Vaibhav Dange Advisor – NHAI Morth- Govt
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INDIAN HIGHWAY SECTOR Vaibhav Dange Advisor – NHAI MoRTH- Govt. of India NATIONAL`` HIGHWAYS : OVERVIEW National Highways length 2nd Largest road network with 5.23 Mn Kms ~135,000 National Highways 2.5% of road network, carry 40% traffic KMS 65% of freight and 80% passenger traffic Top Recipient of PPP funding in 2010-18 # 1 in PPP Operational Maturity (ADB Infrascope 2014) 1 By- Vaibhav Dange `` GROWTH DRIVERS 14% of GDP Logistics cost 14% of India’s GDP, 6% higher than other developing countries. 127% inCrEasE in Govt. BudgEt for Roads Allocated budget for Roads increased to $61.3 Bn in 2019 4 Mn passEngEr car markEt by 2020 India passenger market to go up to 4Mn by 2020 from 1.47 Mn in 2014. 15% Road frEight CAGR Expected Road freight CAGR over next 10 years – 15% NHIDCL establishEd For Border and tough terrain road development 2 NHAI Historical Performance in Highway Construction & Investment `` Construction (km) Investment (in ‘ooo Cr) 3,389 3,071 Public Sector Investment 2,628 Private Sector Investment 1,988 1,501 94.7 83.2 42.7 48.9 23.8 17.3 27.4 15.5 16.4 21.6 2014-15 2015-16 2016-17 2017-18 2018-19 2014-15 2015-16 2016-17 2017-18 2018-19 • Highway construction per year has increased steadily and has • Investment in Highway construction increased by more than doubled in the last 5 years 2.5 times in the last 5 years (CAGR of approx. 22%) At current pace of awards and completion, as well as return of BOT (Toll) packages on concession completion, NHAI expected to have over 52,000 km of highways under toll operations by 2024-25 3 3 Key NHAI initiatives for highways sector in India `` Premium Deferment Restructuring of Premiums committed by 100% equity Divestment Concessionaire; allowed once through the lifetime of the project. 100% equity divestment after two Securitization of BOT Projects years of construction completion for all BOT projects, irrespective of Concessionaire can raise year of award subordinate debt on the strength of future cash flow surplus from BOT Projects Stuck Projects One time Fund Infusion Focused and accelerated Financial assistance in the form of intervention on various fronts loan by NHAI to revive the such as RoW, loan support, languishing national highway projects More Efficient Arbitration change in sponsor etc. helped revive over 50 stalled projects Establishment of SAROD for dedicated and fast movement on any disputes. 4 4 NHAI executed some of the largest PPP projects in `` the world Vadodara - Mahapura - Bharuch Pkg - I Kishangarh (6L) (6L) ~644 cr ~660 cr Ahmedabad - Vivekananda Vadodara Bridge and ~2125 cr Approach Road ~641 cr 2003 2006 2008 2013 2017 2001 2005 2007 2009 2015 Hyderabad – Satara – Kagal Vijayawada ~600 cr ~1740 cr Nellore - Tada Delhi - Gurgaon Section (Access Chenani- (AP-7) Controlled 8/6L) Nashri ~621 cr ~710 cr ~2500 cr 5 OPPORTUNITIES`` ACOSS SPECTRUM Bharatmala 44,000 km Setu Bharatam Opportunity $100 billion 350 ROBs Char Dham Connectivity $150 $8 billion Economic Billion 900 kms corridors 5 Years $ 1.7 billion Logistics parks $22 billion Urban & Bridges & Industrial Greenfield Brownfield Expressways Intercity Roads Tunnels Corridors 6 By- Vaibhav Dange Implementation`` Strategy Design Civil Consultants Contractors/ to prepare Detailed Concessionaires Project Reports to execute the works NHAI Supervision Consultants/ Independent Engineers to supervise the works NHAI outsources the services required for development and management of NHs through global competitive bidding process 7 MODES`` OF PARTICIPATION Engineering, Procurement BOT –Toll BOT – Annuity Hybrid Annuity Model & Construction (EPC) Model DBFOT DBFOT DBFOT DBT Government Support None None 40% support None Toll Collection Investor Government Government Government O&M Investor Investor Investor Government Available for asset recycling post construction 8 By- Vaibhav Dange MODES`` OF PARTICIPATION Engineering, Procurement BOT –Toll BOT – Annuity Hybrid Annuity Model & Construction (EPC) Model DBFOT DBFOT DBFOT DBT Government Support None None 40% support None Toll Collection Investor Government Government Government O&M Investor Investor Investor Government Available for asset recycling post construction 9 By- Vaibhav Dange Model`` Concession Agreement OBJECTIVES Attract private investment Allocation of risks to the party that is best placed to handle it Greater clarity in defining rights and obligations of the parties Reduction in scope of disputes 10 10 Model`` Concession Agreement SALIENT FEATURES (1/2) Grant / Premium Revenue Shortfall loan Partial sharing of traffic risk Capacity Augmentation 11 Model`` Concession Agreement SALIENT FEATURES (2/2) Change of Scope Change in Law Termination Force Majeure 12 Pros and cons of various models `` Comparative EPC BOT (Toll) BOT (Annuity) Hybrid Annuity Analysis Private Budget outlay for Budget outlay investment for up to 40% & Private Investment (Govt. construction cost balance is investment investment) & deferred deferred payments payments Included for 4 O&M Included Included Included years only Tolling Authority Concessionaire Authority Authority Role of Up to 42% of None Major Substantial lenders project cost Ease of Comparatively Requires Requires Requires constant contract simple & easy to constant constant monitoring management administer monitoring monitoring 13 `` Bharatmala: Marquee Highway Development Program Coastal & Border Roads National Corridors efficiency enhancement Economic Corridors program (NCEEP) $150+ Billion Expressways with Setu Bharatam Sagarmala BRT Other National Highways 14 `` Economic Corridors Aggregate length of 25,000 kms Investment of approx. 150 BillionUSD. 40% of freight carried on NH network. To be developed with an integrated ‘corridor development’ approach 15 Initiatives`` launched Safety Engineering / e-Tendering Green Highways Black Spot Removal Advanced Constr. Emergency Landing Electronic Tolling Technologies Facility Advanced Traffic Spatial and LiDAR Way-side amenities Management Technology System (ATMS) Road Asset Use of Management User apps waste materials System (RAMS) 16 `` THANK YOU 17.