s a reason that coastal shipping currently the coastline is not always assured. A balance also contributes just about 6 per cent to the total freight needs to be struck in the shipments between Indiaâ&#x20AC;&#x2122;s movement in the country. Also, of this 6 per cent, most east and west coasts. of it is in containers and the movement of bulk cargo is Last but not least, last-mile connectivity needs miniscule. Headwinds range from issues of taxation (for improvement as costs become unviable if customers Indian shipping companies) that increase their costs â&#x20AC;&#x201C; are more than 100 km away from the port or river. â&#x20AC;&#x153;If Swachh Bharat tax, service tax, value-added tax (VAT), the distance is over 100 km, the land-leg side of the higher wage costs (due to income tax), duty on spare cost then kicks in and it all adds up to quite a bit,â&#x20AC;? parts â&#x20AC;&#x201C; as well as involvement of customs even for coastal says Thapar. He adds, â&#x20AC;&#x153;Unless most of these issues are resolved, especially the two-way movements of cargo, coastal shipping will always remain a Projected cargo potential on National Waterways struggling businessâ&#x20AC;?.

National Waterway (NW)

Coal

A&F

Others

Total

Cargo projected for the year 2019-20 (million tonne) NW 1

10.0

2.0

6.0

18.0

NW 2

2.6

1.0

4.5

8.1

NW 3

0.0

0.2

4.5

4.7

NW 4

2.3

1.4

1.2

4.9

NW 5

10.0

0.1

0.9

11.0

Total

24.9

4.7

17.1

46.7

Cargo projected for the year 2031-32 NW 1

20.0

5.0

14.5

39.5

NW 2

5.0

3.0

9.4

17.4

NW 3

0.0

0.5

7.1

7.6

NW 4

4.2

3.1

2.7

10.0

NW 5

15.0

0.2

2.9

18.1

Total

44.2

11.8

36.6

92.6

A&F: Agricultural & forest produce Source: National Transport Development Policy Committee 34 Infrastructure Today March 2016

INLAND WATER TRANSPORT For the beleaguered Inland Waterways Authority of India (IWAI), the step in the Union Budget 2016-17, to allow the Authority to raise `800 crore by way of taxfree bonds is a shot in the arm. However, Manish Agarwal, Partner and Leader, Infrastructure, PwC India, says, â&#x20AC;&#x153;The amount of `800 cr budgeted for ports and inland waterways appears below the potential of these sectors. Inland waterways will need signiďŹ cant public investments initially, until it reaches a more mature stageâ&#x20AC;?.

Scant focus on water transport and inadequate fund allocations over the last many decades has ensured that domestic water transport in India is still in its infancy. Today, the Ganges (NW 1) carries about 3 mt while the Brahmaputra (NW2) carries about 2 mt. â&#x20AC;&#x153;Since 1986 till 2015, we have spent a miniscule `1,117 crore on waterways,â&#x20AC;? says Verma. He adds, â&#x20AC;&#x153;The Railways spends $17 billion a year while expenditure on roads is about $12 billion. If this is a 100 m race, they are already about 40 m ahead, and they continue to receive www.InfrastructureToday.co.in

&29(5 6725<

The backwaters of Kerala (NW3) offer connectivity to remote hinterlands of the state.

more funds. You can’t expect all the cargo to shift onto waterways just overnight”.

Verma has a point. The inland water systems of Europe and China have been developed over many decades in a phased manner. The Indian government has made a start by identifying priority corridors and it is now necessary to link India’s seaports to its inland water systems for connecting India’s large hinterland.

On the inland waterways themselves, cargo handling remains a problem. Other countries have developed push-towing techniques but this has not been used in India due to the fact the industry is scattered among a large number of small operators. Industry insiders say such small, local operators flex their muscles in order to secure cargo handling contracts along the waterway routes. They are not updated about modernized techniques and their efficiencies remain low, characterised mostly by manual labour. Moreover, suitable terminal jetties with the required facilities are yet to be developed.

moving; some industrial cargo also moves on the waterway. A million tonne is moving there. We are almost complete with the development of NW 3”, says Verma.

NATIONAL WATERWAYS (NW) However, IWAI has initiated and already completed a number of projects. About 11 terminals have already been constructed on NW 3, the smallest of the five NWs which is largely made up of the coastal backwaters of the Arabian Sea and confined to the state of Kerala. The waterway is directly linked to Cochin Port and therefore, can offer a cost-effective solution for foreign trade. “Two thousand plus house boats and fishing boats are moving there; liquid ammonia is www.InfrastructureToday.co.in

March 2016 Infrastructure Today 35

&29(5 6725<

The double stack container train at APM Terminals Pipavav runs up to Surendranagar, connected to Indian Railways, inland container depot network and DFC.

Captain Pavan Sood, Joint MD, IMS Group, who did the dredging for IWAI on NW 3, says the task was a challenging one. â&#x20AC;&#x153;Every 10 m or so that we moved, there would be some ďŹ shermanâ&#x20AC;&#x2122;s net. Second, they would also ask us for the sand that we were removing. What Kerala has ďŹ nally done now is a very wise thing by giving a license to dredge. Now, you can take out the sand for which the government takes a royaltyâ&#x20AC;?.

IMS also began work earlier this January onward on NW 1. The company has a three-year contract which can be extended to ďŹ ve years, to dredge a stretch from Bhagalpur to Simaria. Sood says, â&#x20AC;&#x153;We are taking it down to two and a half meters depth so that barges can move.

Our job is to move from shoal to shoal, get the draft to where it is supposed to be and then move. Our job is with two sets of dredgers, to ensure that waterways are kept open for navigationâ&#x20AC;?.

With a ďŹ&#x201A;eet size of four dredgers, IMS plans to focus on the opportunities in the inland waterways in the near future. In the coming year, Sood says the company could double its ďŹ&#x201A;eet and focus on the smaller water bodies such as rivers, lakes, dams and ďŹ shing harbours.

FT WPeT bda_[db [P]S bXST P]S fPcTabXST fWXRW RP] QT STeT[^_TS UdacWTa QPbTS ^] cWT QdbX]Tbb aT`dXaT\T]cb ² :T[S ?TSTabT] <3 0?< CTa\X]P[b ?X_PePe 36 Infrastructure Today March 2016

The RoRo facility at APM Terminals Pipavav can handle 250,000 cars annually.

On NW 4, which runs from Kakinada to Pondicherry, is about 1,088 km long and runs into three states, IWAI has already identiďŹ ed and done a hydrographic survey. â&#x20AC;&#x153;We are waiting for the land deal report from the Andhra government. Then, we shall ďŹ&#x201A;oat our tender for dredging in the Krishna River up to Kakinada so that we can start some movement shortly. The state government has shown a lot of interestâ&#x20AC;?, says Verma.

Declared as a NW in 2008, NW 4 offers connectivity to intermediate ports like Kakinada, Machilipatnam, Krishnapatnam and major ports like Chennai and Ennore. It also serves cities like Chennai, Visakhapatnam and Vijayawada, among others. NW 4 has the potential to supplement road and rail transport by serving high transport demand corridors.

The NW 5, which runs from Dhamra port and Paradip port to Talcher, is a very commercially viable stretch, says Verma. This waterway connects areas richly endowed with natural reserves on one end to the two major ports at the other end. By developing the Hijili tidal waterway systems, IWT can offer connectivity up to Haldia, extending services all the way up to Allahabad on NW1, up to Sadiya in Assam on NW2 and up to Lakhimpur (also in Assam) on NW6 (proposed). This corridor can move coal and other ores to their respective plants. At present, coal and iron ore moves by both road and rail to the ports for transport to other parts of India.

IWAI has appointed Feedback Infrastructure and the French electricity generation ďŹ rm Compagnie Nationale du Rhone (CNR) as the project development consultants. â&#x20AC;&#x153;They are working to see if there is a possibility of a public private partnership (PPP)â&#x20AC;?, reveals Verma. He adds that Indian conglomerate Tataâ&#x20AC;&#x2122;s has assured some cargo movement and that dredging has www.InfrastructureToday.co.in

&29(5 6725<

Inland water transport is a non-polluting and environmentally friendly form of transport.

started at Padnipal. “Land acquisition was a problem so we negotiated with the farmers and leased land. A temporary terminal is under construction there. We have floated a tender and 12 parties globally have shown interest for preparing the techno-economic feasibility report for NW 5. We feel the World Bank would be willing to fund it, finally”, says Verma.

Due to the highly alluvial nature of the Ganges (NW1) and the Brahmaputra (NW2), dredging and bandalling need to be carried out every year post monsoon on shoals to maintain the targeted least available depth. Both waterways are partially developed and a number of projects are ongoing on both these systems. To be able to utilise the full potential the two waterways systems offer, what is required is “at least 3 m least available depth (LAD) round the year. This will ensure that barges of about two and a half meter draft can move; that means they can carry about a thousand tonnes to three thousand tonnes of cargo. This will be economically viable to carry. If the vessels are smaller, the economics will not work out. We do understand the challenges of maintaining this kind of depth round the year across the river. Therefore, we are also looking at the right kind of barge designs,” says Verma. In fact, IWAI has even floated a tender inviting a consultant to recommend designs of container vessels of optimum size, length, width, depth and height and which can carry large capacities in 2.5 m of available depth. “We will either do draft maintenance or we’ll do ship design which ensure their movement. We are trying it out from all possible angles,” says Verma.

The `4,200 crore World Bank project ongoing on NW1 envisages six fixed terminals, with construction expected to begin on four of those by April. www.InfrastructureToday.co.in

Simultaneously, Verma is busy tying up business and expects more cargo to shift gradually on to NW1. “Then, we also have the assured depth contracts that we are now giving out. So, there will be dredging and then river training”, he says. Moreover, Verma is looking to identify opportunities to start ferry services (such as in Kolkata and Patna) as well as row-rope facilities for both passenger and cargo. “For instance, on the Mahatma Gandhi-Setu bridge, 16-wheelers are not allowed and they have to offload and move on to smaller trucks which increases their cost. Here, we can start RoRo facilities on appropriate barges. We are trying to identify more such RoRo sites on NW1”, reveals Verma.

On NW2 (Brahmaputra), IWAI has given an order of `52 crore for constructing a barge repair facility, considering the absence of such a facility in north-east India and the fact all repairs have to take place only in Kolkata. This facility is projected to be completed in about two years.

A permanent terminal in Dhubri is almost 60 per cent complete. IWAI has also taken some barges from the Assam government which they have repaired and are using to do pilot runs between Dhubri and Hatsingimari. IWAI will start a terminal at Hatsingimari later as it is currently implementing flood protection measures after erosion of a piece of land it had acquired.

CONCLUSION India is at a stage that requires increasing movement of cargo, whether building materials, coal, iron & steel, timber, fertiliser and many other commodities best suited for water transport. A big river vessel or a push barge can easily replace at least a few hundred trucks.

Smaller vessels can replace a few dozen trucks. This will de-congest our roads and ease the problems of traffic pollution and accidents. The development of a sustainable, eco-friendly water transport system is a long-term affair. The experience of both China and Europe show the importance of seaports for IWT and it is commendable that the Sagar Mala project addresses the issue comprehensively.

Perhaps, it has been easy to develop NW 3 because it is the smallest of the waterways. No doubt, development was also helped by the fact Kerala is a tourist state.

However, what is noteworthy is the state has also shown itself to be tourist-friendly. Certainly, the north-eastern states can take a leaf out of the book and develop NW2 not just for trade and transport but also for tourists.

Perhaps, it is apt Sood of IMS should have the last word as he points to the fact that Kerala has signposts on its waterways just like in Venice and other waterways of the great cities of Europe and elsewhere in the world. “That’s how it should be in India on all our waterways”, he says. IT - Rouhan Sharma

March 2016 Infrastructure Today 37

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LEAD

Project smart Itâ&#x20AC;&#x2122;s the little things that matter. Ignore planning and project management at your own peril.

T

he recommendation by the Japan International Cooperation Agency (JICA) to the Maharashtra state government to add two more lanes to the Mumbai Trans Harbour Link project is not only a simple and logical recommendation but also a necessary one. It is only logical that Indiaâ&#x20AC;&#x2122;s longest sea bridge (over 20 km long), should, at the very outset, plan for accidents and emergencies by incorporating at least a couple of emergency lanes. What if, (God forbid), an accident were to occur bang in the middle of the bridge over the big blue? Would there be a way to speedily evacuate the accident victims?

8] 8]SXP cWTh Yd\_ X]c^ TgTRdcX^] fXcW Ydbc PQ^dc _Ta RT]c ^U cWT ^eTaP[[ _[P] 8c Xb fT[[ ]TPa X\_^bbXQ[T U^a P]h _a^YTRc c^ QT bdRRTbbUd[ X] cWXb bRT]PaX^ ² B< BWTcch 2>> 8]SXP B^dcW 0bXP 2daaXT 1a^f] 38 Infrastructure Today March 2016

The question that hasnâ&#x20AC;&#x2122;t been asked yet is whether the government needed an international ďŹ nancing agency to point it out. Shouldnâ&#x20AC;&#x2122;t the suggestion to incorporate emergency lanes have come from the Indian authorities themselves?

The point to note is the aspect of planning and the inference here is that planning is really not a key strength as far as infrastructure projects in India are concerned. The large numbers of stalled, delayed or abandoned infra projects bear witness to this assertion.

With respect to these infra projects, what is normally characterised as implementation or execution failures can actually trace their failure to failures in planning. â&#x20AC;&#x153;In developed markets such as the UK, other countries in Europe and the USA, project stakeholders can spend up to six months during the planning stage,â&#x20AC;? says SM Shetty, COO, India & South Asia, Currie & Brown. â&#x20AC;&#x153;A project goes into execution phase only when at least 70-80 per cent of the planning is complete.

In India, they jump into execution with just about 10 per cent of the overall plan. It is well near impossible for any project to be successful in this scenario,â&#x20AC;? he adds.

Of course, in India, the completion of a project itself is a reason for labelling it a success! For instance, the original plan for the Bandra Worli sea-link estimated the cost at `6.6 billion. The bridge was to be completed www.InfrastructureToday.co.in

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â&#x20AC;&#x153;If you fail to plan, you plan to failâ&#x20AC;?

Satyakumar Shetty, COO, India & South Asia, Currie & Brown, emphasizes the importance of planning in project management.

What are the major challenges in India?

The major challenge today for greenfield projects is to ensure that the project is delivered within time and budget and to the required quality. As an international project management, quantity surveying and cost management company, we bring years of experience from multiple locations around the globe to emerging economies like India.

Many companies are struggling with high interest costs and the last thing they need is time and cost over-runs on projects due to poor operational efficiencies arising from lack of expertise in cost and project management. Iâ&#x20AC;&#x2122;d like to emphasize here that planning is a weak point in India as they are eager to jump into the execution stage with just about 10 per cent of the plan ready. My only advice is if you fail to plan, you are planing to fail!

bids, while ensuring optimum results through effective contract administration.

With the current competitive and demanding conditions found in real estate/construction projects, it is very important to prepare contracts with great care and with expert assistance. It is equally important to initiate and follow effective contract administration procedures. These include evaluating the work completed (earned value) and any risks, monitoring contract changes and their impact on the project and evaluating any potential claims before they have a significant impact. Undertaking effective contract management will provide transparency of the project status, prevent overpayment to contractors and flag up any potential problems early to allow them to be effectively managed.

What do you suggest is necessary?

It is necessary to have a thorough review of the project scope of work and a workshop with the stakeholders to get buy-in to the scope. It is particularly necessary to determine what is important for the successful delivery of the project and what risks the project faces. A proper estimation that accurately reflects the project scope is also essential for the successful delivery of the project. Estimating serves a number of purposes in the construction process in addition to establishing the budget, including preparation of bid documents, cost control and the identification of risk items and a plan to mitigate these risks. The role includes: Â&#x2021; &RQFHSWXDO HVWLPDWHV Â&#x2021; 3UHOLPLQDU\ HVWLPDWHV Â&#x2021; 6FKHPDWLF HVWLPDWHV Â&#x2021; 'HWDLOHG HVWLPDWHV Â&#x2021; &RVW FRQWURO ILQDO SURMHFW FRVW Â&#x2021; &RVW RQ WKH RSHUDWLQJ FRQVWUXFWLRQ SHULRG Â&#x2021; &RVW RI UH PRGHOLQJ RU GHPROLVKLQJ WKH DVVHW This will further assist in achieving the following goals: Â&#x2021; 9DOLGDWLRQ RI SURMHFW FRQVWUXFWLRQ EXGJHWV Â&#x2021; (VWDEOLVKPHQW RI D EHQFKPDUN IRU D FRQVWUXFWLRQ ELG Â&#x2021; (VWDEOLVKPHQW RI D EDVLV IRU ILQDQFLQJ It is essential organisations obtain contracts to achieve and promote good performance, that they are clear in their requirements and that owners carefully allocate risk to the parties that are best equipped to manage them. This will ensure sensible pricing levels and not overburden organisations with unknown risk which will be priced into the

How can you help?

We plan the project execution by introducing an early warning system and contingency planning, drawing upon our past experience and knowledge and bringing a robust, auditable framework for managing the project costs and schedule. In addition to identifying and mitigating the project risks, we also understand some of the longer-term strategic risks both in terms of the project life cycle and business risks. We can help clients with the whole asset life-cycle which can deliver considerable savings.

In addition to risk mitigation, there are also opportunities to minimise cost that we can evaluate, particularly in the early stages of a project where most of the influence takes place on the project outcome. These include, but are not limited to, evaluating different construction/design options (optioneering), undertaking value engineering studies to achieve the same project objective but at a reduced cost, having a good procurement strategy with incentivised contracts and then, once the contracts are let, closely monitoring performance, change management and bringing early warnings of potential impacts to the management team to afford timely action.

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What are your focus industries in the coming times?

The scope of infrastructure development in India is vast.

We are looking forward to increasing our footprint in some key sectors in the infrastructure domain like manufacturing, ZLWK D IRFXV RQ 60(V VPDOO DQG PHGLXP HQWHUSULVHV

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March 2016 Infrastructure Today 39

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â&#x20AC;&#x153;If you look at IT companies, the ďŹ rst thing they ask in the RFP is for certiďŹ ed project managersâ&#x20AC;?

Raj Kalady, MD, PMI India, says the need of the hour is to make project management FHUWLÂżFDWLRQ FRPSXOVRU\ ZKLOH LQYLWLQJ ELGV IRU LQIUD SURMHFWV VLPLODU WR PRVW RWKHU FRXQWULHV What is the importance of planning in project management?

3ODQQLQJ LV NH\ DQG RQH RI WKH PDLQ pillars of project management. The other way to define project management is basically, plan the work and work the plan.

Typically, in India, while some projects are impacted due to external factors beyond the control of the implementing agencies (land acquisition, regulatory approval), majority of the projects are delayed by factors that can be controlled through proper planning and project management. $V SHU WKH 30, .30* 6WXG\ RQ 3URMHFW schedule and cost overruns - Expedite infrastructure projects, there are many external and internal reasons for time overruns across a projectâ&#x20AC;&#x2122;s life-cycle. If you look at these reasons (table below), they are interrelated. If we hire project managers with adequate planning skills, they can appropriately factor in delays caused by regulatory approvals, land acquisitions and other factors. One of the reasons for inefficient project delivery is the paucity of skilled project managers in the infrastructure sector. This decline in the inflow of talent in the sector has emerged as the embryonic cause for time and cost overruns in the project life cycle. Unfortunately, resources are seen migrating from the infrastructure sector towards alternative, more lucrative and cushier job options in ,7 ,7H6 LQGXVWULHV HWF Sure, but how do you take an unknown factor into consideration? Right of way, for instance..

It depends on the situation. The fact of the matter is you are aware that this is the way the route has to go, and there are these blocks that may possibly come. It could need a political intervention, bureaucratic intervention or something else. However, you are aware that some intervention will be UHTXLUHG WR JHW 5R: 'HSHQGLQJ RQ WKH LQWHUYHQWLRQ UHTXLUHG you can accordingly plan for what kind of contingency you may need. That way, you can plan the project around that hurdle or you can do other sections earlier, do something else that doesnâ&#x20AC;&#x2122;t block up your resources.

What kinds of assumptions does one make in contingency planning?

There are known risks and there are unknown risks. For unknown, you always have to assume some aspects. You

40 Infrastructure Today March 2016

need to figure out what could go wrong.

There is a whole chapter on Risk 0DQDJHPHQW LQ 30,¡V $ *XLGH WR WKH 3URMHFW 0DQDJHPHQW %RG\ RI .QRZOHGJH 30%2.Â&#x160; *XLGH ² )LIWK (GLWLRQ RQ WKH ways to identify risks; planning for risk mitigation and what to do when there are unknown unknowns.

Can you pick out a couple of instances?

First and foremost, it is important to understand risk is not always negative. It is also positive. Risk is positive when things go in your favour. If you are building something today in Mumbai and the monsoon is delayed, that is a positive risk as the work can go on. An advanced monsoon is a negative risk. The first and foremost thing is to VLW GRZQ DQG XVLQJ WKH %OXH 2FHDQ WKLQNLQJ EULQJ RXW DOO WKH possibilities which can come into play and conduct a noholds-barred discussion on what can go wrong. Then you list them down; what is the probability of it happening and the possible resulting impact. Therefore, there is a method in which you can quantify the risk. If the probability is only 5 per cent but the impact a higher number, multiplying the two gives you the risk factor. While starting the project, one can WKHQ WDNH D GHFLVLRQ VD\LQJ WKH SURMHFW QHHGV D SODQ % RU & WR mitigate risks which have a magnitude of X and above.

So there are ways of arriving at such things..

There are ways of arriving at these numbers. Let the project management team decide if they are not going to have any backup plans or mitigation plans for risks such as tidal waves, because the score of that is very low. $OVR WKH LQGXVWU\ KDV VWDUWHG DFFHSWLQJ WKH 3URMHFW 0DQDJHPHQW 2IILFH 302 FRQFHSW IRU LQGHSHQGHQW UHSRUWLQJ DQG HQVXULQJ SURMHFW PDQDJHPHQW H[FHOOHQFH +DYLQJ D 302 FRXOG EH DQ HIIHFWLYH ZD\ RI PRQLWRULQJ SURMHFWV 3URMHFW WHDPV WKDW KDYH DGRSWHG 302 IHHO WKDW LW KHOSV LQ HQVXULQJ successful implementation of projects through deployment RI SURMHFW PDQDJHPHQW EHVW SUDFWLFHV 302 DOVR KHOSV LQ proactive risk identification and provides adequate guidance and information for timely decision-making.

So, not making a plan for such a thing is a conscious decision one takes!

Exactly. Importantly, one is aware and accordingly, one

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352-(&7 0$1$1*(0(17 has either built in those risk mitigation plans upfront or not. The other way to work it out is also to figure what happens if an unplanned risk does occur, and what can be done about it? If one factors in the fact that steel prices will not change but in fact, they do change over the course of the project, how does RQH PLWLJDWH WKDW" +DV VRPHWKLQJ HOVH EHFRPH FKHDSHU" 'RHV it make sense to do some hedging? These are various aspects which one needs to bring into proper project planning.

Do you think planning is underrated?

It is much underrated in India.

In India only, or worldwide also?

In India it is underrated a lot more. We want to jump into execution and in almost all cases, without spending adequate time on long-term planning.

As we are aware, the planning phase of projects appears to be largely affected by the factors generating from land acquisition and regulatory approvals. However, these external factors leading to lapses in project delivery are primarily due to insufficient mitigation adopted to overcome them. The project teams must take these activities into account while considering the time cycle for the project completion. *LYHQ WKH WUHQG RI JURZLQJ VL]H DQG FRPSOH[LW\ RI SURMHFWV the increase in number of stakeholders and affected sections is inevitable. Also, the growing concern and stronger measures for protection and restoration of environment have added to the efforts required by project management organisations. These external factors can be mitigated by timely action given that the strong and periodic information system is established to provide the necessary information.

Although the factors affecting project time-lines primarily appear to be associated with external factors, the underlying reason behind them remains the delayed or non-identification of pre-requisites to overcome these factors. In the absence of adequate identification of these dependencies, the projects usually land in trouble at the start, which in turn manifests into delayed project delivery or higher cost at completion.

Why do you think this is so? Is it changing now?

I am not too sure to what I would attribute this lack of planning in India but I think it has got to do with cultural aspects of India. Iâ&#x20AC;&#x2122;ll give you an example. Till the multinational players came to India, we never had a concept of workers wearing KHOPHWV :K\ ZDV WKDW" 'LG ZH QRW IHDU IRU RXU OLYHV" 'LG ZH not have safety on our minds? Itâ&#x20AC;&#x2122;s only when we had these companies coming in and insisting that people wear helmets that it has now become a culture. However, even today when you go to tier II or tier III cities, it is still not as prevalent as much as it should be.

Even a basic thing like this?

Yes; you see the kind of reflective gear on-site workers are

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supposed to wear, and this, too, was not common earlier. To answer your question, yes, I think that with more exposure, there is going to be more time spent in all aspects of project management including safety, health and environment.

However, we really need to move much faster. There must be a drive from within to be able to provide improved quality. It is a clichĂŠ that the devil is in the detail but one does really need to go in deep to figure out the issues that may impact the project. One of the best examples I give of good planning LV WKH &HQWUDO 'HOKL DUHD 7KH &HQWUDO 'HOKL DUHD ZDV HQYLVDJHG 100 years back. Even today, you will never get traffic jams.

There are lovely, wide roads and footpaths and the whole area was beautifully planned during the colonial era.

What is the work you are doing to help better practices?

We work with various groups for capacity building. There are two things that need to be done. One is to build capacity, which means get people trained and make them aware of good project practices. The second is to ensure that the system has a process to support the trained project managers. If the system does not insist on a project charter, planning process, stakeholder management or a ULVN UHJLVWHU WKHQ SHRSOH DUH QRW JRLQJ WR GR LW 6R WUDLQLQJ is needed as well as ensuring that the system supports the project managers.

A lot of this will happen through industry-academia interaction..

Yes and a change in policy of the government. For H[DPSOH WRGD\ ZKHQ WKH *RYHUQPHQW RU WKH ILQDQFLDO LQVWLWXWH HLWKHU RI WKHP SODFH D 5)3 GR WKH\ LQVLVW RU HYDOXDWH the project management capabilities and expertise of the organisation? They definitely evaluate the financials and they look at the fact that the company may have done projects in WKH SDVW %XW ZKDW DERXW WKH SURMHFW PDQDJHPHQW VNLOOV" 'R WKH\ FKHFN LI WKH RUJDQL]DWLRQ KDV D 3URMHFW 0DQDJHPHQW 2IILFH" 'R WKH\ FKHFN LI WKH RUJDQL]DWLRQ KDV SURMHFW management processes in place?

7KH 30, .30* VXUYH\ VXJJHVWV WKDW WKHUH LV D GHDUWK RI manpower across categories; however, non-availability of highly-skilled professionals can have an adverse impact on WKH SURMHFW GHOLYHU\ DQG FRVW %\ ,QGLDQ LQIUDVWUXFWXUH sector is expected to have a shortage of around three million project professionals including project managers, civil engineers, planners, surveyors, safety professionals, etc.

Hence, it is imperative to increase investment in training and mentoring to develop the requisite skill set in the professionals, deployed across various departments. Also, it is important for more and more universities and colleges to include project management degree/programs as part of their curriculum.

For the complete interview log on to www.infrastructuretoday.co.in

March 2016 Infrastructure Today 41

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Similarly, the Mumbai metro saw a cost escalation of over 80 per cent from its initial estimated cost.

Shetty, says, â&#x20AC;&#x153;Project costs in India can escalate beyond imagination. The escalation is not twofold or even threefold. It can be tenfold with `70 billion escalating to `700 billion for instance, and that is not uncommon. However, this can be avoided by right planning. They know the route for the metro. They know the way the sea-link will take. They also know the problems they will encounter. They should have planned for it. It is okay if you start the project six months late,

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42 Infrastructure Today March 2016

but once you start, you should be able to complete it at a go within the time-lines laid downâ&#x20AC;?.

Raj Kalady, MD, PMI (India), highlights another aspect of planning, citing the Bangalore airport as an example. â&#x20AC;&#x153;The Bangalore airport is a very good airport for the capacity it was intended to serve, but on the day it opened, it exceeded capacity. Within ďŹ ve years of its opening, it was getting upgrades. This is not an example of good planning. In contrast, look at the Delhi airport.

It can last you another 60 years before you run out of space. Clearly, when the land was allotted for the airport decades back, it was done with high visionâ&#x20AC;?.

Whether roads, bridges, metro, airports, ports, real estate or anything else, 50 per cent of the work is already complete if you have just made a plan, says Shetty, who advises clients on issues of project and cost management.

Take the case of Dilip Buildcon, a rapidly growing, privately held, engineering, procurement and construction (EPC) ďŹ rm based in the state of Madhya Pradesh. The largest road-focussed construction ďŹ rm in its state, the company has an enviable track record of completing its projects on or before their scheduled completion dates. Rohan Suryavanshi, Head-Strategy & Planning at DBL, says itâ&#x20AC;&#x2122;s no secret. â&#x20AC;&#x153;The key lies in planning,â&#x20AC;? he says. â&#x20AC;&#x153;The planning and execution of the project are equal processes. Generally, in EPC projects, we may not get time for planning once we get the appointed date. Therefore, we set the time for planning from the date of LOA up to the date of appointment.

This time-frame is usually about two and a half monthsâ&#x20AC;?.

During this planning stage, Suryavanshi and his team focus on issues relating to land acquisition and identify the critical activities of the project. The phasing of design and drawings is done for each activity as well as a complete planning of resources (construction material, plant & equipment, manpower). A phase-wise mobilisation plan of the resources is also drawn up and a cash ďŹ&#x201A;ow programme is made to ensure timely delivery of the project.

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DBL receives an early completion bonus for most of their infrastructure projects.

Gurgaon-based Punj Lloyd is another ďŹ rm which has commissioned a number of projects ahead of the scheduled completion time. For its Khagaria Purnea road project in the state of Bihar, the company even received an early completion bonus from the National Highways Authority of India (NHAI). Not surprisingly, Punj Lloyd is one of the few large infrastructure developers in the country who look towards their own institute â&#x20AC;&#x201C; the Punj Lloyd Institute of Infrastructure Management â&#x20AC;&#x201C; for engineers with multi-disciplinary skills.

However, Rajat Seksaria, VP & Business Head, Punj Lloyd Infrastructure has a different take on the issue. He believes that while the importance of theoretical and academic tools is more applicable to relatively more developed markets, the higher levels of uncertainties in India call for a slightly different skill set. â&#x20AC;&#x153;Here, the environment is much more unstructured,â&#x20AC;? he says. â&#x20AC;&#x153;Therefore, an ability to gauge the sense of proportion of the different issues becomes important and knowing how to deal with each one of them quickly in the local context. These are the people who make better project managers here,â&#x20AC;? he says.

With respect to issues such as land acquisition or right of way â&#x20AC;&#x201C; issues that have scuppered many a developerâ&#x20AC;&#x2122;s project, Seksaria says such problems can be dealt with. â&#x20AC;&#x153;The problem is most companies are not hands-on. One needs strong teams for liaisoning, government, corporate and community relations, a CSR focused approach and an overall strong engagement model to deal with people and resolve problems that may ariseâ&#x20AC;?, Seksaria says. However, he notes that with the overall growth in the industry, the importance of planning tools, MIS, monitoring systems, the implementation of IT and project management are all becoming increasingly important.

While land acquisition and right of way issues are not entirely unknown quantities, Shetty believes companies must plan for contingencies. â&#x20AC;&#x153;For greenďŹ eld www.InfrastructureToday.co.in

projects, depending on the project, we keep up to 10 per cent of the overall project cost as contingency. We also advise a time contingency when the drawings are not clear at the very beginning during the planning stages of the project,â&#x20AC;? he says.

Both Kalady of PMI and Shetty of C&B are of the ďŹ rm opinion that the poor track record in implementation of projects can only improve if there is more importance placed on the planning aspect. To ensure this, both of them believe that the government must make it a mandatory requirement for developers to acquire project management certiďŹ cation. â&#x20AC;&#x153;If the government does not do it, then the lenders should do it. Look at the NPAs of banks in India,â&#x20AC;? says Kalady.

Shetty adds, â&#x20AC;&#x153;In India, I see a lesser focus on the planning aspect of the proposed project. The banks do ask for the plan but they focus on the overall project features, start and completion dates, costs and returns.

There is a need to shift the focus on how each activity has been planned, what are the possible pitfalls and the mitigation measures that the developer is proposing. Itâ&#x20AC;&#x2122;s ironic because it is these plans that are actually going to deliver the returns which the banks are so focussed onâ&#x20AC;?.

Moreover, he suggests that the banks should also do their own due diligence before committing themselves.

Shetty adds that Currie & Brown ensures the quality of its own staff through training and qualiďŹ cation with the Royal Institute of Chartered Surveyors (RICS).

Companies also opt for certiďŹ cation with PMI which offers the Project Management Professional (PMP) certiďŹ cation. (London-based RICS is a professional body that accredits professionals within the land, property and construction sectors while PMI is a US non-proďŹ t professional organisation solely for project management).

Shetty says that projects given for bidding in the US, Europe and elsewhere look for such certiďŹ cations whereas in India â&#x20AC;&#x153;they just look at the engineering qualiďŹ cations and work experience. The lenders should stress on these additional qualiďŹ cations,â&#x20AC;? he emphasizes.

However, he believes that the scenario today in India us far better than it was just a decade ago. â&#x20AC;&#x153;Ten years back, there was nothing called project management.

With the multinationals coming to India and bringing their work methodologies with them, it is a far improved scenario today,â&#x20AC;? he reďŹ&#x201A;ects.

March 2016 Infrastructure Today 43

352-(&7 0$1$*(0(17 CASE STUDY

Beating the clock Infra development company Dilip Buildcon boasts an enviable track record RI WLPHOLQHVV +HUH DUH GHWDLOV RI WKHLU ¿UVW URDG SURMHFW LQ 8WWDU 3UDGHVK

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he road section DBL worked upon was basically one part of the full section of 150 km. The authorities floated open a tender for this 150 km stretch of road in three segments - km 0 to 43, km 43 to 93 and km 99 to 150 at the same time, out of which we received the stretch between km 43 to 93. The remaining stretches were allotted to two leading peer companies.

We completed our project about 230 days earlier while the other two portions of the project are still work in progress. This basically shows the different and aggressive working strategy of DBL as compared to our peers.

PROJECT OBJECTIVE The project objective included rehabilitation, upgrades and augmentation of the existing carriageway to two-lane with paved shoulders standards with construction of new pavement rehabilitation of existing pavements, construction and/or rehabilitation of major and minor bridges, culverts, road intersections, interchanges, drain, etc. and maintenance of the project during the defect liability period which is expected to be two years.

SCOPE OF THE PROJECT Widening and reconstruction of existing road to two lane (Including urban area 4 Lanes 7.650 Km) with paved shoulder length 50.615 Km having 51 major and minor structures along with toll plaza, bus byes, truck lay bye, rest area, RCC drain, and major and minor junctions, etc.

CHALLENGES FACED a. It is difficult to get the support of locals in the initial stages. Also, local political disturbance. b. Major challenge was to get the main product black metal locally, so we had to take the material from the quarry, 300 km from the project site. We also had to take care of the cost of this transportation, obviously. c. Facing land acquisition hurdles. d. Obstruction within ROW. PROJECT MANAGEMENT TECHNIQUES a) Strict adherence of Project SOP. b) Daily monitoring of projects from HO. c) Deviation analysis at all levels of project.

44 Infrastructure Today March 2016

d) Detailed analysis of GPS data attached with all fleet, curing down time of fleet through data mining. e) Minute monitoring of mobilisation policy of resources. f) Visits by Devendra Jain, Director, regularly; addressing all queries and hurdles at sites. g) Re-ordering level at site.

SOLUTIONS a) Subcontracting small works. b) Segregate all projects in small parts like Pyramid strategy and minutely observe deviation from SOP. c) Prepare dedicated team for black metal/aggregate procurement; who manage all the activities from quarry site to project site. d) Maintaining proper re-order level of material on site.

LESSONS LEARNED a) We have used a new technology called CTB (Cement Treated Base) first time in our road projects and implemented it successfully which reduced the cost of projects significantly. b) Due to this technique, we have saved the aggregate and other petroleum products. c) Great test of company to come out successfully with local issues like political disturbance, etc. d) Prepare SOP for implementing new technology.

BENEFITS OF THE PROJECT a) It is basically a matter of pride for us that we have entered the state of UP for the first time and completed our projects without compromising on quality and earned maximum early completion bonus. Due to this, we have created a good impression not only in the eyes of employer (MORTH) but the state government and local government bodies b) For the local public, travel time got reduced by half c) Successfully implemented new technology due to which we will save our material cost, time and overhead cost in other projects. Also, this technique is more eco-friendly because it reduces the use of petroleum products d) Got overall knowledge for working in the state.

Furthermore, we have bagged more projects in the state of UP after this so it is now easier for us to work in UP www.InfrastructureToday.co.in

352-(&7 0$1$*(0(17 CASE STUDY

Against All Odds A shining example of success, NTPC Ltd won PMI India’s Best Project of the Year award. The award was for exemplary use of project management techniques to complete 5MWp grid-connected solar PV plant in Port Blair in record time.

N

TPC commissioned a 5MWp grid connected solar Photo Voltaic (PV) power plant project in Port Blair, Andaman & Nicobar (A&N) Islands.

The project was executed on a build-own-operate basis through a memorandum of understanding that NTPC signed with the A&N Islands administration.

The project is spread across a 10-hectare plot that has been leased out for a period of 25 years by the A&N electricity department, the plant’s customer.

NTPC awarded the Engineering, Procurement, and Construction (EPC) contract to Hyderabad-based Photon Energy Systems Ltd. The project was completed within six-and-a-half months from the date of handing over of the land, in spite of several challenges.

PROJECT OBJECTIVES NTPC set out with the objective to produce environment-friendly, sustainable energy that would assist in saving diesel, reducing and saving foreign exchange outflow, and reducing the country’s carbon footprint.

“This was a highly complex project because of the challenges associated with a compressed project schedule and working in a remote island that is separated from the nearest port by over 1,000 km. We adopted robust project life-cycle methodologies even before the project was awarded to the time it was commissioned,” said A K Jha, (now former) CMD, NTPC Ltd. NTPC floated a tender for the EPC contract based on competitive bidding. Photon Energy Systems Ltd won the EPC contract. The project was monitored and controlled with the help of a proven project monitoring system to avoid any slippages.

THE CHALLENGES The primary challenge was to execute the project that was away from the mainland within the time schedule (within FY 2012-13). Detailed below are the various project specific challenges: LOGISTICS IN SUPPLY CHAIN Transportation by ship from Chennai to Port Blair www.InfrastructureToday.co.in

Energy Export Targets Net energy to be exported: 69,38,000 kilowatt hour (kWh) units per annum, i.e. 6.938 million units per annum (equivalent to the requirement of around 6,000 dwelling units) Annual capacity utilisation factor (CUF) on net export basis: 15.84 per cent

faced a bottleneck as ships sailed from Chennai to Port Blair only on specified days of the week. This caused delays; certain equipment reached the site just one week before the project was commissioned.

SUPPLIERS During execution, one critical supplier of module structures was not able to adhere to the schedule. Its manufacturing capacity could not keep to the quantity required and its process facility was inadequate to meet the specification and quality requirements. The project team had to scout for an alternate source.

HUMAN RESOURCES Port Blair did not have an adequate number of skilled workers. There was a shortage of electricians, cable jointers and riggers. Coordination between multiple project teams that were geographically scattered was also a challenge, considering that the team had only six months to execute the project.

COMMUNICATION This was a project that required NTPC to collaborate at different levels such as with the EPC contractor, sub-vendors, the customer, the local administration, and the local community. Limited communication facilities in Port Blair, including slow internet speed due to limited bandwidth allocation posed serious communication bottlenecks during the peak project execution period.

OTHER CHALLENGES Inclement weather/heavy monsoon rains for almost a month during the peak project construction period of six months added to construction woes.

The project also had to abide by a height restriction March 2016 Infrastructure Today 45

352-(&7 0$1$*(0(17 A Few Project Highlights Â&#x2021; PLFUR SLOH IRXQGDWLRQV Â&#x2021; PHWULF WRQV RI JDOYDQLVHG LURQ VXSSRUW VWUXFWXUHV VWUXFWXUHV

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Â&#x2021; $ERXW NP RI SRZHU FRQWURO FDEOHV DQG RSWLFDO ILEUH FDEOHV Â&#x2021; RXWGRRU W\SH LQYHUWHUV RI N: HDFK Â&#x2021; 6XSHUYLVRU\ FRQWURO DQG GDWD DFTXLVLWLRQ V\VWHP Â&#x2021; &RQWURO URRP EXLOGLQJ RI VT PHWUH Â&#x2021; $ERXW NP RI LQWHUQDO URDGV Total manpower employed during peak construction time: about 100

of a maximum of two metres from the ground that is imposed by the Airports Authority of India.

PROJECT MANAGEMENT TECHNIQUES R Venkateswaran, regional ED (South), NTPC Ltd, said, â&#x20AC;&#x153;We followed our internal, Integrated Project Management Control System (IPMCS), which is in line with international standards such as PMIâ&#x20AC;&#x2122;s â&#x20AC;&#x153;A Guide to Project Management Body of Knowledge (PMBOKÂŽ Guide). IPMCS helped us transition the project smoothly across its lifecycle through close monitoring, coordination, interface management, and timely decision-making. It was one of the major contributors behind the projectâ&#x20AC;&#x2122;s success in a limited time frame.â&#x20AC;?

SCOPE NTPC overcame scope challenges with a detailed â&#x20AC;&#x153;sensitivity analysisâ&#x20AC;? to determine changes in the annual energy generation because of changes in the irradiation level. For the annual generation ďŹ gure, NTPC based its estimates on the worst case scenario to provide a margin of safety while determining the project viability.

LOGISTICS IN SUPPLY CHAIN There was close coordination between manufacturing and supplies. To save time on shipments, six main inverters and one spare set were airlifted from Germany to Chennai, and thereafter transported by ship to Port Blair.

SUPPLIERS Special teams were deputed at the sites of major vendors to inspect, clear, and follow up on critical supplies and equipment due for dispatch. Teams used imaging technology and electronic transfer of documents and images for speedy submission and approval of vendor drawings, data sheets, and work documents.

HUMAN RESOURCES A full-time Project Management OfďŹ ce (PMO) was set up during execution. Strict implementation of 46 Infrastructure Today March 2016

NTPCâ&#x20AC;&#x2122;s ďŹ eld quality assurance system, safety standards, and commissioning procedures in Port Blair ensured workforce safety. Workersâ&#x20AC;&#x2122; safety and wellbeing were also enforced through regular site visits and interactions with supervisors.

COMMUNICATION The project management team conducted regular monitoring of the projectâ&#x20AC;&#x2122;s progress. All design and engineering activities including preparation, submission, review, revision, and ďŹ nal approval were fully automated through paperless, internet-based applications.

SUPPLEMENTARY SOLUTIONS Since the low lying areas on the island are always waterlogged due to regular, heavy rainfall, extensive arrangements were made to clear out the area throughout project execution.

Excavators and rock cutters for earth pits, and drill machines for laying foundations and cable trenches in rocky terrains were used. The project was executed 24x7 under ďŹ&#x201A;oodlights powered by diesel generators.

LESSONS LEARNED s 4O ENSURE THAT THE LAND IS IN PHYSICAL POSSESSION without any encumbrance well before the EPC contract is awarded. s 4O CREATE ADEQUATE BUFFER TIME FOR DISPATCH AND delivery activities for projects in remote locations that require multi-mode logistics. s 4O PROVIDE FOR ADEQUATE STOCK OF SPARES OF construction machinery at the site to avoid delays due to machinery breakdown.

BENEFITS The NTPC solar PV project supplies clean and green solar energy to the A&N grid that supplies power to the island. It helped reduce carbon dioxide emission by 6,173 metric tonnes during the ďŹ rst year of operation.

As a UNFCC registered plant, it received 6,173 CERs during the ďŹ rst year of operation (2013-2014).

These tradable CERs have provided NTPC an additional source of revenue in the CER market.

The project was completed not only within the time, cost, and quality prescribed but also with a safety record of zero accidents during the construction and operations phases.

The project went on to win NTPCâ&#x20AC;&#x2122;s Swarn Shakti Award for excellence in project management for renewable projects that was instituted by the company in 2012-13.

This case study was submitted by Project Management Institute (PMI) India, as an example of successful project management.

www.InfrastructureToday.co.in

352-(&7 0$1$*(0(17 COMMENT

Is the Project Plan Just a Pretty Picture on a Wall?

Is project and programme management still a silo in your business? Is the project plan just a pretty picture on a wall that is not really driving what your team does?

E

ven though the pressure to deliver projects on time is intensifying, most players within the oil & gas, utilities, construction and contracting industries still seem reluctant to integrate the project plan with the other systems and functions in the business.

Typically, project plans are developed in tools like Microsoft Project, Primavera or Asta. However, these tools are rarely integrated with systems supporting other common business functions such as procurement, engineering, operations, sub-contract management, construction and project cost control.

By its very nature, the industry has long been heavily document-based, with few fixed offices and staff predominantly based on site. With many interwoven teams and multiple businesses working together, tracking staff availability, scheduling, time-sheets and payroll is still one of the biggest overhead tasks. When it comes to the project plan, the sub-plans for these business functions are still typically created in Excel. So, not only are they NOT integrated with the primary systems supporting these functions, how does the management even know that these sub-plans are aligned with the pretty picture of the original project plan?

The problem of alignment is made even harder when the scope of a project changes constantly through contract variations. Whenever you have multiple overlapping systems – and therefore no single source of truth – there is a risk that one system will be updated but not the others.

With the introduction of new technologies like Building Information Modelling (BIM), we are starting to see partial integrations with the project plan. Some organisations, for example, are trying to link the plan to the BIM module to implement smart 4D construction simulation solutions. But even this only covers the construction phase of the project and does not attempt to create a single source of truth. It also relies on having a very well structured BIM model and very high quality data.

Why is there such a reluctance to integrate the plan?

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There are two main reasons: 1. Inertia: the business systems used in most construction and contracting businesses are not integrated and do not support a work breakdown structure that is integrated with the other functional areas of the business. They are still operating with many non-integrated systems and lots of Excel spreadsheets and there is no expectation that things should be different.

2. Culture: Simply put, people are still working in departmental silos and are reluctant to change as they may fear that if their data becomes visible, they can be held accountable. The functional areas all want to invent their own plans because that is what they trust and that is what they can control.

The industry needs to think about introducing an integrated approach to project management to ensure that projects run within time-scales and don’t go over budget. An integrated plan means everyone has to trust and work to one plan. The benefit is the organisation is working to one common goal and the project delivery performance will improve. To achieve this, an integrated solution which can manage the entire project life-cycle – such as our IFS Applications – is essential to projectbased businesses like those in the oil & gas, utilities and construction and contracting industries.

New technologies like BIM will increasingly drive a move away from primarily document-driven processes to an integrated data-driven approach. The adoption of more sophisticated information inputs enables organisations – and potentially entire supply chains – to move away from isolated business processes, with their corresponding information silos, to processes that are integrated throughout the whole design, construction and asset management life-cycle.

The article is authored by Ian Fleming, Managing Director for IFS’s operations in the Middle East, Africa and South Asia regions.

March 2016 Infrastructure Today 47

352-(&7 0$1$*(0(17 INTERVIEW

“Stakeholders have now started shifting towards value-consciousness from price-consciousness earlier” Ashish Tandon, MD, Egis in India, says global experts are increasingly taking up projects in India at every stage of the project life cycle.

What is the significance of project management, particularly at a time when India is looking at large scale infra projects of a size and scale it has never attempted before?

India aspires to be the hub of global manufacturing and it is doing everything in its power to make it happen.

Many major infrastructure projects are announced, set within time-lines and budgets. Proper project management is the only way this mammoth task can be realized. Else, it will be impossible to manage the scale and quality that India is aiming to achieve.

As the 12th five-year plan enters its last quarter, there is an expected shortfall of 30 per cent to the proposed $1trillion infrastructure spending, with huge shortfalls in sectors like ports, railways and roads. If we analyse the reasons, they can be categorised as internal and external factors impacting the project deliverables.

External factors like land acquisition, environment clearances and other regulatory approvals are beyond the control of the implementing agencies. However, there are internal factors such as adequate planning, project scheduling and monitoring of critical activities, resource management, etc., if managed properly, may cease to be bottlenecks. We need to revamp the whole process of conceptualising and completing projects.

Faster, more efficient project management would reduce costs, improve productivity and increase competitiveness.

What is your observation how stakeholders in India approach project management?

Project management, until recently, was never seen end-to-end. It was always in silos which is why there were unavoidable gaps between different stages and the end product, more often than not, was unable to match up to global standards.

Things are looking a lot better now. Almost all stakeholders have realised the importance of project 48 Infrastructure Today March 2016

management and have actually started taking conscious steps to eliminating challenges. To start with, there is now a one window clearance for most projects.

Stakeholders have started shifting towards valueconsciousness from price-consciousness earlier. This is encouraging global experts to take up projects in India at every stage of the project life cycle, thereby offering better solutions at every stage – from planning to execution.

In the current context of project management, there is an urgent need to anticipate and apprehend risk.

Continuous risk mitigation needs to be implemented at the planning stage. Each one should acknowledge their share of responsibilities for an idyllic accomplishment of a project. For example, as an awarding agency, the government should look after land acquisition, rehabilitation and resettlement, fund allocation, etc., prior to initiating a project. The contractors should have proper resource management, quality monitoring techniques in place, prior to construction work; everyone involved has to play their part effectively.

How does one deal with factors that are beyond one’s control like land acquisition?

Project management is a tool that can help you preempt difficult situations arising in the project and help you try to mitigate risks. It can, however, help you to a certain extent and act like a cushion. However, for smooth completion of projects, the external factors which are not within control have to change, else the project delivery suffers.

Land acquisition, being a problem area in most projects, should not be looked upon as a challenge faced only by Indian projects. It is a concern for projects around the world. It is the approach to such a matter IT which makes it difficult.

For the complete interview log on to www.infrastructuretoday.co.in www.InfrastructureToday.co.in

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Aviation infrastructure still grounded Supporting infrastructure has to catch up with the growth envisaged for Indian aviation.

W

ith a market size of around $16 billion, India is the ninth largest civil aviation market in the world today. During the Eleventh Plan period (2007-12), passenger traffic grew at a CAGR of 11 per cent. Passenger handling capacity increased three-fold from 72 million in 2005-06 to over 198 million in 2010-11 and cargo handling capacity expanded from 0.5 mt in 2005-06 to 3.3 mt in 2010-11.

Multiple factors have contributed to this, including a strong economy, higher household incomes, entry of low-cost carriers, rising business and tourist travel and increasing cargo movement, amongst others. To keep pace with this impressive performance, aviation infrastructure is in an expansion mode with several measures taken like construction of greenfield airports, modernisation of brownfield ones and the introduction of advanced operational systems.

GROWTH GRAPH Yet, these fall short of current and future demands, as can be observed from the following facts. Airport density is low in India with just one airport for every 4.6 million people compared with the US that has one airport for 60,000 people. China has a ratio of one airport for every 3.2 million people. Passenger-handling capacity of Indian airports is expected to be 500 million in the next

50 Infrastructure Today March 2016

10 years and India needs around 400 operational airports by 2025 to meet its growing demand. Currently, there are only 82 operational airports and of the 125 airports managed by AAI, only seven are profitable.

“The civil aviation sector has witnessed unprecedented traffic growth in the past few years due to rapid economic growth, growing tourism , entry of low-cost private carriers, liberalization of international bi-lateral agreements, and our civil aviation policy. India has the potential to be an aviation leader by 2025, within the top three positions in terms of passenger transport”, says Satyan Nayar, Secretary General, Association of Private Airport Operators (APAO).

He adds, “This implies that huge private investments will be required as AAI alone will not be able to raise the required funds of about $30 billion. India is likely to have aircraft fleet strength of approximately 4,000 by 2030, requiring further investments of about $90 billion.

Therefore, it is essential airport infrastructure is developed to meet future growth”.

It is not just India but all of Asia that is gearing up to meet rising demand, says Sonal Mishra, Associate Director, Capital Projects and Infrastructure, PwC India. He explains, “Asia has emerged as the leading aviation market capturing 30 per cent of the world’s revenue passenger km. This growth is expected to

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“Viability of the project and a reasonable rate of return are not ensured by the policy makers.”

Satyan Nayar, Secretary General, Association of Private Airport Operators, shares his views on private participation in aviation infrastructure with Janaki Krishnamoorthi.

How successful has been the PPP model in the development/modernisation of India’s airports?

The modernisation of Delhi and Mumbai Brownfield airports and setting up of three new PPP Greenfield airports at Cochin, Hyderabad and Bangalore have shown that PPP is a successful model for development of airport infrastructure in the country.

These airports have not only created world class infrastructure but have also been adjudged as the best airports in the world

by ACI in their respective categories consistently including for the year 2015.

Apart from transforming the airport from a public utility to a commercial enterprise with a higher degree of efficiency, these airports have also significantly contributed to the reduction of airlines’ operational costs, by reducing their turnaround time. The PPP arrangement has also put huge funds at AAI’s disposal by way of revenue sharing .

Many studies have proved that there is substantial contribution by the PPP airports to the country’s GDP in addition to providing huge employment What are the road blocks to private sector participation?

Consistent and forward looking investor friendly regulatory regime is critical, which is absent today. Viability of the project and reasonable rate of return to the investors are not ensured by the policy makers. Though the government had intended to go for a 30 percent hybrid Till regime it is yet

to be implemented. The threat of CAG and RTI applicability to PPP Projects creates an uneasy environment as it is likely to put greater emphasis on procedural orientation as against performance orientation.

There are unexplainable delays in bidding, land acquisition and environmental clearances which in turn delay projects, indefinitely in certain cases. In the absence of long term debt funding option, developers are burdened by the long gestation period. The prevailing high tax regime is not favourable either.

Today, the sector does not have a structured National Civil Aviation Policy, a National PPP Policy, Hub policy or a modern set of acts and rules to govern the sector.

Which are the potential areas that are likely to open up opportunities for various private players?

The important sectors with huge opportunities are airport development, which is a basic infrastructure requirement for connectivity; MRO - as Indian carriers are expected to add two to three times their fleet size in the near future; air cargo - as air freight traffic is expected to increase five times by 2032; ground handling which is expected to grow significantly; real estate development which apart from airport related, will also include other connected activities; multi nodal access to airports and technological upgrades in all areas.

continue at 6 per cent (vis-a-vis 2-3 per cent in other regions) resulting in a surge in demand for airport infrastructure in the region. Consequently, there are plans for several mega airport projects in Asia including Al Maktoum International Airport, Beijing Daxing International Airport, Hong Kong International Airport’s three runway system, and Changi’s east extension. When completed, all of them are expected to have an individual capacity of more than 100 million passengers per annum. A need is also felt for small to medium size airports across the region to expand the air connectivity network”.

POLICY PARAMETERS No doubt the Indian government has taken several www.InfrastructureToday.co.in

March 2016 Infrastructure Today 51

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Huge investments will be required to build more airports such as the Rajiv Gandhi International Airport in New Delhi.

measures. Some of them include 100 per cent FDI for both greenďŹ eld (under automatic route) and brownďŹ eld (with approval from Foreign nvestment Promotion Board) airports, 100 per cent tax exemption for airport projects for 10 years and development of airports through PPP, etc. â&#x20AC;&#x153;India is on the trajectory of high growth in airport infrastructure, given the current governmentâ&#x20AC;&#x2122;s focus on aviation requirements and with the tier-2 and tier-3 cities coming to the forefront of the growth vortex.

Private participation can add great value in meeting rising demandâ&#x20AC;?, says SGK Kishore, CEO, GMR Hyderabad International Airport Ltd (GHIAL).

The current (2016-17) Budget has some encouraging provisions for the sector. Some of these include developing under-served airports/airstrips, providing tax exemptions and incentives, reviving some of AAIâ&#x20AC;&#x2122;s non-operational airports and special incentives for developing India as a maintenance, repair and overhauling (MRO) hub.

It remains to be seen how much of it will translate

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into implementation and how soon, say industry insiders. â&#x20AC;&#x153;There have been capacity expansion plans of existing large and major airports. However, implementation has not kept paceâ&#x20AC;?, points out Mishra. â&#x20AC;&#x153;In addition, even with the current expansion plans, majority of Indian airports will be saturated in the next 5-10 years.

According to different estimates, more than `400,000 crore of investment is required to augment airport infrastructure. The actual implementation as compared to these estimates is almost negligibleâ&#x20AC;?, he adds.

In fact, AAI had planned to invest `12,500 crore over the 12th Plan period on airport infrastructure.

However, the actual amount spent until 2015 is only `4,357.87 crore. RK Srivastava, Chairman, Airports Authority of India (AAI), attributes the low spending largely to the sluggish economy. â&#x20AC;&#x153;The beginning of the twelfth ďŹ ve year plan period was sluggish due to a slowdown in the economy. Consequently, aircraft and passenger movements both declined. This impacted the infrastructure development plans along with other factors like land availability and statutory clearances. www.InfrastructureToday.co.in

)($785( CWTaT Xb WdVT _^cT]cXP[ U^a cWT STeT[^_\T]c ^U PXa_^ac X]UaPbcadRcdaT \PY^aXch ^U fWXRW fX[[ ]TTS _aXePcT RP_XcP[ ² B6: :XbW^aT 24> 6<A 7hSTaPQPS 8]cTa]PcX^]P[ 0Xa_^ac ;cS 6780; The capex for the years 2012-13, 2013-14 and 2014-15 was `1,800 crore, `1,158 crore and `1,399.87 crore respectively. The revised estimates for 2015-16 is `1,900 crore and the Budget estimates for 2016-17 is `2,056 croreâ&#x20AC;?, notes Srivastava.

According to him, the capex has been utilised for creating facilities like modern terminal buildings, runway extensions, parking bays, parallel taxiways, ATC tower cum technical blocks and for acquiring additional aircraft. â&#x20AC;&#x153;A signiďŹ cant part has been spent on modernising and upgrading ANS infrastructure. AAI has also undertaken upgrades/development of ďŹ ve airports-Kishangarh, Belgaum, Hubli, Jharsuguda and Tezu - in 2014-15â&#x20AC;?, adds Srivastava.

The government has been promoting the development of low-frill airports in tier II and tier III towns, requiring substantial investments. However, Indiaâ&#x20AC;&#x2122;s capex lags other countries. Mishra says, â&#x20AC;&#x153;Indiaâ&#x20AC;&#x2122;s current capex pipeline is around $5 billion which is signiďŹ cantly less than the requirement. It is also far below the capital investment plans of countries like China ($130 billion) and UAE ($46 billion)â&#x20AC;?.

PRIVATE PARTICIPATION The private sector has played a major role in the development of international airports in Delhi, Mumbai, Hyderabad, Bangalore and Cochin. Investment by the private sector is projected to grow at a CAGR of about 30 per cent during FY2012-17.

Privatisation is a major trend in worldwide, says Kishore. He explains, â&#x20AC;&#x153;The emerging global market trends reďŹ&#x201A;ect enhanced levels of private participation in the public sector. The modern instruments in ďŹ nancing are enablers in foreign funding across the globe. The

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Draft National Civil Aviation Policy (DNCAP) 2015 - Industry view RK Srivastava, Chairman, Airports Authority of India It provides a fillip for promotion of regional air connectivity. AAI will examine the feasibility of developing AAIâ&#x20AC;&#x2122;s balance non-operational airports factoring the changed environment and the need for regional and remote area connectivity. For the non feasible, non-operational airports, other potential uses are being explored.

SGK Kishore, Chief Executive Officer, GMR Hyderabad International Airport Ltd. The policy seems to be progressive and meets Indiaâ&#x20AC;&#x2122;s requirement while taking care of the global aviation trends and future capability building. We hope the policy will be implemented in its true spirit at the earliest.

Sonal Mishra, Associate Director, Capital Projects and Infrastructure, PwC India The policy has attempted to address the following issues, which are in line with the industryâ&#x20AC;&#x2122;s demand: development of Greenfield or Brownfield airports through PPP and by AAI; development of Tier- II and Tier- III airstrips/airports and development/upgradation of no-frills airport at cost of `50 crore each; proposed â&#x20AC;&#x153;Open Skiesâ&#x20AC;? policy on a reciprocal basis with SAARC countries and countries with territory located entirely beyond a 5000 km radius will allow European carriers to expand their network and frequencies in India; the policy changes and duty relaxation proposals is likely to make MRO for Indian planes cheaper by 25-30 per cent; proposed Regional Connectivity Scheme, an all-inclusive airfare not exceeding `2,500 per passenger, indexed to inflation for a one-hour flight on RCS routes - to be effective from April 1, 2016 would provide boost to domestic traffic.

success factors for any PPP model remain political commitment, enabling policy frameworks, long-term capital market, innovative funding programmes and consistent regulatory framework, among othersâ&#x20AC;?.

Mishra concurs. He adds, â&#x20AC;&#x153;Airport privatisation is an emerging trend. The South American region has played a pivotal role, accounting for around $17 billion in airport privatisation (out of the total deal value of $21 billion worldwide). Besides, countries in European Union, Japan, Brazil and Ireland have all announced privatisation drives in 2016. Airports have also moved away from being mere infrastructure providers to full-ďŹ&#x201A;edged businesses. Strong political support, including buy-in from the government and public are critical to ensuring the success of PPP. Risks www.InfrastructureToday.co.in

)($785( for PPP transactions need to be adequately assessed to ensure a bankable transaction”.

The inter-ministerial task force constituted by the government under the chairmanship of BK Chaturvedi, to prepare a financing proposal for the Twelfth Plan period, has also recommended private participation in the development and operation of airports, improvement of navigational/surveillance facilities and air cargo logistics. The task force had specifically suggested AAI’s 32 non-operational airports with no passenger/ freight potential be developed into aero sports centres, flying clubs and training centres.

Based on these recommendations, AAI had commissioned a feasibility study for development of the same. Srivastava reveals, “Out of this, AAI has already developed Mysore and Kadapa for commercial operations of ATR-72 type of aircraft. Rupsi is being developed by IAF as joint-use airport and AAI will construct a civil enclave. Similarly, land requirement has been projected to the respective state governments for development of Akola, Sholapur (greenfield) and Warangal airports.

Salem and Jhausuguda have been identified as having industrial potential and development of Jharsuguda is under consideration. For development of north-east region, the development of Tezu airport has also been taken up. Flying club activities are carried out at Vellore, Nadirgul and Behala airstrips”.

Satyan Nayar, Secretary General, Association of Private Airport Operators Steps towards regional connectivity are welcome.

However, a moratorium of 10 years on airport charges will not be a self-sustaining proposition. The economic benefit of providing VGF to public at large may not materialize unless there is clarity on the parameters to be examined before providing VGF for a particular route.

APAO strongly recommends abolition of the 5 year/ 20 aircraft rule pertaining to the commencement of International Operations by Indian Airline companies, which is discriminatory against Indian carriers Provisions regarding bilateral traffic rights are a welcome step towards opening Indian skies. Categorization of route can be based on traffic volume. However, it is to be revisited whether with the introduction of regional connectivity scheme (RCS), the route dispersal guidelines (RDG) are really required.

Introduction of hybrid Till shall lead to incentives to generate higher non-aeronautical revenue which would help in bringing down aeronautical charges in the long run and help airports to become viable and provide funds required for future expansion, and modernization. The hybrid Till mechanism, as followed across the world (using only the profit from non-aeronautical revenue streams for cross subsidization) should be adopted for all airports.

Liberalization of land use at existing AAI airports and future PPP/ AAI projects will realize the full potential of available land. However, specifically excluding existing PPP projects for the purpose of land use utilization is not in the interest of AAI/ such PPP projects.

AAI’s dual role as airport operator as well as Air Navigation Services (ANS)provider at times creates conflicts of interest and hence, ANS should be established as a separate entity, which will also bring the necessary focus for upgrades of ANS facilities in India.

There must be an apex body to implement various policy decisions where multiple government agencies are involved.

The new, integrated terminal building at AAI’s Tirupati Airport is popularly known as the Garuda Terminal. www.InfrastructureToday.co.in

March 2016 Infrastructure Today 55

)($785(

The new, integrated terminal at AAI’s Kolkata Airport is spread over 2,510,000 sq. ft. and is able to handle 25 million passengers annually.

OVERT OPPORTUNITIES No doubt, the growing industry has opened up significant opportunities for several investors, including developers, MROs, equipment manufacturers, security/ passenger amenity services to technological solution providers and a range of other stakeholders.

“There is a huge growth potential for the development of airport infrastructure, majority of which will require private capital. Hence, it is imperative the enabling business environment is fostered by the government so that the potential of the industry can be realised for the larger socio-economic benefit of the country”, says Kishore. The industry is also banking on the implementation of the draft National Civil Aviation Policy 2015 which has several positive provisions.

CHALLENGING COURSE Challenges are galore in this sector – from complex policies, aggressive price cuts, a multi-tiered tax system, inordinate project delays, procedural delays, viability issues, lack of a long-term national level policy, etc.

“The sector is faced with multiple challenges.

Airports being highly capital intensive projects require long gestation period to break-even. However, impediments like funding constraints, unfavourable tax regime, uncertain traffic growth, lack of stable policy and regulatory frame work, delays in land acquisition, environmental clearance and most importantly, health of airlines have put the viability of airport projects under threat”, says Nayar. He adds, 56 Infrastructure Today March 2016

“Further, the government had planned to commence work this financial year on three greenfield airports (Navi Mumbai, Goa and Kannur) under the PPP model. However, only Kannur project is progressing well. The government’s proposed privatisation of four to five AAI airports have also not taken off. In view of all this and the frequent changes in government’s stand on airport privatisation, there is a growing concern among investors. The policy and regulatory regime should be investor friendly to facilitate private participation”.

The air charter market in India, which is still at a nascent stage, has its own challenges too, says Bhupesh Joshi, CEO, Club One Air. “We are facing multiple problems. Global economic slow down, internal policies, rupee devaluation are some factors hindering the growth of our segment. We need easy access to funds at lower interest rates for procuring aircraft for commercial use, tax relaxations on importing repair parts, lesser airport charges, reduction of taxes on ATF”, says Joshi.

No doubt India’s aviation industry has huge growth potential. However, its growth and progress to becoming the largest aviation market by 2030 will definitely require huge investment in aviation infrastructure development, which can only come from the private sector. This, in turn, calls for investor-friendly regulatory framework and policies. IT - Janaki Krishnamoorthi

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)($785( CASE STUDY

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part from being Indiaâ&#x20AC;&#x2122;s ďŹ rst PPP Kissan Vikas Patra (a government savings greenďŹ eld airport, Cochin scheme that doubles the amount in 5 ½ International Airport is also the years).The remaining half was to be utilised worldâ&#x20AC;&#x2122;s ďŹ rst solar-powered airport. The for funding the project. Estimates were three plants of varying capacity generating about `200 crore would be collected.

50,000 to 60,000 units of electricity daily is However, by 1993, only around Rs 4 crore able to meet the airportâ&#x20AC;&#x2122;s total power had been mobilised. Since KIAS, being a requirements. The airportâ&#x20AC;&#x2122;s development â&#x20AC;&#x201C; charitable society, had limitations for based on a unique funding concept and raising funds, CIAL was formed in 1994 as a rehabilitation package â&#x20AC;&#x201C; is a case study at public limited company, which could raise Harvard University, IIM Ahmedabad and large equity investments. However, VJ Kurian, Founder MD, CIAL IIM Kozhikode. mobilisation continued to be difďŹ cult, Conceived in 1991, Kochi International especially due to the negative campaign Airport Society (KIAS) was established under the against the project. Later, however, Federal Bank (with Charitable Societies Act. After nearly a decade-long a bridge loan of `10 crore), HUDCO (with a term loan struggle, the airport, constructed at a cost of `300 crore of `98 crore), and the Government of Kerala (with at Nedumbasserry, was inaugurated in May 1999. The equity investment of `1 crore) came to the rescue. ďŹ rst ďŹ&#x201A;ight took off in June the same year.

An area of 1,253 acres of land (required for Challenges ranged from fund-raising to land the project), belonged to 3,824 land owners, all of acquisition and a difďŹ cult terrain that was waterlogged whom opposed the acquisition with the support of with weak and unpredictable subsoil. â&#x20AC;&#x153;Since the local leaders. Adequate funds were not available to National Airport Authority (NAA) was unable to pay compensation to project affected people (PAP) invest in the project and the state government also which made matters worse. â&#x20AC;&#x153;Again, a novel scheme unable to shoulder the full ďŹ nancial burden, mobilising was introduced wherein the land owners were offered funds, estimated at a Rs 200 crore in 1993, was a major negotiated rates for their property. All those who challenge. â&#x20AC;&#x153;VJ Kurian, then District Collector of handed over their land were entitled to several Ernakulam, (now Founder MD of Cochin International rehabilitation beneďŹ ts, including the free-hold title of Airport Limited (CIAL)), conceptualized the novel idea a 6 per cent developed property free of cost. This unique of funding the development with the joint ďŹ nancial rehabilitation package, which later became a case participation of airport users (mainly non-resident study for World Bank, worked wonders. As many as Indians), airport service providers and the governmentâ&#x20AC;? 719 persons came forward for negotiated settlementsâ&#x20AC;?, recalls ACKNair, Airport Director, CIAL. explains Nair.

The scheme involved availing an interest-free loan By 1997, substantial land was in CIALâ&#x20AC;&#x2122;s possession of `5,000 for six years, from individuals. For repayment but some land owners still held on and challenged the of the deposit, half the amount was used for purchasing process in court. More than 400 cases were ďŹ led but CIAL won all the cases including a few at the Supreme Court. This infrastructure project owes its success to Kurian who dared to dream differently and worked assiduously to fulďŹ l that dream with his team.

Designed on the lines of Keralaâ&#x20AC;&#x2122;s traditional architecture, the airport recorded a cumulative annual growth rate of nearly 20 per cent in the initial eight years. Thereafter, passenger grew at 12 per cent, touching 6.45 million passengers in 2014-15.

The airport handles more than 1,100 aircraft movements IT per week.

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March 2016 Infrastructure Today 57

%8'*(7 ,03$&7 ANALYSIS

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would not hesitate in terming the Budget as focused on re-igniting â&#x20AC;&#x153;growthâ&#x20AC;? with emphasis on ďŹ scal discipline. Infrastructure remains a focus area with an attempt to unleash the capital expenditure cycle. The total outlay allocated for infrastructure in budgeted expenditure for ďŹ nancial year (FY) 2016-17 is `2.21 trillion.

In addition to providing high budgetary allocations to infrastructure, the Budget has also tried to address its ďŹ nancing issues by announcing deepening of the corporate bond market and allocation of `25,000 crore towards recapitalization of public sector banks. However, given the huge NPAs already disclosed by them in the last two quarters and continued high degree of stress expected on their balance sheets, one was expecting a larger corpus allocation for recapitalization. This may adversely affect companies in infrastructure and other core sectors committed to undertake capital expenditure in the near future.

Further, the budget speech also included initiation of

the Public Utility Dispute Resolution Bill and guidelines on renegotiation of public private partnership (PPP) concession agreements.

While the dispute resolution initiative is aligned to the Kelkar Committee Report and was expected, I believe allowing renegotiation of terms in PPP contracts is a rather bold step with a positive intent. Initiating renegotiation of contracts is a sensitive issue and may certainly need to be rationally calibrated in a welldeďŹ ned framework to avoid any undue advantage being passed on to stakeholders.

Apart from the above, it has been proposed to provide an investment linked deduction to Indian companies or their consortium engaged in the business of developing or operating and maintaining of a new infrastructure facility. The speciďŹ c infrastructure facilities include roads and highways and water projects.

This will incentivise cash rich companies to invest in infrastructure and thus, industry participation is expected to increase.

ROADS & HIGHWAYS Together with the capital expenditure announced for the Railways, the total capex outlay for roads and railways in 2016-17 will be `2.18 trillion. The government plans to develop road projects spanning 50,000 km and entailing investments of about $250 billion over the next five to six years. It has allocated `55,000 crore to roads, topped by `15,000 crore raised by the National Highways Authority of India (NHAI) through bonds. The total investment in roads including the rural Pradhan Mantri Gram Sadak Yojana allocation would be `97,000 crore during FY 2016-17. This will certainly increase the pace of completion of road projects which would be closer to the proposed construction rate of 30 km per day rate in next 12-18 months. The strategy to push the stranded road projects is being vigorously pursued by the Ministry of Road Transport & Highways. The FM claimed that 85 per cent of these stranded projects have been already put back on track. While these figures seem to be too good to believe, the approach and the relentless efforts certainly needs to be lauded. NHAI has a target of awarding 10,000 km of projects this fiscal year, out of which 6,353 km of projects had already been awarded. The remaining are also expected to be awarded soon. An approval of nearly 10,000 km of national highways in FY 2016-17 is expected. I would tend to believe that most of these projects are likely to be awarded on the EPC and annuity model and hence may be a big positive, particularly for EPC companies focused on roads.

Road transport in passenger segment is to be opened up to the private sector by amending the Motor Vehicles Act to remove/reduce permit raj and allow more private participation.

58 Infrastructure Today March 2016

www.InfrastructureToday.co.in

%8'*(7 ,03$&7 POWER

AVIATION

Key Budget announcement X Achievement of 100 per cent village electrification, i.e., 13,000 more villages to be electrified by May 1, 2018 – `8,500 crore is allocated to Deen Dayal Upadhyaya Grameen Vidyutikaran Yojana (DDUGVY) and Integrated Power Development Schemes (IDPS) for FY 2016-17.

X Plans spanning 15 to 20 years to increase investment in nuclear power generation. Budgetary allocation up to `3,000 crore per annum, together with public sector investments, will be leveraged to facilitate the required investment for this purpose.

X Clean Energy Cess levied on coal, lignite and peat has been renamed as Clean Environment Cess and increased to `400 per tonne from `200 per tonne earlier.

While the 100 per cent village electrification by May 2018 is an ambitious target, it would certainly encourage investments in the next couple of years. This is also aligned to the government’s vision of providing power to all by 2019 and is essentially positive for transmission companies.

One of the biggest challenge which the Indian power sector is facing is access to reasonable means of finance.

The twofold increase announced in the clean energy cess would be marginally denting the confidence of stakeholders in conventional power generation.

The capacity addition in the solar segment has briskly picked up over the last two years and is expected to dominate the capacity addition in the RE sector for the next few. However, the capping of Accelerated Depreciation benefit to 40 per cent will have a marginally retarding effect on the capacity addition. Power procurement would remain the biggest challenge to watch out for which the government has sought to address through the UDAY scheme.

The government is working on the National Civil Aviation Policy 2015, which deals with a number of aspects such as safety, bilateral traffic rights, regional air connectivity, aeronautical Make in India, 5/20 Rule, etc., to create an ecosystem with a mission to provide safe, secure, affordable and sustainable air travel with access to various parts of India and the world. The major budget announcements were: X Government to partner with state government to revive unserved and underserved airports, in order to boost regional connectivity.

X 10 of the 25 non-functional air strips with the Airports Authority of India also to be developed.

Other recent policy updates.

FDI norms in certain segments in the civil aviation sector has been raised to 100 per cent from 74 per cent, thus allowing foreign general aviation charter operators and large ground handling companies to set up their own bases in India. These initiatives seem to be a firmed up step forward to lead a major push to the government’s regional connectivity plan. However, the overall corpus of investments towards airports might be on the lower end and may need to be revisited.

PORTS Key Budget announcement The FM said that major ports have handled the highest ever quality of cargo and added their highest ever capacity. He also shared that a series of measures for modernising the ports and increasing their efficiency have been initiated. Citing plans for improving port infrastructure, the FM said that the Sagarmala project has already been rolled out and announced plans to develop new greenfield ports in the eastern and western coasts of the country. Approximately `800 crore was allocated towards investment in waterways projects.

While the ports sector has a definite potential to be a game changer with fillip from the vibrant logistics sector, unfortunately, it remains grossly under-serviced (vis-à-vis other segments such as roads, railways, etc.) from an investment viewpoint. This concern should be addressed sooner than later to unlock the full potential of development along India’s huge coastline.

IT This article has been authored by Sandeep Upadhyay, MD&CEO, Centrum Infrastructure Advisory.

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March 2016 Infrastructure Today 59

%8'*(7 ,03$&7 ANALYSIS

Implications on infrastructure The amount of `800 cr budgeted for ports and inland waterways appears to be below the potential of these sectors.

The roads and highways sector is the prominent one with 24 per cent increase in Budget allocation.

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he Union Budget 2016-17 lists infrastructure among one of the four priority areas. However, it refrains from making big policy announcements to restart the private investment cycle, and is largely limited to tax proposals and expenditure allocations.

This is positive, in that it indicates continuity of the past policies. It supplements several measures already underway in various line ministries, such as projects under Sagarmala programme, financing of Smart Cities and Amrut, and Hybrid Annuity Model for National Highways.

While the Budget significantly increases public spend in key infrastructure sectors, the government’s inability to continue large scale infrastructure financing is evident. Several more measures are needed to draw further private investment and participation in roads, railways, airports, waterways, housing, etc.

BUDGET VS REQUIREMENTS The roads and highways sector is the prominent one with 24 per cent increase in Budget allocation. However, an additional `30,000 crore in private investments is 60 Infrastructure Today March 2016

still needed over and above the allocation of `55,000 crore and the proposed `15,000 crore to be raised by NHAI through bonds, to meet the target of development of 10,000 km in the year.

The ground for this has been laid well, with about Rs 80,000 crore worth of projects under implementation, including `25,000 crore worth of PPP projects awarded in 2015-16. The Rail Budget also increases the investment target to `1.2 lakh crore, a part of which will be met through gross budgetary support. Given the declining operating ratio, and with freight and passenger traffic remaining nearly flat, the Railways will need to quickly devise private investment models to be able to achieve the target.

The amount of `800 crore budgeted for ports and inland waterways appears below the potential of these sectors, though ports can largely raise private capital.

Progress on corporatisation of major ports remains slow.

Corporatisation of ports can significantly enhance selffinancing ability. Inland waterways, however, will need significant public investments initially, until it reaches a more mature stage. www.InfrastructureToday.co.in

%8'*(7 ,03$&7 Airports need both capital and expertise to deliver to its potential. The limited success of Durgapur airport has highlighted that new airport development in private sector is difficult in an environment where long term capital is scarce. In this context, the proposal to finance regional airports jointly with state governments is a good one. This model can be made more effective by bringing private sector capabilities into operations.

Initiatives to bring private sector capital and expertise into airports have slowed down.

Increased emphasis on rural infrastructure overshadowed urban financing which had found strong support in the last few years. However, affordable housing continues to be centre- stage, and several more concessions have been announced. These will need to be supplemented with ground level reforms on land and legal issues to attract large developers to the really lowcost end of the spectrum. Strong legal framework for better balanced tenancy laws could give a significant fillip to the rental housing model of development.

Exemption of dividend distribution tax for REITs is a strong step towards channelling more funding into real estate projects, which will also benefit Smart City projects.

For industrial parks, developers, lower income tax rate for new manufacturing companies, along with changes in customs duty, could give a stronger push to Make in India. As the capital investment cycle is expected to restart with the continuously growing economy, it will result in demand returning for land in industrial parks. With good quality infrastructure, several such parks in the private and public sector are geared to emerge as competitive locations for manufacturing. While SEZ concessions are being phased out, a harmonised set of policies across different types of industrial areas is still needed.

EASING FUNDING Banks need to be recapitalised to be able to start lending to new PPP projects. The budgeted `25,000 crore is inadequate, and the shortage will potentially delay growth in private investment in the longer term.

However, the tight funding keeps lenders focussed on carefully resolving stressed assets, instead of promoting moral hazard. There are important lessons to be learnt from the over-leveraging experience of PPP investors.

Also, more details of the National Infrastructure Investment Fund were expected in this Budget. It will hopefully be clarified subsequently that how would the NIIF complement infrastructure financing system.

Exemption from dividend distribution tax for REITs and InvITs will give a fillip to this channel of financing, including for Smart City projects.

Several more measures are needed to draw further private investment and participation in railways.

governments to back high-risk new projects in absence of large scale private investment. In addition to low-risk models such as Hybrid Annuity, there may be more innovative ones involving selling / securitising existing assets and cash-flows. This was also recommended by the Kelkar Committee. However, there is some level of disappointment at insufficient push to implement the committee’s other recommendations.

The government may implement those as well to address the concerns of private investors, including constituting infrastructure PPP review committee, amending Prevention of Corruption Act, and setting up National Facilitation Committee.

IMPLICATIONS FOR STAKEHOLDERS Construction companies were already seeing an upswing in their order books, and the increased spending on roads, railways and irrigation will continue this trend.

However, increased rural spending may have only marginal impact on large construction companies, if such contracts are more suited for local players.

For infrastructure owners and operators, addressing stressed assets remains priority over pursuing new projects. Towards this, the budget proposes introducing guidelines for renegotiation of PPPs and the Resolution of Disputes Bill, as suggested by the Kelkar Committee.

If these can be speedily implemented, the impact on the sector would be much more than the long list of announcements in earlier Budgets.

IT This article is authored by Manish Agarwal, Partner and Leader Infrastructure PwC India.

KELKAR COMMITTEE PROPOSALS It is a challenge for the line ministries and state www.InfrastructureToday.co.in

March 2016 Infrastructure Today 61

)($785( 0$66 85%$1 75$163257$7,21 MUMBAI METROPOLITAN REGION

In Transit If all the proposed metro and monorail projects were to be executed effectively and started rolling on time, Mumbai - the city of dreams - would soon be a commuters’ paradise.

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uggestions for having flexible work timings are apparently being considered by the state government, considering the immense load on the suburban transit system during the peak hours.

According to the Observer Research Foundation (ORF) Report, Mumbai suburban railway network is one of the world’s busiest networks. Running 2,813 trains, it carries almost 80 lakh passengers daily. Of the total number of passengers in the MMR region, 52 per cent travel by the suburban railway system.

The saturated suburban transit system of the Mumbai Metropolitan Region (MMR) and the consequent proliferation in the fatality rate due to overloading has long been raising alarms. To de-congest the roads with their soaring traffic density and mitigate the burden on the suburban transit system, metro rail and monorail systems were heralded in the MMR. With a slew of projects in the pipeline, the mass rapid transit system (MRTS) is being hailed as a panacea for the commuting woes in the region.

There has been a growing interest among policymakers about the relevance of rail-based systems

62 Infrastructure Today March 2016

in India to address the mobility needs of the expanding population in the cities. While evaluating different mass transit options for Indian cities, metro systems are often given preference due to the fact that road-based bus systems cannot cater to capacity requirements as much as metro and monorail systems. In addition to this, these are perceived to have higher levels of comfort, safety, speed and efficiency than bus systems, making them more attractive to both policymakers and potential users of the system.

PROPOSED PROJECTS The limitations in expanding the suburban rail network have led the government to chalk out the ambitious plan of laying 170-km of metro rail network in the MMR by 2020. To de-congest the existing public transport systems and increase mobility across the region, the Mumbai Metropolitan Region Development Authority (MMRDA) through the Mumbai Metro Rail Corporation Limited (MMRCL) is attempting to successfully implement the seven proposed metro rail corridors in Mumbai. www.InfrastructureToday.co.in

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“Citizens in next 10 years shall have a choice of public transport based on efficiency” Nilaya Varma, Partner and Head, Government and Healthcare, KPMG in India How are Mumbai Metro Line 1 and Monorail Phase 1 faring with respect to profitability?

The Mumbai Metro Line 1 (Ghatkopar to Versova) and Monorail Phase 1(Jacob CircleWadala-Chembur) are comparatively new compared to Delhi Metro. In fact the Monorail – Jacob Circle-Chembur link is yet to get completed.

Considering the average daily ridership of approximately 3 lakh, Mumbai Metro is faring well in terms of profitability. Since Phase 1 of Monorail is yet to complete, analysing the profitability will be premature.

What is the current status of the mass urban transportation of MMR? In 2005, MMRDA had conducted a study on Comprehensive Transport Strategy for MMR. Following initiatives are on the drawing board for comprehensive Urban Transport: 1. Formation of Unified Metropolitan Transportation Authority (Seamless travel between BEST, Suburban Railways, Taxis, Autorickshaws, Public transport, etc) 2. Conversion of AC coaches for suburban Trains 3. Building new connectivitiy like Virar to Alibaug expressway, MTHL, Eastern Freeway, Malad to Bandra Sea link, Worli to Nariman point Sealink, etc

Work on the three metro corridors is expected to be awarded after June. Mumbai Metro Rail Corporation, which is a JV between the government of India and the state, hopes to launch the construction of Mumbai Metro III and Dahisar to DN Nagar and Dahisar east to Andheri east routes after June this year.

The Navi Mumbai Metro is planned to consist of five lines, totalling 106.4 km. All the phases of Line 1 (Belapur–Pendhar–Kalamboli–Khandeshwar line) will be constructed and funded by City and Industrial Development Corporation (CIDCO). The implementing agencies for Lines 2 and 3 will be Navi Mumbai Municipal Corporation and Mumbai Metropolitan Region Development Authority respectively. The estimated project cost of Line 1 is estimated to be `4,068 crore.

The 8.9 km Wadala-Chembur monorail will be extended to a 20-km corridor and the Mumbaikars would be able to benefit from is the Phase-2 of the monorail between Jacob Circle and Wadala. The opening of Phase-2 between Jacob Circle and Wadala is expected to solve the problem of fewer commuters using the monorail. www.InfrastructureToday.co.in

With five smart cities on cards for MMR, is the progress on the upcoming metro lines satisfactory? Don’t the delays escalate the project costs and affect the economic viability?

Yes. The delay is predominantly due to land acquisitions in a land scarce metropolis Mumbai. The project cost will be determined on the development incentives such as Transit Oriented Development (TOD), where the project management company gets additional FSI to sale as TDR in the market to adjoining plots of Metro corridor. Hence the economic viability is totally market driven, creating a win-win situation for MMRDA as well as developers.

Can metro and monorail systems effectively resolve the traffic congestion issues of MMR? What can the citizens look forward to?

Yes. The citizens in next 10 years shall have a choice of public transport based on efficiency and willingness to pay.

MMRDA is also working on Integrated Ticketing System that shall provide a Cash card for citizens and choice for citizens to travel by any mode of public transport. The bottom line is to discourage citizens to travel by their own private vehicle by making an efficient, affordable and reliable public transport.

MUMBAI METRO ONE The introduction of Mumbai Metro Line 1 has significantly reduced the journey time from 71 minutes to 21 minutes between Versova and Ghatkopar. It is the main trunk route as it provides access to MIDC, SEEPZ and other commercial establishments which employ lakhs of people. According to the Mumbai Metro One Private Limited (MMOPL) spokesperson, “Mumbai Metro Line 1 has been EBITDA-positive (EBITDA = Earnings Before Interest, Taxes, Depreciation and Amortisation) for the last 10 months of its operations now.”

The alignment has proved to be a breakthrough in providing the much-needed connectivity between the Eastern and Western suburban railway lines at Ghatkopar and Andheri respectively. “As the successful running of Mumbai Metro Line One has made amply evident, addition of other lines of a mass rapid transit system (MRTS) like Metro would only serve to help declog our roads of traffic and decongest the suburban railway network,” asserts the MMOPL spokesperson.

A significant operational challenge that the metro March 2016 Infrastructure Today 63

)($785( 0$66 85%$1 75$163257$7,21 The cost of this corridor is estimated at `23,136 crore ($3.4 billion). JICA will provide financial assistance in the form of a soft loan amounting to `13235 crore ($1.9 billion) for the `23,136 crore ($3.4 billion) project. JICA will fund 57.2 per cent of the equity. “Our funding for Mumbai Metro Line 3 is being extended in Tranches. So far the first Tranche loan amounting to JPY 71 billion has been sanctioned. JICA has recently signed a loan agreement with the Government of India for providing the first tranche of 71,000 million yen (` 4,553 crore),” states Tomohide Ichiguchi, Senior Representative, JICA India.

With regard to financing the other metro rail corridors, Ichiguchi says, “As expressed by H.E. Mr Miyazawa, Minister of Economy, Trade and Industry, Japan, in September, 2015, Japanese side is positive for further cooperation in the new metro projects in Maharashtra if the Government of India requests the Government of Japan.”

rail corridor is faced with is lack of adequate space to accommodate passengers in case of exigencies. “Owing to the unique layout of the existing structures on the busy route along which the Mumbai Metro One corridor has been constructed, space was a huge constraint. As a result, size of the stations had to be optimised, leading to less platform width at the key locations of Ghatkopar and Andheri, which witness the highest footfall due to interchange between metro and suburban railway network,” avers the spokesperson.

MUMBAI METRO THREE The work on the 33.5-km Colaba-Bandra-SEEPZ metro line is likely to take-off by mid-2016, and it is slated to commence operations by 2020. RITES Ltd has prepared the detailed project report (DPR) for Mumbai Metro Line 3. “The DPR for was prepared about three years back. MMRC is implementing it with support of a GC,” says a RITES official.

64 Infrastructure Today March 2016

NAVI MUMBAI METRO The progress on the Phase-I of the Navi Mumbai Metro Civil Works is claimed to be nearly 60 per cent. “CIDCO has embarked on a Turnkey Single Contract for all Metro Systems to facilitate single point responsibility for integration and interface of the Metro Systems together with three years Maintenance Responsibility,” reveals a CIDCO official. This implementation model is said to be the first of its kind in India.

In Phase-I, CIDCO has laid emphasis to equip the Navi Mumbai Metro with the latest technology and adapt the size which could in future offer seamless integration with the various corridors planned in MMR Region. “While there have been issues in relation to the Metro Crossings over Railway Land, National & State Highway and the raising of EHVT overhead lines, most of these are getting sorted out and we expect to commission Line-1 in mid-2017. The Phase-II & Phase-III are also planned to be taken up shortly,” remarks the official.

A RITES official states, “RITES Ltd was awarded the work for ‘DPR for Lines 3 and 4 and Validation of DPR of Line 2 of Navi Mumbai Metro’ in November 2015. A metro study takes significant amount of time as it involves collection of traffic data, transport demand www.InfrastructureToday.co.in

)($785( 0$66 85%$1 75$163257$7,21 forecasting, topographical and geotechnical surveys, alignment and system design, etc.”

The study is expected to be completed by June 2016.

The actual commencement of project will depend on various state and central government approvals and its funding after the completion of DPR. DETERMINANTS Most of the metro rail projects in India are Brown Field projects. The challenge is to maintain the construction speed in the environment of various restrictions, towards working space, without impeding traffic movement and giving due consideration to avoid air and noise pollution in residential zones and obtaining clearances from the various Departments.

Metro projects of such scale generally take around four to five years for completion, given the complexity and the interdependencies.

The success of large infrastructure projects would largely depend upon the availability of cheaper sources of funds and therefore funding from international agencies like JICA and World Bank is extremely important. Metro projects are highly capital intensive in nature with a long gestation period. Interest cost constitutes the largest chunk of the total cost for any metro project and most of the large projects are able to meet only the operating cost during its initial years of operation.

In order to reduce the financial stress on the infrastructure projects, it is important that the interest burden be reduced so that there is no compromise on the other operational and safety requirements or standards. There is a need for the government to ensure that the entire sector can receive such funding and not only the government projects. “If the benefits which are granted government metros are also granted to Mumbai Metro One, Mumbai Metro One would be self-sustainable at the existing fares,” affirms the MMOPL spokesperson.

Success of any metro project in terms of ROI would have different connotation for different companies as the financing terms are not similar for everyone. For DMRC, the majority of its funds are financed from JICA due to sovereign grantees provided

by GOI which comes with a very low rate of interest whereas the private sectors do not have any access to such cheaper funds. However, the metro projects in India are yet to attain positive returns on its investments.

Metro rail projects have high construction cost & low IRR. This factor is one major hurdle to attract private sector equity participation in the PPP mode.

There is a need for the urban transportation planners to give more focus to seamless connectivity and ensure that planning for first and last mile connectivity shall be undertaken along with the planning for the www.InfrastructureToday.co.in

List of revised metro corridors proposed for implementation Sr. No

Corridor

Length (km)

Phase

1

Versova-Andheri-Ghatkopar

11.40

Phase I

2

Charkop-Bandra-Mankhurd-Dahisar*

32.00

Phase I

3

Colaba-Bandra-SEEPZ

33.50

Phase I

4

Charkop-Dahisar (Merged with Line 2)

7.80

Phase II

5

Wadala-Ghatkopar-Teen Haath Naka (Thane)**

20.70

Phase II

6

Teen Haath Naka-Kasarwadavli (Thane)-Bhiwandi-Kalyan

34.60

Phase III

7

SEEPZ-Kanjurmarg

10.50

Phase III

8

Andheri (E)-Dahisar

18.00

Phase III

9

Sewri-Prabhadevi

3.50

Phase III

Total

172.00

1. Line 4 – Charkop-Dahisar metro corridor have been merged with Line 2 and reconfigured as Dahisar-Charkop-Bandra-Mankhurd (40 km) 2. Wadala-Ghatkopar-Thane (Teen Haath Naka) is extended upto Kasarwadavli and reconfigured as Line 4 Wadala-Ghatkopar-Thane (Teen Haath Naka) – Kasarwadavli (32 km).

infrastructure facility itself. In case of inadequate first and last mile connectivity, there are chances that the infrastructure facility shall remain un-utilised.

CONCLUSION Mega infrastructure projects aimed at easing traffic congestion and pollution woes are in the pipeline, but implementation has been nothing short of a fiasco.

However, seamless connectivity will remain no distant dream if a collaborative effort is put forward in a cohesive manner.

Robust planning and a complete road map regarding right of way, land or project affected persons, environmental issues, various approvals or permissions are to be structured to address in a time-bound manner through one window. The planning for the infrastructure development needs to be undertaken keeping in view the interplay amongst various sub-sectors, viz., roads, express ways, mass rapid transit systems, smart cities, etc.

Standalone planning and implementation of any one of the sub-sector creates imbalance in the intra and inter city planning and project implementation.

Apart from cohesive development, the government needs to revamp policies to promote private sector participation providing a well-defined road map of projects, appropriate and stable regulatory system or mechanism and a strong political will to take necessary decisive steps to address road blocks in a IT time-bound manner.

- Ratna Nair

March 2016 Infrastructure Today 65

368 63(&,$/ INTERVIEW

“We need to address issues on safety, security, infrastructure, revenue models and private sector participation” Captain Ajay Chauhan, CEO, GUJSAIL, talks about the plans to develop aviation infrastructure within Gujarat.

The state civil aviation minister has said that Gujarat can be a MRO hub. What are the preparations going on to achieve this?

Aircraft maintenance, repair and overhaul (MRO) providers play an essential role in the aviation industry by assuring the safety and air-worthiness of each aircraft. It is estimated that the global MRO market is worth up to $50 billion. While MRO activities were once mainly the domain of airlines, today many airlines, in order to reduce costs and small parts inventory, are outsourcing maintenance services to third party or specialized MRO companies. MRO providers generally work in the following categories: Airframe heavy maintenance and repairs: An MRO can offer such capabilities as aircraft maintenance checks, wing installation and repairs, inspection of gear and thrust reversers, cleaning, inspections, repairs, application of corrosion inhibitors, aircraft painting, fuel tank maintenance, repairs, inspections and renovation of aircraft interiors, among others.

Component Services: An MRO could undertake the repairs and servicing of aircraft, engine and avionics components.

Engine maintenance and repairs: Some MRO providers offer various levels of engine maintenance, modification, testing and repair work.

Line Maintenance: Trouble shooting, checks.

The international airport of Ahmedabad, with a supporting presence of industries and plenty of land availability, has an MRO developed by the government.

GUJSAIL recently set up a general aviation MRO in Ahmedabad, with a dedicated hangar near the domestic terminal of the SVP International Airport.

The MRO has parking facilities for two aircraft and is equipped with repair shop, store for parts and equipment, offices and other facilities. The MRO has handled airframe heavy maintenance, component services, line 66 Infrastructure Today March 2016

maintenance and inspection of private business aircraft and also planes used for other purposes. A Legacy 650 was one of the first aircraft to come to this MRO.

How many projects are currently in progress and what is their status?

The Civil Aviation department intends to develop new airstrips at Ankleshwar, Palitana, Dwarka, Ambaji, Dahej, Dholavira, Morbi and Rajkot for the development of the trade and tourism in the state of Gujarat. These will also enhance the regional air connectivity within the state and provide an economic and rapid transit within the state.

Is there an interest from private sector to develop these regional airports on PPP basis?

The Civil Aviation department will appoint a consultant for the development of regional airports. The consultant will be appointed by floating a Request for Proposal (RFP) through the empaneled consultant.

There are eight major locations in which the government wishes to develop the airstrips for promoting trade & tourism and providing regional air connectivity. The locations are Ankleshwar, Palitana, Dwarka, Ambaji, Dahej, Dholavira, Morbi and Rajkot. The consultant will do the master planning and bid process management for the selection of the developer on PPP mode.

How will all your plans be implemented?

The Gujarat State Aviation Infrastructure Company will act as a nodal agency for the Home Department for the implementation of air borne law enforcement within the state. GUJSAIL will prepare the tender for the procurement of the helicopter with all the latest equipment on board and take care of the operation and IT maintenance of the helicopter.

For the complete interview log on to www.infrastructuretoday.co.in www.InfrastructureToday.co.in

6327/,*+7 INTERVIEW

“Solar is simple! As long as the sun shines and you have the right technology with the right equipment, it’s good business” Rajat Seksaria, Vice President & Business Head, Punj Lloyd Infrastructure, talks about the company’s plans and competitive advantages in solar.

Tell us a little about Punj Lloyd.

Punj Lloyd Infrastructure Limited (PLIL) is a wholly owned subsidiary of Punj Lloyd which was incorporated as a project development company focussing on public private partnership (PPP) projects in transportation, energy and urban infrastructure. Since 2010, the company has grown significantly and presently has assets (commissioned and under development) of about $400 million. I am proud that each of our projects was commissioned ahead of time; a rare feat in the infrastructure industry. In fact, as recognition of our delivery capability, its road project Khagaria Purnea road project in Bihar received an early completion bonus from NHAI. The present focus of PLIL is in developing solar power projects.

Why solar?

Increased concern on climate and environmental changes, rapid technological developments in available solar technology and proactive government and regulatory environment provide a good backdrop for focusing on this segment. As an infrastructure development company and with a clear focus on quality and delivery, we want to be partners in the solar power revolution in India.

Our first solar development project was an outcome of the Jawaharlal Nehru National Solar Mission launched in 2010 – the 5MW solar power plant in Rajasthan with a PPA of 25 years with NTPC Vidyut Nigam Limited. The project was financed by US Exim Bank and has been successfully running since January 2012. Today, PLIL has a portfolio of six solar projects (commissioned and under development) of about 83 Mw in size and about $90 mln in asset value in three different states. Each of those entities with whom we have an agreement are highly rated, making for a high quality portfolio for us. www.InfrastructureToday.co.in

Are you looking at opportunities in rooftop and solar parks? What projects are you bidding for?

Solar power development in India has evolved into four clear segments; rooftop projects which are typically sub mw size; second – sub 5 Mw, typically undertaken by rich farmers, small enterprises and/or high net worth individuals; third – 10 to 40 Mw which are usually on offer by various state governments; and fourth – large 50 Mw + single site projects usually within a solar park and under the aegis of central government agencies like NVVN and SECI. Our focus would be in the third category of projects, sized between 10 to 40 Mw, as we believe we have developed strong project delivery capabilities in this segment which requires working collaboratively with various stakeholders like small contractors, local farmer/ land owners, local communities, state government, state utilities, etc.

We have executed many rooftop projects. In January 2015, a 200 kWp SPV Grid interactive multi-rooftop, single point integration power plant, designed and commissioned by Punj Lloyd, was inaugurated by Chandigarh Renewable Energy Science and Technology Promotional Society (CREST) at the Indian Reserve Battalion (IRB) Complex in Chandigarh, taking Punj Lloyd’s cumulative installed solar energy capacity in rooftops to over 1.2 MWp in Chandigarh.

Punj Lloyd had earlier completed a 495 kWp and a 435 kWp SPV grid interactive multi-rooftop single point integration power plants in the government colleges of girls and boys, respectively.

Chandigarh was identified as the model solar city by the Ministry of New and Renewable Energy (MNRE) in its Solar City Programme. CREST is the nodal agency IT for executing solar projects in Chandigarh.

For the complete interview log on to www.infrastructuretoday.co.in March 2016 Infrastructure Today 67

/(*$/(6(

Insolvency and bankruptcy code: Resolving the NPA crisis The proposed code is a step in the right direction to bring about clarity in the legal framework and certainty and predictability in restructuring of debt and insolvency.

T

he one thing, which is commonly heard in the corridors of the financial world, is the looming concern as regards the huge NPA that banks are currently saddled with. Long drawn processes pertaining to insolvency has taken a toll on the credit realization in the country. The level of NPAs is alarming, unmanageable and stalling the growth of the credit market. This situation has arisen largely due to lack of robust legal and regulatory framework supporting a clear and cohesive action with respect to restructuring; debt recovery and security enforcement; and insolvency.

Timely resolution of these matters are essential for easy access to credit. Without a healthy credit market, Make in India may not be realised to its optimum. With an objective of an overhaul and providing the required impetus to the credit market, the task to draft a suitable legal framework was assigned last year to the Bankruptcy Law Reforms Committee (Committee) chaired by Dr. T K Viswanathan. The committee submitted its report in November 2015, along with an Insolvency and Bankruptcy Code. This proposed code was tabled before the Lok Sabha in the winter session.

EXISTING LEGAL FRAMEWORK Restructuring A revival and rehabilitation (R&R) of industrial corporates is required to be implemented under Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) by Board for Industrial and Financial Reconstruction (BIFR). A company can make reference for R&R under SICA, when it is deemed to be a sick company, i.e., the net worth of the company is entirely eroded. In connection with this reference, BIFR appoints an operating agency who presents an R&R scheme. The BIFR has power to either approve the R&R scheme or recommend winding up as per the Companies Act. Even before the industrial borrower becomes ‘sick’, the lenders can consider debt restructuring for any corporate under the mechanisms prescribed by Reserve Bank of India (RBI), namely, Corporate Debt Restructuring (CDR) and Joint Lenders Forums (JLF) mechanisms. More recently, the RBI has permitted the 68 Infrastructure Today March 2016

Stalled or delayed projects have put pressure on banks’ finances.

lenders to acquire control of the debtor at the discretion of the lenders under a new framework commonly known as Strategic Debt Restructuring (SDR).

Recovery of Debt and Security Enforcement The lenders can initiate recovery of their debt by approaching the Debt Recovery Tribunals (DRTs) under the Recovery of Debt Due to Banks and Financial Institutions Act, 1993 (DRT Act). Further, the secured creditors have been granted the right to enforce security without intervention of court under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). For any issue arising under the SARFAESI Act, the DRT is the forum for adjudication. However, the remedies under the DRT Act and the SARFAESI Act are only available to the banks and notified financial institutions.

Other creditors can only file civil suits in civil courts for recover of debt and enforcement of securities.

Winding up A liquidation/winding up of a company is governed by the Companies Act under the jurisdiction of the relevant High Court. A winding up petition under the Companies Act can be filed by any stakeholder for various reasons including debt default. www.InfrastructureToday.co.in

/(*$/(6( Issues with the Existing Legal Framework The separate laws and the existence of various judicial forums for considering matters of restructuring, debt recovery and winding up have given rise to multitude of issues. Two major issues being conflict of laws and multiplicity of proceedings result in undue delays in recovery and liquidation. While the banks and financial institutions initiate recovery under the DRT Act and the SARFAESI Act, other creditors file summary suits and winding up petitions. Also, certain earnest attempt of restructuring under BIFR, CDR and JLF get impacted if the debt recovery and winding up proceedings run in parallel.

The reasons of the conflicts between SICA and debt recovery laws stem from the objectives of these laws.

The primary objective of SICA is revival and rehabilitation of sick industrial companies. The DRT Act and the SARFAESI Act have been enacted with main objectives of assisting the lenders for expeditious recovery of debts and enforcement of security interest.

Section 22 of the SICA provides for moratorium on all legal proceedings. Thus, under SICA, the revival of sick company takes precedence over debt recovery rights of creditors. Similarly, Section 34 of the DRT Act gives overriding effect to it over other legislations.

Thus, the scheme of SICA and the scheme of the DRT Act and the SARFAESI Act work in opposite directions, often raising questions of interplay and giving rise to conflict. The interplay of these provisions came for adjudication recently in 2014 before the Supreme Court in KSL Industries vs. Arihant Threads Ltd . In this Supreme Court observed that in the event of conflict between overriding provision of Section 22 of the SICA which purports to make proceedings for recovery of the debt against the sick company untenable and Section 34 of the DRT Act, the provisions of SICA shall prevail. This was decided on the consideration that R&R efforts should take priority over the recovery of debts.

SICA provides moratorium on all other legal proceedings once the reference is accepted by BIFR. However, under second proviso to Section 15 of SICA, the reference to BIFR cannot be made if the secured creditors have initiated action under the SARFAESI Act. Further, under third proviso to Section 15 of SICA, the reference which is pending can be abated if 75% of the secured creditors resolve so to initiate action under the SARFAESI Act. It is to be noted that there is no specific requirement of approval of 75% of the secured creditors under the said second proviso of Section 15.

However, in Asset Reconstruction Co. India P. Ltd vs.

Shamken Spinners Ltd , the Delhi High went a step further to interpret that the approval of 75% of the secured creditors will also apply if the reference to BIFR is to be prevented under the second proviso. www.InfrastructureToday.co.in

While, both DRT Act and the SARFAESI Act have been enacted to provide debt recovery rights to the lenders, the issues have arisen if two proceedings can be carried on simultaneously or if withdrawal of proceedings under the DRT Act is a condition precedent to taking recourse under the SARFAESI Act. While considering this issues, in Digivision Electronics Ltd. vs. Indian Bank , the Madras High Court held that as per Section 19 (1) of the DRT Act, the secured creditor is required to withdraw application pending before DRT to initiate action under the SARFAESI Act. However, in Transcore vs. Union of India , the Supreme Court took the opposite view holding that ‘the remedies of enforcement of security interest under the SARFAESI Act and the DRT Act are complementary to each other and there is no inherent or implied inconsistency between these two remedies. Therefore, the doctrine of election of one proceeding over another has no application in this case.’

Whilst the informal restructuring under CDR, JLF and SDR finds support from the RBI as the same is implemented as per the guidelines prescribed by RBI, the success of the same often becomes difficult in scenarios where legal proceedings for debt recovery and winding up are initiated by other stakeholders including non-participating lenders.

It can thus be said that the restructuring exercise and recovery of debts including insolvency proceedings are required to be dealt holistically. The separate laws and legal forums give rise to friction between these proceedings, which promotes obstructionism by parties with vested interest and lead to undue delays in implementation. Further, availability of multiple remedies for different stakeholders give rise to multiplicity of proceedings, where one proceeding tend to work against another proceeding i.e. winding up and debt recovery. In an attempt to deal with these issues, it is proposed to replace the existing formal restructuring and insolvency framework with the Proposed Code.

PROPOSED INSOLVENCY AND BANKRUPTCY CODE The entire foundation of the Proposed Code is on two pillars i.e. insolvency resolution process (IRP) and liquidation process. IRP refers to an attempt at restructuring of debt where the creditors and debtor negotiate the possibility of restructuring of debt and viability of the debtor’s business as going concern.

IT Ajay Shaw is a Partner while Ashish Pahariya is a Manager with DSK Legal, Advocates and Solicitors.

The views expressed in this article are their own.

Authors can be reached at ajay.shaw@dsklegal.com and ashish.pahariya@dsklegal.com.

For the complete article log on to www.infrastructuretoday.co.in March 2016 Infrastructure Today 69

(9(17 5(3257 MAKE IN INDIA

Exhibition extravaganza 7KH ¿UVW 0DNH ,Q ,QGLD :HHN ZDV KHOG LQ 0XPEDL DQG ZDV WKH ELJJHVW HYHU VKRZ RI WKH FRXQWU\¶V PDQXIDFWXULQJ SURZHVV

W

ith a business commitment of `15.20 lakh crore in investments, the Make In India Week in Mumbai was the biggest and grandest event of its kind in India. “It has been a phenomenal hit.

It has successfully brought manufacturing, design and innovation to the centre-stage” Amitabh Kant, Secretary, Department of Industrial Policy & Promotion, said.

Maharashtra Chief Minister Devendra Fadnavis said his state was successful in attracting investments worth `8 lakh crore across sectors. He said a task force is being set up, headed by the state’s Industry Minister to ensure that MoUs signed are translated into actual investments.

Policies/initiatives unveiled `2,200 crore Electronics Development Fund unveiled by Shri Ravi Shankar Prasad to finance innovation, R&D in electronics manufacturing National Capital Goods Policy unveiled by Heavy Industries Minister Shri Anant Geete, aimed at creating an ecosystem for a globally competitive capital goods sector Investment opportunities in food processing by Ms. Harsimrat Kaur Badal E-toll policy covering 360 toll plazas on the national highways across India

70 Infrastructure Today March 2016

FACTS AT A GLANCE More than 8 lakh people visited the Make In India Expo and other events, of which 49,743 were registered delegates. 102 countries were represented in the mega expo. A total of 150 events were organised under the Make In India Week banner. More than 25,000 people participated in seminars and symposia, where over 1,200 experts from various walks of life spoke on wide-ranging issues concerning business and society. These included ministers, chief ministers, policy-makers, industrialists, academicians and spiritual gurus.

The Make In India Expo was spread over 23 lakh sqft of area, housed under air-conditioned hangers in 27 halls. A total of 215 exhibitors show-cased their strengths and opportunities in 11 sectors covering aerospace & defence, automotive, chemicals & petrochemicals, construction machinery, food processing, infrastructure, IT & electronics, industrial equipment & machinery, MSME, pharmaceuticals and textiles. There were 17 Indian states with their pavilions in the Make In India Centre. The Make In India Week provided a platform for nearly 8,200 business-to-business, business-toGovernment and Government-to-Government meetings. www.InfrastructureToday.co.in

(9(17 5(3257 Key deals concluded at MIIW

PARTICIPATION Key government delegates during the week included Stefan Lofven, Prime Minister of Sweden, Juha Sipila, Prime Minister of Poland, Piotr Glinski, First Deputy Prime Minister of Poland, Yosuke Takagi, Minister of Economy, Trade & Industry, Japan, Cesar Fergozo, Minister of Asia and Middle East, Mexico, Ignasius Jonan, Transportation Minister of Indonesia and Som Prasad Pandey, Industry Minister of Japan.

Union Ministers who participated in the Make In India Week that was inaugurated by Prime Minister

State specific policies The Maharashtra government unveiled five new policies: 1 41. Maharashtra Retail Policy 2. Single Window Policy 3. Maharashtra Maritime Industries Policy 4. Electronics Policy covering FAB manufacturing 5. Special package for SC/ST entrepreneurs Odisha Industrial Development Plan 2025, Jharkhand Industrial Promotion Policy 2016 were also unveiled during the week.

www.InfrastructureToday.co.in

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of the Maharashtra Government Â&#x2021; 6RODU ,QGXVWULHV DQG *RYHUQPHQW RI 0DKDUDVKWUD WR VHW XS SODQW LQ Nagpur for manufacturing of ammunition for armed forces

Narendra Modi included: Arun Jaitley, Manohar Parrikar, Nitin Gadkari, Ravi Shankar Prasad, Kalraj Mishra, Nirmala Sitharaman, Piyush Goyal, Dharmendra Pradhan, Anant Geete, Santosh Kumar Gangwar, Harsimrat Kaur Badal and Col Rajyavardhan Rathore.

Key Indian CEOs who were present included Ratan Tata, Cyrus Mistry, Mukesh Ambani, Kumar Mangalam Birla, Anand Mahindra, Gautam Adani, Sajjan Jindal, GV Sanjay Reddy, Ajay Piramal and YC Deveshwar, among a host of others.

Key foreign CEOs who attended the MIIW included John Chambers of CISCO Systems, Markus Wallenberg of SEB, (Sweden), Doug DeVos of Amway, Hakan Bushke of SAAB, Sweden, Edward Monser IV of Emerson, USA, Mats H Olsson of Ericsson and Karol IT Zarajczyk of Ursus, Poland.

March 2016 Infrastructure Today 71

(9(17 5(3257

The event kicked off in Mumbai in the wake of the government’s DQQRXQFHPHQW RI WKH ¿ UVW FLWLHV VHOHFWHG IRU WKH 6PDUW &LWLHV 0LVVLRQ

Launching the India Readiness Guide. (L-R): Philip Bane, Executive Director, US Smart Cities Council; Leocadia Zak, Director, United States Trade and Development Agency (USTDA); Bruce Andrews, Deputy Secretary, US Department of Commerce; Pratap Padode, Founder & Director, Smart Cities Council India; Sumit Banerjee, Chairman, ASAPP Info Global Group.

I

t was a day-long event that witnessed participation from over 70 distinguished speakers and a highpowered, 50-member Smart Cities Trade Mission led

by Bruce Andrews, Deputy Secretary, US Department of Commerce. More than 40 mayors, commissioners and urban officials from India interacted with over 300 delegates who attended the event. Parallel B2B sessions ensured a productive outcome for both participants and local government officials interested in adopting innovative technologies for their respective cities.

The proceedings began with Pratap Padode, Founder & Director, Smart Cities Council India, laying emphasis on “the mandatory engagement of citizens” as a key element of the smart cities mission.

While Bruce Andrews was in India to help facilitate business partnerships between both countries, in his special address he encouraged delegates to interact with the 18 US companies present at the event. He said that the US was pleased with the recommendations of the Kelkar Committee report and looked forward to its implementation. He also highlighted the importance of protecting intellectual property rights and exhorted India to deepen its capital markets.

Further, Philip Bane, Executive Director, US Smart Cities Council, highlighted the work of the council and launched the India Readiness Guide along with Padode and a host of other dignitaries on stage.

72 Infrastructure Today March 2016

Leocadia Zak, Director, United States Trade and Development Agency (USTDA), highlighted the work done by the trade body and averred that the US has the best solutions for India’s smart city projects.

Praveen Pardeshi, Principal Secretary, Government of Maharashtra, said the private sector and government need to deliberate upon the matter and restructure certain areas.

Renato de Castro, an international expert on smart cities and Executive Director, Baumann Consultancy Network (Italy), laid stress on the importance of technology and collaboration. He picked out Singapore and St Louis as the best examples of smart cities and Rio de Janeiro for smart mobility.

A panel on ‘Financing for Smart Cities’ discussed the need for projects to be bankable to ensure the economic viability of infrastructure projects.

Nevertheless, the panel accepted that the special purpose vehicle (SPV) structure envisaged for the smart cities inspires confidence. It saw the need for a new set of investors for long-term infra projects.

During the discussion on ‘Overcoming Challenges in Implementing Smart Cities Solutions in India’, the panellists suggested key points that could be considered while implementing smart city projects. One was the need for a level playing field and proper ecosystem pattern while implementing a smart city. Notably, the www.InfrastructureToday.co.in

(9(17 5(3257 panellists agreed that the government must curb regulatory procedures to make India smart. They also felt the need for financial sustainability and innovative revenue models while advocating utilisation of infrastructure. The session underlined the engagement of civilians is a must for the success of smart cities.

In the session, ‘Technological Challenges’, the panellists unanimously agreed upon the use of best technology available, but with a domestic flavour to it.

Meanwhile, the session was divided among two groups; while one faction was eager to imply standardised technologies, another preferred regularisation. The tech wizards also felt the need for technology-based infrastructure, a global mantra these days.

In the session on ‘Changes in Our City Governance to Enable Better Implementation of Smart Cities’, the panellists agreed upon citizen participation in decisionmaking, transparency in governance, procurement process and performance measurement. They laid emphasis on educating government officials for successful smart city proposals and suggested government leaders need to know about ethical governance, partnerships and safeguarding the environment.

The session on ‘Rethinking Mobility’ discussed the designing of BRTS, smart parking for growing parking congestion, car pooling and transport planning. It was recommended that the government rethink the age-old Motor Act, owing to which innovations such as car pooling have not been successful.

The session ‘Innovation Showcase’ focused on studying how to convert urban challenges into opportunities. Innovations in smart energy, mobility, healthcare and waste management were discussed.

It was agreed that innovation coupled with entrepreneurship has developed places like Silicon Valley, but the concept of smart cities needs even further study. Water harvesting and renewable energy were discussed at great length.

The session on ‘Water Management’ deliberated upon drinking water for all and harvesting rainwater.

The panellists agreed a holistic approach is required.

Further, for better analytics, electricity, water and gas demand or supply would be important parameters of a smart meter. They analysed why certain cities grow and others are left behind. They saw employment, personal wealth and tax structure as primary reasons for a city to proceed on the path to development.

The session ‘Energy Efficiency’ focused on LED, smart street lighting, integrated BMS, renewable energy and energy storage. The panel pointed to energy as a key factor in the ‘smart’ mix. They urged on the need to eliminate fossil fuels to generate electricity and reduce T&D losses by smart monitoring. They also emphasised upon the need to analyse the pattern of electricity consumption to make storage more efficient, and for www.InfrastructureToday.co.in

buildings under construction to ensure zero wastage of energy by using proper insulation and natural lighting.

The session ‘Smart Planning for Cities’ focused on preparing master plans, including smart yet sustainable elements in planning, and greenfield vs brownfield development. The panellists shared that a smart, sustainable city should bring together natural environment, services, and soft and hard infrastructure. They laid emphasis on the need for urban planning solutions to be area-specific and threw light on issues such as space for hawkers and parking, which need to be addressed in urban planning.

They also suggested three things to be kept in mind in master planning: Demand facility, transit-oriented facility and financial planning. It was agreed that quality of life and business need to go together for a smart city.

Session: Overcoming Challenges in Implementing Smart Cities Solutions in India.

(L-R): Jagdish Salgaonkar, Sr Vice President, AECOM; Guy Perry, President-Cities and Strategies, Essel Infraprojects; Aamer Azeemi, Managing Director, CISCO (Moderator); Sanjay Bhatia, Managing Director & Vice Chairman, CIDCO; Ashish Mathur, Managing Director, JUSCO.

The session ‘Building Safe and Resilient Cities’ deliberated on developing city resilience from natural disasters and new technologies and techniques available to better security management. The panel pointed to the use of IT and technologies for smart cities as the next level. In discussion, the need for another approach to address security was raised and disaster management where people need to be evacuated urgently. It was added that for safe cities, prediction, prevention and proactive play are required.

The session ‘Ambition Zero Waste’ focused on waste management technology and the government’s mission vs public response. It started with stats on municipal waste generated and treated. As the panellists pointed out, landfills have become land hills owing to waste.

They highlighted the need for a regulatory framework to gather the lifecycle of various waste products and ascertain how much of it can be recycled. Considering India will generate 10 million metric tonne by 2020, the T3 model of transport, training and technology was suggested for developing waste. The need for an army of waste managers and a systematic chain of waste management for smart cities was noted.

It was an enriching day with power-packed sessions, discussions and a platform for universal networking. IT March 2016 Infrastructure Today 73

,1)5$ ),1$1&( FINANCE TRACKER INFRA FUNDS TRACKER AS ON FEBRUARY 29, 2016

Scheme / Index

NAV value

Point-to-point Returns (%) 3 6 1 3 months months year years -17.27 -18.75 -23.91 8.11 -11.88 -11.43 -16.45 11.71 -17.29 -16.50 -22.13 13.55 -16.81 -16.25 -20.78 9.10 -16.92 -13.77 -19.17 14.15 -19.06 -18.53 -22.25 10.49 -7.61 -4.46 -11.51 10.84 -13.22 -8.91 -20.21 9.73 -16.40 -14.47 -16.69 22.98 -18.37 -23.06 -31.50 -0.13

5 years 0.67 5.98 6.88 2.32 8.44 5.84 4.24 -3.66 17.46 -3.99

Baroda Pioneer Infrastructure Fund Birla Sun Life India Reforms Fund Birla Sun Life Infrastructure Fund BOI AXA Manufacturing & Infrastructure Fund Canara Robeco Infrastructure DSP BlackRock India T.I.G.E.R. Fund DSP BlackRock Natural Resources and New Energy Fund Escorts Infrastructure Fund Franklin Build India Fund Goldman Sachs Infrastructure Exchange Traded Scheme (GS Infra BeEs) HDFC Infrastructure Fund

9.10 12.09 21.15 9.95 31.38 55.75 16.29 5.85 24.24 228.86

1 month -9.81 -7.29 -9.92 -10.36 -12.00 -11.82 -7.96 -9.44 -6.67 -6.59

12.05

-15.01

-26.07

-22.01

-30.28

8.08

2.04

HSBC Infrastructure Equity Fund ICICI Prudential Infrastructure Fund IDFC Infrastructure Fund JM Basic Fund Kotak Infrastructure and Economic Reform Fund L&T Infrastructure Fund LIC NOMURA MF Infrastructure Fund Reliance Diversified Power Sector Fund

13.92 31.38 9.16 17.33 13.21 8.75 9.23 60.74

-12.60 -12.32 -12.78 -10.47 -5.47 -12.59 -10.73 -12.59

-20.23 -21.53 -18.37 -16.83 -10.94 -19.35 -19.30 -18.24

-22.73 -21.94 -20.66 -17.68 -11.79 -18.15 -19.57 -15.42

-26.73 -27.96 -22.00 -19.54 -15.34 -21.67 -26.96 -21.16

8.95 7.55 4.71 11.04 17.85 14.28 6.12 6.18

5.11 2.49 NA 6.04 9.22 5.80 1.61 -1.75

Religare Invesco Infrastructure Fund Sahara Infrastructure Fund - Fixed Pricing Sahara Power & Natural Resources Fund SBI Infrastructure Fund Sundaram Infrastructure Advantage Fund Tata Infrastructure Fund

11.11 15.32 12.35 9.51 20.66 34.97

-10.48 -11.89 -10.59 -7.96 -12.76 -10.53

-15.19 -16.96 -14.25 -14.92 -18.18 -17.55

-16.40 -17.53 -13.09 -14.32 -17.52 -16.62

-24.16 -19.49 -19.78 -18.18 -20.79 -21.92

16.91 6.40 5.54 8.27 10.20 9.43

7.91 1.79 1.17 1.66 -0.49 2.77

Tata Infrastructure Tax Saving Fund

16.46

-10.31

-17.02

-17.17

-23.05

7.78

2.14

Taurus Infrastructure Fund

14.13

-10.80

-17.13

-18.93

-25.55

7.10

2.24

UTI Infrastructure Fund

32.24

-11.07

-21.66

-23.38

-27.82

5.66

1.09

-10.46

-17.09

-16.82

-22.03

9.74

3.52

Nifty Infrastructure

-6.73

-18.41

-23.42

-32.03

-0.56

-4.25

Nifty 50

-7.62

-11.95

-12.35

-21.00

7.06

5.54

Category Average Benchmark Index

Note: Returns for one year and below are absolute, while above one year are annualised.

Highlighted cells signify the top gaining scheme in the respective time period.

ANALYSIS

Powered by:

Infra funds recorded strong performance vis-Ă -vis their category and market benchmarks - the Nifty Infrastructure and the Nifty 50, respectively, over last three years. However, performance was weaker over the one-month, three-month, six-month, one-year and five-year time frames, and against the market benchmark, 74 Infrastructure Today March 2016

www.InfrastructureToday.co.in

,1)5$ ),1$1&( even as they outdid the category benchmark (except for the onemonth period).

Within funds, the Kotak Infrastructure and Economic Reform Fund topped the one-month time-frame with negative returns of 5.47%, while DSP BlackRock Natural Resources and New Energy Fund topped the three-month, six-month and one-year time-frames, with -7.61%, -4.46% and -11.51% returns, respectively. The Franklin Build India Fund continued to top the three-year (22.98%) and five-year periods (17.46%).

INDUSTRY INDICES

Month

Open

High

Indices: BANKEX

Feb 16 Mar 16

17,639.41 15,921.52

17,674.87 17,611.42

11,201.02 10,296.96

11,332.22 11,079.24

Indices: BSEIT

Feb 16 Mar 16

Close

15,224.26 15,814.82 15,921.52 17,485.69 10,044.59 10,229.49 10,257.73 10,979.19

For the period: Feb 16 to Mar 16

12,511.46 11,309.73

12,728.83 12,412.64

10,934.89 11,239.38 11,269.84 12,301.58 Source: BSE

TOP GAINERS IN LAST 30 DAYS

Ticker Vakrangee Eichermotors Apollo Tyres United Spiri Bank of Baroda JSW Steel Bharti Airte MARICO Procter & Gmbl Finolex cable

Source: kitco.com

For the period: Feb 16 to Mar 16

Indices: BSECG

Feb 16 Mar 16

Low

For the period: Feb 16 to Mar 16

Price (Rs) Chng. 52 Week 52 Week 1/3/16 (%) (High) (Low) 213.5 11.48 216 86.55 18894.8 10.77 21618.3 13930 157.9 9.53 223.3 127.95 2650.8 8.09 4080 2232 132 7.97 216.25 109.45 1125.15 7.07 1145.4 801 316.75 6.82 452.45 282.3 236.85 4.94 246 177.08 5786.6 4.76 7435 5171 237.7 4.04 306.4 201

RUPEE CROSS RATES Currency

Offer 1 Month Ago (on 29th February)

% change Since then

USD-INR

68.62

67.67

1.374606506

EUR-INR

75.08

73.41

2.221775289

GBP-INR

95.20

96.51

-1.383540376

BSE SENSEX MOVEMENT LAST MONTH

TOP LOSERS IN LAST 30 DAYS

Ticker Wockhardt Ltd COX & Kings BHEL Shipping Corp ARROW Web Sadbhav Eng UNITECH Oriental Bank Monsanto Suzlon

Price (Rs) 1/3/16 761.05 147.1 91.1 55.55 49.6 208.75 3.91 76.65 1582.05 13.5

Chng. 52 Week 52 Week (%) (High) (Low) -38.9 2000 706.35 -36.47 341 140.5 -35.13 289.85 90.4 -34.49 100.9 43.85 -32.6 97.2 49 -32.22 385 198.45 -29.8 21.45 3.43 -29.51 265 75.3 -28.86 3510 1566.25 -27.41 31.35 12.8

BSE SENSEX MOVEMENT IN LAST ONE YEAR

Source: Religare Technova Global Solution

IT 76 Infrastructure Today March 2016

www.InfrastructureToday.co.in

&20081,&$7,21 )($785(

AAI ranked among the best: ACI Itâ&#x20AC;&#x2122;s not just India that is drawing the attention of the world but Indiaâ&#x20AC;&#x2122;s airports are also ranked among the best globally.

Lucknow Airport was rated as the second best airport in the 2 to 5 mln passengers per annum category.

Trivandrum Airport was ranked as the fifth best airport in the 2 to 5 mln passengers per annum category.

T

he Airport Authority of Indiaâ&#x20AC;&#x2122;s (AAI) persistent efforts to improve the services and passenger facilities at its airports have placed AAI amongst the best service provider in the world. AAIâ&#x20AC;&#x2122;s four airports are DPRQJVW WKH WRS ÂżYH DLUSRUWV LQ WKH category of 2 to 5 million passengers per annum across the world.

Based on the results of the survey carried out by the Airports Council ,QWHUQDWLRQDO D JOREDO QRQ SURÂżW organization of airport operators) on airport service quality (ASQ), Jaipur Airport was rated as the worldâ&#x20AC;&#x2122;s No 1 airport. This was in the category of Srinagar Airport was rated as the second best airport in the world in the upto 2 million 2 to 5 mln passengers per annum. passengers category.

Lucknow Airport was rated as the second best airport in the same category.

Further, Jaipur Airport has also been rated as the EHVW DLUSRUW E\ UHJLRQV DQG VL]H LQ WKH $VLD 3DFLÂżF region in the category of 2 to 5 million passengers per annum. AAIâ&#x20AC;&#x2122;s Goa and Trivandrum airports are DW IRXUWK DQG ÂżIWK SRVLWLRQV LQ WKH VDPH FDWHJRU\ ,Q WKH up to 2 million passengers per annum category, AAIâ&#x20AC;&#x2122;s Srinagar airport was rated as the second best airport in the world.

All the 11 airports that ACIâ&#x20AC;&#x2122;s ASQ surveyed are Jaipur Airport has been rated as the best airport in the category of 2 to 5 million passengers.

www.InfrastructureToday.co.in

rated above the world average, i.e. 4.13 on a scale of 5.

March 2016 Infrastructure Today 77

&20081,&$7,21 )($785(

Robbins EPB surmounts Chennai Metro Challenges Recent breakthrough marks triumph over mixed ground conditions.

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The News In Brief Ć&#x201D; Breaking through on January 27, 2016, the Robbins EPB at Line 1 of the Chennai Metro overcame a gamut of challenges including difficult mixed ground Ć&#x201D; Contractor Afcons Infrastructure Ltd. And Robbins Field Service worked together to improve cutter life in hard granite rock up to 150 MPa (21,700 psi) UCS Ć&#x201D; Robbins India hired a geologist to map ground ahead of the TBM, providing a clear picture during tunneling, and also for the second tunnel drive Ć&#x201D; Despite continued difficult geology on the second drive, the experienced crew was able to achieve up to 12.6 m (41 ft) in one day and 62 m (203 ft) in one week

78 Infrastructure Today March 2016

The 6.65 m diameter Robbins EPB was designed to excavate granite, sand, silt, and clay with boulders up to 300 mm in diameter.

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SN Subrahmanyan, Deputy MD & President, L&T...62

FIRST

FEATURE Ă&#x2022;LĂ&#x20AC;Â&#x2C6;V>Ă&#x152;Â&#x2C6;Â&#x2DC;}Ă&#x160;Â&#x153;Â&#x2C6;Â?Ă&#x160;Ă&#x203A;Â&#x2C6;Ă&#x192;VÂ&#x153;Ă&#x192;Â&#x2C6;Ă&#x152;Ă&#x17E;Ă&#x160;Ă&#x152;Ă&#x20AC;iÂ&#x2DC;`Â&#x2C6;Â&#x2DC;}

Chennai Challenge...92

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Opportunities in Ports & Port Construction...96

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Optimism in Roads & Highways...72

TECHNOLOGY VÂ&#x153;Â&#x2021;vĂ&#x20AC;Â&#x2C6;iÂ&#x2DC;`Â?Ă&#x17E;Ă&#x160;Ă&#x192;Â&#x153;Â?Ă&#x2022;Ă&#x152;Â&#x2C6;Â&#x153;Â&#x2DC;Ă&#x192;Ă&#x160; Â&#x153;Ă&#x20AC;Ă&#x160;Â&#x2DC;ii`Ă&#x160;Â&#x153;vĂ&#x160;Ă&#x152;Â&#x2026;iĂ&#x160;Â&#x2026;Â&#x153;Ă&#x2022;Ă&#x20AC;

Managing Construction Waste As cities are getting choked by huge levels of C&D waste, it is time for city corporations to take immediate action, developers and contractors to get more responsible, and a legal mandate to be imposed to manage, recycle and reuse this waste....44

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7(1'(56 Roads/Road Over Bridge/ Bridges/ Flyovers/ Highways

1 | Central Railway Details: Tenders are invited for construction of minor bridges earth work in formation, side drains & toe/retaining wall between km. 950.35 (Darimeta -Narkher section) to km. 981.25 (Katol station excluding) for 3* line between Itarsi-Nagpur section.

Submission Date: 30/03/2016 | Location: Mumbai, Maharashtra | Tender Value (`): 323955 Contact: Chief Engineer, 6th Floor, New Admministrative Building, D. N. Road, CST. Mumbai-400001 Maharashtra. T: 022-22620963 2 | Ministry of External Affairs Details: 7HQGHUV DUH LQYLWHG IRU FRQVWUXFWLRQ RI WZR ODQH URDG RQ 1+ VSHFLÂżFDWLRQV IURP 3DOHWZD WR ,QGLDQ Myanmar border (zorinpui) from km 0.00 to km 109.2 in chin state of Myanmar.

Submission Date: 30/05/2016 | Location: Delhi, Delhi | Tender Value (`): 15829900000 Contact: Ircon Infrastructure & Services Ltd, C-4, District Centre, Saket, New Delhi-110017, Delhi.

T: 011-29565751, info@irconisl.com _ 6RXWK (DVWHUQ &RDOÂżHOGV /WG Details: Tenders are invited for Improvement of goods shed road at Bhatapara station.

Submission Date: 31/03/2016 | Location: Chhattisgarh, Bhatapara | Tender Value (`): 4361693 Contact: 2IÂżFH RI WKH 6U 'LYO (QJLQHHU &R 2UGLQDWLRQ 6RXWK (DVW &HQWUDO 5DLOZD\ 5DLSXU &KKDWWLVJDUK M: 09752877200, F: 0771-2252220, srden@r.rainet.gov.in 4 | National Highway Authority of India Details: 7HQGHUV DUH LQYLWHG IRU VL[ ODQH RI JUHHQÂżHOG SURSRVHG XGDLSXU E\SDVV FRQQHFWLRQ EHWZHHQ 1+ at existing km 118+500 at Debarito nh-8 km 287+400 at Kaya village (Udaipur bypass- length 23.883)] on hybrid annuity mode, package-iv of Kishangarh-Udaipur-Ahmedabad stretch under nhdp phase v in the state of Rajasthan.

Submission Date: 31/03/2016 | Location: Ahmedabad, Rajasthan Contact: G 5 & 6.Sector 10. Dwarka, New Delhi-110075, Delhi.

T: 011-25074100, 2507400, F: 25093507, 25093514

Airport

5 | Airports Authority Of India Details: Tenders are invited for construction of ATC tower and technical block ar NSCBI airport.

Submission Date: 28/03/2016 | Location: Rangpuri, New Delhi | Tender Value (`): 3060000000 Contact: Rangpuri, New Delhi-110037-Delhi. T: 011-26892589 6 | DEFENCE PSUS Details: Tenders are invited for provision of concrete turning pad, runway end safety area and concrete surfaces DW ,QV 8WNURVK 3RUWEODLU &RPSOHWLRQ 3HULRG 'D\V Submission Date: 26/03/2016 | Location: 3RUW %ODLU $QGDPDQ 1LFREDU ,VODQG _ Tender Value (`): 1050000000 Contact: &KLHI (QJLQHHU $Q =RQH 0LOLWDU\ (QJLQHHU 6HUYLFHV %LUFKJXQM -XQJOLJKDW 3RUW %ODLU Andaman & Nicobar Islands. T: 0319-2286837, F: 2286418, geaengr@gmail.com 7 | Metro Railway Details: Tenders are invited for execution of works for construction of single block (G+2) frame structure operational & catering building for air india limited at NSCB Airport kolkata against relocation and allied works in connection with extension of metro railway from Noapara to Barasat via Bimanbandar.

Submission Date: 29/03/2016 | Location: Kolkata, West Bengal Contact: Con, Metro Railway, Metro Rail, Bhavan, 8th Floor, 33/1, J. L. Nehru Road, Kolkata-700071, West Bengal. T: 033-22267569 IT

82 Infrastructure Today March 2016

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