449 infrastructure projects show cost overruns worth Rs 4.29 lakh crore

Source: The Economic Times, Mar 21, 2021

As many as 449 infrastructure projects, each worth Rs 150 crore or more, have been hit by cost overruns totalling more than Rs 4.29 lakh crore, according to a report. The Ministry of Statistics and Programme Implementation monitors infrastructure projects worth Rs 150 crore and above.

Of the 1,736 such projects, 449 reported cost overruns and 547 were delayed.

“Total original cost of implementation of the 1,736 projects was Rs 22,32,019.72 crore and their anticipated completion cost is likely to be Rs 26,61,205.74 crore,” the ministry’s latest report for February 2021 said.

According to the report, the cost overrun for completing these 449 projects works out to be Rs 4,29,186.02 crore.

The expenditure incurred on these projects till February 2021 is Rs 12,78,270.71 crore, which is 48.03 per cent of the anticipated cost of the projects.

However, the report said the number of delayed projects decreases to 409 if delay is calculated on the basis of latest schedule of completion.
Further, for 930 projects neither the year of commissioning nor the tentative gestation period has been reported.

Out of 547 delayed projects, 109 projects have overall delay in the range of 1-12 months, 132 projects have delay of 13-24 months, 187 projects reflect delay in the range of 25-60 months and 119 projects show delays of 61 months and above.

The average time overrun in these 547 delayed projects is 44.59 months.

Reasons for time overruns as reported by various project implementing agencies include delay in land acquisition, delay in obtaining forest and environment clearances, and lack of infrastructure support and linkages.

Delay in tie-up for project financing, delay in finalisation of detailed engineering, change in scope, delay in tendering, ordering and equipment supply, and law and order problems, among others, are the other reasons, the report said.

The report also cited ‘state-wise lockdown due to COVID-19‘ as a reason for delay in implementation of these projects.

It has also been observed that project agencies are not reporting revised cost estimates and commissioning schedules for many projects, which suggests that time/cost overrun figures are underreported, it added.

To fund infra, Cabinet clears DFI Bill with ₹20,000-crore initial govt equity

Source: The Hindu Business Line, Mar 16, 2021

New Delhi: The Cabinet on Tuesday approved bringing a Bill to set up a development financial institution.

The National Bank for Financing Infrastructure and Development (NaBFID) Bill, 2021 is expected to be tabled in the ongoing session of Parliament. “Through the Bill, we will have an institution and institutional arrangement, which will help in increasing long-term funds,” Finance Minister Nirmala Sitharaman told a press briefing after the meeting of Union Cabinet.

The DFI will get ₹20,000 crore as equity capital from the government. “With this kind of initial capital, I expect the institution to use it as lever to raise up to ₹ 3-lakh crore in the next few years,” she said, adding that it can access from the market funds otherwise not available.

Infrastructure financing

In Budget 2021-22, the Finance Minister had announced the setting up of a DFI.

“Infrastructure needs long-term debt financing. A professionally managed DFI is necessary to act as a provider, enabler and catalyst for infrastructure financing. Accordingly, I shall introduce a Bill to set up a DFI,” she had proposed.

The institution will have a board with at least 50 per cent non-official directors. The chairman will be a person of repute in the field. “Emoluments will be as per the market standards. Higher age limit and longer tenure for MDs to be put in place,” she said, adding that its board can take call on merging existing institution like IIFCL. Sitharaman also mentioned that initially the company will be 100 per cent government owned. However, over a period, the government will gradually lower its equity. “In any case, the government’s shareholding will not be lower than 26 per cent,” she said.

Tax benefits

The Minister said that because of tax benefits. and tweaks to the Indian Stamp Act. , “we expect big pension and sovereign funds will come. The government is also planning to give it a certain security because of which the cost of funds will come down,” she said adding that there will be a positive impact on the bond market.

Later, a senior official said the DFI will not issue tax-free bonds but compensate the tax outgo of the institutions putting money in it. A grant of ₹5,000 crore is to be provided. The government will guarantee any overseas borrowing, and compensate the guarantee fee. The funds raised by the DFI will be used in infrastructure projects. The government has prepared the National Infrastructure Pipeline with an investment of ₹111-lakh crore.

Tabreed, IFC to invest $400 mn for cooling infra in India, Southeast Asia

Source: Business Standard, Mar 03, 2021

Mumbai: UAE’s National Central Cooling Company or Tabreed, and International Finance Corporation (IFC) on Wednesday announced plans to invest USD 400 in India and South-East Asian countries to build cooling service infrastructure.

Tabreed and IFC, a member of the World Bank Group, have formed a joint venture to establish a district energy investment platform in Singapore, as per an official statement.

The JV will invest in district cooling, trigeneration and cooling as a service offering with a primary focus on India followed by other South-East Asian countries, it said.

“Platform to target USD 400 million in capital deployment in India and other South-East Asian countries,” the statement said, without specifying the exact allocation to the countries.

Tabreed has ongoing development activities in India and the platform will build on the same after the establishment of its wholly-owned subsidiary to install energy-efficient end to end cooling as a service offering through an outsourced utility model for real estate developments, new urban masterplans and ongoing redevelopments across target cities.

The government India Cooling Action Plan’ forecasts an eight-fold increase in demand through to 2038 and the commercial real estate sector alone estimated to add 100 million refrigeration tons in capacity during this period, it said.

The cooling as a service market is at a relatively embryonic stage in India and real estate developers make their own individual and varied cooling technology choices, funding Capex from their balance sheets to thereafter work with a fragmented ecosystem of service providers leaving significant headroom, the statement said. “The size and dynamism of India and other South-East Asian countries will keep them at the heart of the global energy system with all roads to a successful global clean energy transition going via India,” Tabreed’s chief executive Bader Saeed Al Lamki said.

$31 billion lined up for 400 port projects across 7,500-km coastline: PM

Source: Business Standard, Mar 02, 2021

Mumbai: India will invest $82 billion (or Rs 6 trillion) in port projects by 2035, raise the share of clean renewable energy source in the maritime sector, develop waterways, augment seaplane services, boost tourism around lighthouses, and generate 2 million jobs, Prime Minister Narendra Modi said on Tuesday.

He urged global players to make India a “preferred investment destination”. In a bid to develop the 7,500-km coastline of India, the Ministry of Ports, Shipping and Waterways has drawn up a list of 400 projects with investment potential to the tune of $31 billion (or Rs 2.25 trillion), said Modi at the opening of a three-day Maritime India Summit, participated by 24 nations.

“More than 574 projects at a cost of $82 billion have been identified under the Sagarmala project for implementation between 2030 and 2035. We will encourage private investment in the port sector. India’s long coastline awaits you. Let India be your preferred trade destination. Let Indian ports be your port of call for trade and commerce,” Modi said, inviting players to invest in Indian ports, shipyards, and waterways.

The capacity of major ports has increased to 1,550 million tonnes (mt), from 870 mt in 2014.

Modi said Indian ports have reduced waiting time for inbound and outbound cargo. “India is very serious about growing in the maritime sector and emerging as a leading Blue Economy of the world,” he said.

At present, mega ports with world-class infrastructure are being developed at the ports of Vadhavan (in Palghar district of coastal Konkan), Paradip (in Jagatsinghpur district of Odisha), and Kandla (officially Deendayal Port Trust in Kutch district of Gujarat).

“Ours is a government that is investing in waterways. Domestic waterways are found to be cost-effective and an environment friendly way of transporting freight. We aim to operationalise 23 waterways by 2030,” he said. India has as many as 189 lighthouses across its vast coastline. The government has chalked out a plan to develop some of these spots into tourist destinations.

He said steps are also being taken to introduce urban water transport systems in Kochi, Mumbai, Gujarat, and Goa.

The government is also focusing on the domestic shipbuilding and ship repair market.

Domestic ship-recycling industry will also be promoted to create wealth from waste. India has enacted the Recycling of Ships Act, 2019, and agreed to the Hong Kong International Convention.

To encourage domestic shipbuilding, approvals have been given to the Shipbuilding Financial Assistance Policy for Indian shipyards.

Meanwhile, ship repair clusters will be developed along coasts by 2022.

Talking about the Maritime India Vision 2030, Modi said it outlines the priorities of the government. He detailed a 10-year blueprint with the aim of overhauling the Indian maritime sector, which envisages to generate employment for 2 million people.

“Maritime India Vision 2030 will involve an investment of over Rs 3 trillion, which will generate more than 2 million jobs and unlock annual revenue potential for major ports worth over Rs 20,000 crore,” according to the Ministry of Ports, Shipping and Waterways’ document.

The policy plans incentivising global cruise liners to make India their home port and emphasises on strengthening the maritime institutions to enhance India’s training and development capabilities on a par with global standards. This will help in increasing India’s share of seafarers from 12 per cent to over 20 per cent.

448 infra projects report cost overrun of Rs 4.02 trn; 539 behind schedule

Source: Business Standard, Feb 21, 2021

New Delhi: As many as 448 central sector infrastructure projects have reported a cost overrun of over Rs 4.02 lakh crore as of February 21, 2021.

The monthly Flash Report by the Ministry of Statistics and Programme Implementation said that 539 projects are running behind schedule.

“Total original cost of implementation of the 1,739 projects was Rs 22,18,210.29 crore and their anticipated completion cost is likely to be Rs 26,20,618.44 crore, which reflects overall cost overruns of Rs 4,02,408.15 crore (18.14 per cent of original cost),” it said.

The expenditure incurred on these projects till January 2021 is over Rs 12.29 lakh crore, which is 46.92 per cent of the anticipated cost of the projects.

“Out of the 1,739 projects, 12 projects are ahead of schedule, 247 are on schedule, 539 are delayed, 448 projects reported cost overrun and 209 projects reported both time and cost overrun with respect to their original project implementation schedules,” it said.

The report however, noted that the number of delayed projects decreased to 401 if delay is calculated on the basis of latest schedule of completion. Further, for 941 projects neither the year of commissioning nor the tentative gestation period has been reported.

NHAI plans to monetise projects worth Rs 3 lakh crore

Source: The Economic Times, Feb 16, 2021

NEW DELHI: The National Highways Authority of India is looking to monetise around 7,500 kilometres of road projects worth Rs 3 lakh crore, a senior NHAI official has said.

“If we were to look at our monetisation plans, all the greenfield projects we are making could be potentially monetised,” the official told ET.

These projects, which are mostly greenfield expressways and access-controlled highways, will be completed by 2024-25, and are likely to be monetised through different models.

The authority plans to raise Rs 20,000-25,000 crore through the SPV model, and Rs 10,000 crore through the toll-operate-transfer (TOT) model in 2021-22, the official said. A second infrastructure investment trust (InvIT) worth around Rs 6,000 crore is also in the pipeline for the next financial year.

“In terms of the model of monetisation, we are open. Depending on the mode which gets better response from the market, we will take a call on how we monetise the majority of our projects,” the official said.

A second official ET spoke with said the national highways building authority is ready with a pipeline of projects to be monetised in FY22, but the exercise will depend largely on market response to certain models.

NHAI has been keen on special purpose vehicle (SPV) as a model for monetisation. The SPV shall raise debt on its balance sheet, while NHAI will retain the operational control during construction and operation and maintenance periods. The toll on the projects housed in SPV shall be collected by NHAI and SPV shall get the annuity payments without any construction and tolling risks.

The authority had last year formed an SPV for financing the Delhi-Mumbai Expressway. “We are also planning to form an SPV for financing the Delhi-Katra expressway,” said the first official.

Govt eases curbs on steel for highway construction to reduce cost

Source: Business Standard, Feb 14, 2021

New Delhi: Doing away with restrictive conditions for use of steel in highways construction, the government on Sunday announced that all kinds of steel will be allowed for highways provided these meet the quality parameters.

Earlier, the contract provisions required use of steel produced by primary/integrated steel producers only. The move is aimed at ensuring cost reduction in highways construction using steel.

“The Ministry of Road Transport and Highways has issued orders that all steel whether produced from ore, billets, pellets or melting of scrap – would be allowed to be used for National Highway construction, as long as it meets the standards required for specific grades of steel,” the Ministry said in a statement.

The steel proposed to be used would be tested in NABL-accredited laboratories as a third party check before approval. The move is based on the analysis and discussions with stakeholders and also technical opinion.

In view of the increase in steel prices, which can impact the cost of building national highways, Road Transport & Highways Minister Nitin Gadkari had suggested the need to re-look at all conditions which could be restrictive, without impacting the quality of material used for highway construction.

With this step, the supplier base for steel used in the construction of national highways would increase, leading to more competition and better price discovery by the markets, the statement said. This is also part of the continuous effort by the Minister to reduce costs through use of new technology, reducing restrictions on suppliers and making the procurement system transparent, it added.

Commerce, urban affairs ministries to work on logistics planning in cities

Source: Business Standard, Jan 20, 2021

New Delhi: The commerce ministry will work with its housing and urban affairs counterpart to focus on 50 cities for logistics planning, a move aimed at promoting ease of doing business in the country, an official statement said on Wednesday.

The decision was taken during the National Conference with States on Logistics on Tuesday to initiate a consultative and collaborative framework for the central and state governments to work in a coordinated manner in the logistic sector.

The commerce ministry said that an 18 point agenda was presented to the states to improve the logistics.

The key areas for logistics improvements in the states were identified as city logistics, simplification of approvals for warehouses, facilitation for warehousing development, reducing the burden on truck movement and addressing the shortage of truck drivers.

“It was decided that the Ministry of Commerce will work with the Ministry of Housing and Urban Affairs to focus on 50 cities for logistics planning initially. A plan for facilitation to reduce enforcement burden on truck drivers will be developed,” the statement said.

State-level coordination committees on logistics will be formed, it added. “The Logistics Division of the Ministry of Commerce will embark on a survey to assess and rank states on logistics performance.The states’ ranking will focus on data in addition to perspective on logistics performance,” the statement said.

Govt targets to complete 11,000 km of national highways this fiscal

Source: The Hindu Business Line, Jan 17, 2021

New Delhi: Road Ministry hopes to complete 11,000 km –stated target–of national highways (NH) by end-March this fiscal.

The Ministry has constructed 8,169 km of NH from April 2020 to January 15, 2021, in the current financial year 2020-21, with a speed of about 28.16 km per day, an official release said.

This is 2 km a day higher than the stretch of roads constructed during the same period in the last fiscal ( when 7,573 km roads were constructed with a speed of 26.11 km per day).

The Ministry of Road Transport & Highways (MoRTH) has created a record by constructing 534 km of NH in the last week that started from January 8.

The pace of award for highway projects has doubled from April to January 15.

The Ministry also awarded NH projects of 7,597 km during this period (April 2020 to January 15, 2021), the release added. In 2019-20, projects of 3,474 km were awarded during the same period. Thus, the pace of award has also more than doubled this fiscal.

In total, projects of 8,948 km of roads were awarded in 2019-20 while 10,237 km of roads were constructed, the release said.

The achievement assumes significance given that the first two months of the current fiscal were lost due to nationwide lockdown in the wake of COVID-19 pandemic. The Ministry has taken several initiatives to increase the pace of construction. The pace of construction is expected to increase further in the remaining months of the current financial year, conducive to construction activities.

Maharashtra gets Centre’s nod for ₹5,801-cr national highway projects

Source: The Hindu Business Line, Jan 08, 2021

Mumbai: The Centre, under the Annual Plan, has given clearance for new national highway projects worth ₹5,801 crore for Maharashtra. The plan for national highways in Maharashtra was approved for ₹2,727 crore but it has been enhanced to ₹5,801 crore, which will improve and develop 1,035 km of national highways in the state, said Union Minister Nitin Gadkari on Thursday.

He reviewed the progress of highway infrastructure projects in Maharashtra with Chief Minister Udhhav Thackerey and senior officials in Mumbai.

Gadkari said at that meeting that a lot of construction work of national highways is underway in Maharashtra. In order to expedite these works, land acquisition and issuance of other permits should be expedited by the State Government. Also, a time-bound program should be decided for clearances by the state forest department for such highway projects.

He also asked the State Government to fast-track national highway projects, which are being built on the principle of ‘Build, Use and Transfer’ in the state. He also informed that ‘Palkhi Marg’ connecting Pandharpur ― Alandi and Pandharpur-Dehu Road will be constructed, which will have a parallel pedestrian track for members of the Warkari sect to undertake their pilgrimage to Pandharpur town in safety and comfort.