Gadkari unveils InvIT road map for NHAI, initial target ₹20,000 cr

Source: LiveMint.com, Jan 29, 2019

Mumbai: The National Highways Authority of India (NHAI) will initially raise ₹15,000-20,000 crore in its maiden InvIT offer and then go for a larger round, depending on the response it receives from investors, Union minister Nitin Gadkari said.

NHAI’s InvIT offer, expected in the months ahead, is part of the government’s plans to tap alternative sources of financing to boost public spending in the roads and infrastructure sector amid declining private sector interest in the build, operate and transfer model, where the entire initial cost is borne by them.

In addition to the InvIT offer, the government has firmed up funds from domestic lenders to raise money for long-gestation projects, Gadkari, Union minister for road transport and highways, said in an interview on Monday. “We are working closely with the Reserve Bank of India on this issue and I just spoke to governor Shaktikanta Das and he has assured that banks will fund projects up to 30 years subject to financial viability,” he said. “This is for the total cost of projects, land acquisition, cost of construction, against toll receipts. State Bank of India has assured us ₹50,000 crore already.”

An InvIT manages income-generating infrastructure assets, typically offering investors regular yield and a liquid method of investing in infrastructure projects. While two private sector road developers have raised money through InvITs, the government’s plan to step into this market has enthused investors wanting to bet on the infrastructure sector. The Union cabinet cleared NHAI’s plans to launch an InvIT in December.

In a press release last month, the government said: “Given the magnitude of the Bharatmala programme ( ₹5.35 trillion), NHAI would need adequate funds to complete the projects within the prescribed timelines. As part of this exercise, a workable option is to monetize the completed and operational national highway assets to unlock their value and offer attractive schemes to private players to invest in construction of new national highways.”

“The InvIT will come soon, in the next (fiscal) year,” Gadkari said. “The initial package is small, at ₹15,000-20,000 crore. Money is not a problem and we have new models (of financing) coming up.”

Earlier this month, finance minister Nirmala Sitharaman unveiled a ₹1 trillion National Infrastructure Pipeline for the next five years. While the roads sector is a significant part of this programme, the budgetary allocation to the roads ministry has failed to keep pace with the government’s ambitions, forcing the former to look elsewhere for funds.

In the Union budget for FY20, the allocation to the ministry of road transport and highways increased 12% to ₹1.12 trillion, while support to NHAI increased from ₹68,563 crore to ₹72,058 crore. Meanwhile, NHAI’s debt is about ₹2.5 trillion and interest payments are poised to outstrip toll revenues this year.

Read the rest of this entry »

Reliance launches new road project to counter pushback against plastics

Source: Business Standard, Jan 29, 2019

Reliance Industries, India’s largest petchem player, is launching a project to use plastics in road construction, amid growing concerns over pollution in the country of 1.3 billion whose major cities are often plagued with smog and litter.

India, which uses about 14 million tonnes of plastic annually, lacks an organized system for management of plastic waste, leading to widespread littering.

Prime Minister Narendra Modi is urging India to end consumption of single-use plastics by 2022.

But Indians should focus on fighting pollution, not plastics, executives at Reliance, whose chairman is Asia’s richest man Mukesh Ambani, said during a launch event on Tuesday.

The company will seek to work with India’s highway authority and individual states to potentially supply a plastics-infused mix to make some of the thousands of kilometers of roads Modi wants to build to upgrade India’s creaking infrastructure.

Light plastics, the type used as carry bags or snack wrappers, are typically not viable to recycle and so end up in landfills, street corners or oceans. Reliance wants to shred these plastics and mix them with bitumen, a formula the conglomerate says is cheaper and longer-lasting.

“(This) can be a game-changing project both for our environment and our roads,” Vipul Shah, the COO of the petrochemicals business, said at a company petchem plant in the western state of Maharashtra.

Shah was coy on details, saying Reliance had yet to work out the financial fine print in what he stressed would be a philanthropic endeavour.

Reliance’s announcement comes as campaigners such as Greta Thunberg ramp up pressure on businesses to help tackle climate change.

“It is happening internationally and now has started percolating to India too, though it’s at a very early stage,” said Sunil Dahiya, an analyst at the Center for Research on Energy and Clean Air.

“Corporates and industries are a big source of all kinds of pollution in India, so much more serious thoughts, policies and actions are required from them,” he added. India was home to 15 of the 20 most polluted cities in the world in 2018, according to a study by two groups monitoring air pollution. New Delhi is the world’s most polluted capital, with smog causing school cancellations, flight diversions and untold health problems for its over 20 million people.

First-of-its-kind road deal may free $4.5-billion stressed projects

Source: Business Standard, Jan 25, 2019

Cube Highways & Infrastructure is weeks away from buying a road asset of a bankrupt company, a first-of-its kind purchase that could free up about $4.5 billion worth of stressed projects.

The Singapore-based firm — backed by investors including the World Bank’s financial arm, Abu Dhabi Investment Authority and I Squared Capital — is using a novel method called ‘substitution,’ where lenders to insolvent Lanco Infratech are directly transferring Lanco’s road assets to Cube, without routing ownership through the state-run National Highways Authority of India.

Lanco is in bankruptcy court and unable to service its debt. “All lenders have agreed and the formal handover will likely take place in the next three-four weeks,” Gautam Bhandari, managing partner at I Squared Capital, said in a phone interview on Thursday.

Investments in infrastructure up by 25% in 2019, highest since 2016

Source: Business Standard, Jan 23, 2019

Chennai: Investments in Indian infrastructure increased by around 25 per cent to $ 28.74 billion in 2019, highest since 2016. Sale of Sadbhav Engineering’s nine road projects lead the investment flow in 2019. In 2018, the sector attracted $22.91 billion.

However, number of deals dropped to 58 from 64, according to Inframation, an Acuris company, data.

Sale of Sadbhav Engineering’s nine road projects for $ 993.5 million to an infrastructure investment trust (InvIT) backed by Canada Pension Plan Investment Board (CPPIB) was India’s biggest infrastructure M&A deal in 2019. The deal also underscores investor interest in the country’s roads sector.

Of the total amount, the energy sector had received 31 per cent, while power and transport attracted 25 per cent and 24 per cent, respectively.

Compared with 2018, when renewable energy attracted the highest share of investments at 35 per cent, deal closures proved to be a challenge in 2019 with the segment attracting just 18 per cent of the total investments. The sector is likely to receive a boost in 2020.

Complementing the investments into different sectors, infrastructure investment trusts (InviTs) received a boost with their number going up to eight from one in 2018. More infrastructure trusts are likely to be set up with investors looking at InvITs as the preferred route for investments, they said in the report.

SBI Capital Markets led the financial advisors ranking by value (2 deals valued $ 8 billion) and Deloitte topped the table by deal count (3 deals worth $ 1.7 billion).

Cyril Amarchand Mangaldas led the legal advisors ranking by value and deal count, having advised on 22 deals worth $ 14.7 billion.

SBI Capital Markets topped the loans league table by value while Rural Electrification Corporation (REC) ranked the first by deal count. JP Morgan topped the bond arrangers league table by both value and deal count (8 deals valued $ 0.52 billion).

Government begins drive to remove speed breakers on National Highways

Source: The Economic Times, Jan 07, 2019

New Delhi: The National Highways Authority of India (NHAI) has begun a drive to remove all kinds of speed breakers on national highways, particularly at toll plazas to ensure smooth flow of traffic.

“Considering the fact that National Highways are designed to cater to high speed traffic without any hindrance, NHAI has started drive to remove speed breakers from national highways under its jurisdiction,” the authority said in a statement on Tuesday.

While the authority has already mandated implementation of FASTag on toll plazas and conversion of cash toll lanes to FASTag lanes, the speed breakers or rumble strips constructed at toll plazas are being removed with immediate effect for smooth vehicular movement.

Since 15th December 2019, at least 75% of toll lanes at toll plazas in the country are using FASTags for toll collection, in order to phase out toll collection in cash, a move that will also help reduce congestion at toll plazas.

In a letter sent to NHAI in July this year, the highways ministry had asked for conversion of all toll lanes at all national highways to ‘FASTag lanes’.

The RFID-based FASTag affixed on the windscreen of the vehicle allows for direct payment of fee from the prepaid or savings account linked to it, and enables vehicles to drive through toll plazas without stopping for transactions.

Roads of different categories and under different situations are designed for designated speeds at which vehicles can travel with convenience and safety. At certain locations, control of speed becomes necessary to promote orderly traffic movement and improved safety.

“The speed breakers result in considerable delay, damage to the vehicles and significant discomfort to vehicle occupants and more fuel consumption due to acceleration and deceleration,” the statement said.

This will also ensure avoidable wastage of transportation fuel for which country is heavily import-dependent, and will also result in lesser pollution, NHAI said.

Russian firm to invest $100 m to offer free Wi-Fi in metro stations

Source: The Hindu Business Line, Jan 04, 2020

New Delhi: Russia-based technology firm Maxima Digital is investing $100 million over the next two years to provide free Wi-Fi in India’s metro stations and coaches.

The company has been working with Delhi Metro Rail Corporation (DMRC) over the past three or four months to offer free high-speed Wi-Fi services on metro trains — a first in India.

Right now, the service covers all stations and trains that ply the Airport Express Line that connects New Delhi Railway Station and Terminal 3 of the Indira Gandhi International Airport. “The total investment for the whole DMRC network will not exceed $100 million over the next two years. We have around 12 people and (they) will be managing the Wi-Fi services, too,” Farhad Rustamov, Maxima’s CEO, told BusinessLine. Read the rest of this entry »

NHAI downsizes toll-operate-transfer-4 bid by Rs 2,000 crore

Source: The Economic Times, Jan 06, 2020

NEW DELHI: The government has downsized its fourth bid for monetisation of toll assets by around Rs 2,000 crore as it seeks to attract smaller investors that will help monetise assets faster. The National Highways Authority of India (NHAI) had invited bids for the fourth round of toll-operate-transfer (TOT) auctions in October last year to raise Rs 4,170 crore, with a total of seven road stretches having a cumulative length of 400 km.

The authority has now downsized the package, reducing the initial estimated concession value (IECV)—the base price of the bid—to Rs 2,165 crore. The concession period of the bundle has now been reduced to 20 years. Read the rest of this entry »