Budget 2020 benefits the freight and logistics sector
National Logistic Policy to lead to operational efficiency for freight operators February 2020
It is known - and recognised - that the Indian economy is one of the fastest growing in the world. However, for this growth to sustain, the infrastructure sector needs acceleration at a much faster pace. With this in mind, Finance Minister Arun Jaitley allocated Rs 396,135 crore for the infrastructure sector in this year´s Budget, up 10 per cent from the previous year. Out of the total outlay, Rs 241,387 crore has been set aside for transport infrastructure, paving the way for project announcements aplenty this year.
Looking back, the year 2016-17 saw the government on a spending spree. According to numbers from Projects Today, as in December 2016, the Central Government has spent Rs 3.88 lakh crore on 2,195 projects (across sectors) contributing 46.08 per cent of the share of countrywide spending. And various state governments, which own 4,329 projects, have spent Rs 2.53 lakh crore with a total share of 30.13 per cent. Cumulatively, the Centre and states have spent a whopping Rs 6.41 lakh crore, up by 34.61 per cent from the previous figure of Rs 4.76 lakh crore.
Zooming into some key infrastructure segments, from April to December 2016, 275 projects worth Rs 1.27 lakh crore were commissioned in the country. However, a major portion was spent on sectors including electricity and non-conventional energy, followed by utility services (water pipelines, water, sewage effluent treatment, transport, roads, railways, airways and shipping infrastructure).
The former saw a spend of Rs 78,000 crore, whereas the later witnessed Rs 39,957 crore; both contributing heavily in India´s economic growth with a maximum share of 92 per cent. Meanwhile, mining activities have contributed well to India´s economic activities with Rs 4,922 crore.
In terms of fresh investment, the same period witnessed sectors including water pipelines, water, sewage effluent treatment, transport, roads, railways, airways and shipping infrastructure investing Rs 5.04 lakh crore, up by 78.59 per cent from the previous year´s figure of Rs 3.83 lakh crore. The transport sector attracted major investments worth Rs 3.97 crore, followed by roads with Rs 1.80 lakh crore, railways with Rs 1.68 lakh crore, real estate with Rs 42,748 crore, irrigation with Rs 42,662 crore and shipping infra with Rs 12,000 crore.
Tuning into 2017-18, CW reviews the budgeted spend for key infrastructure sectors: Airports, Ports, Railways, Roads and Smart Cities.
Airports: AAI makes CAPEX plan of Rs.17,500 crore for 2016-2021.
Ports: Allocation of Rs.1,773 crore in FY17-18.
Railways: Capex for 2017-18 at Rs.1.31 lakh crore.
Roadways: Allocation of Rs.64,900 crore for 2017-18.
Smart Cities: Expenditure of Rs.1.31 lakh crore in the next five years.
AAI makes CAPEX plan of Rs.17,500 crore for 2016-2021
India aims to become the third largest civil aviation market by 2020, and the largest by 2030. Is this achievable?
For starters, airport infrastructure has opened up to the private sector, fuelling growth in the country´s passenger handling and cargo handling capacity. Testament to this is a recent CARE Ratings Union Budget analysis report, which states that the total passenger handling capacity of airports increased from 72 million in FY2006 to about 272 million in FY2016, while total cargo handling capacity stood at 6.2 million tonne per annum in 2016.
The Union Budget 2017-18 brought more good news for the sector with the announcement that selected airports in Tier-II cities will be taken up for operation and maintenance under the PPP mode. Further, while presenting the Budget, Finance Minister Arun Jaitley said the Airport Authority of India Act will be amended to enable effective monetisation of land assets and the resources raised will be utilised for airport upgrades. This is expected to have a positive impact on airport infrastructure development in Tier-II cities.
Significantly, the overall budgetary allocation for the Ministry of Civil Aviation for 2017-18 has been increased by 22 per cent over 2016-17 to Rs 5,167 crore.
´Of this, Airports Authority of India (AAI) has been allocated Rs 2,543 crore, which is expected to be invested in basic airport infrastructure,´ says Yogesh Kumar Jain, Managing Director, PNC Infratech, New Delhi. ´However, private-sector investments are expected in a big way for development and operation of new greenfield international airports in Mopa in Goa,
Navi Mumbai in Maharashtra and Bhogapuram in Andhra Pradesh, and upgrade of the existing airport in Nagpur.´
What´s more, AAI has made a CAPEX plan of Rs 17,500 crore for the period 2016 to 2021. As S Sreekumar, General Manager-Planning, AAI, says, ´The segmentation of AAI´s capital budget is based on five regions: East, North, Northeast, South and West. Under these segments, there is segregation such as airport works, ANS works, security works, etc.´
Additionally, plans are being laid to take up city-side development and multi-level car parking through PPP. ´This is part of land monetisation to augment non-aeronautical revenue,´ shares Sreekumar.
´In Phase-1, city-side development has been planned in Lucknow, Raipur, Tirupati, Kolkata, Varanasi, Bhubaneswar, Jaipur and Amritsar. Also, multi-level car parking is planned in Ahmedabad, Pune, Chennai, Calicut, Jaipur and Amritsar in Phase-1.´ Undoubtedly, the development of airports brings better connectivity, which in turn will trigger investments in multi-sector infrastructure, particularly tourism and industry. ´Private-sector investment in airports was sluggish for the past five years,´ says Sreekumar, emphasising that a revival is on. However, he adds that private-sector investment is confined to self-standing airports. ´The objective of AAI is to provide widespread connectivity by developing airports in Tier-II and Tier-III cities, which can help inclusive growth of the economy.´ True to this, the recently introduced Regional Connectivity Scheme will help accelerate the same.
Yogesh Kumar Jain, Managing Director, PNC Infratech, New Delhi, on the impact of government announcements on the company´s growth and opportunities:
Apart from investments from both government and private sectors, approval of the new civil aviation policy by the government and other socioeconomic developments are expected to boost the sustainable growth of the civil aviation sector in FY2017-18 and beyond.
The new aviation policy envisages a big boost to air travel to small towns and feeder routes. Both the Central and state governments are expected to make sizeable investments for revival of small regional airports as no-frills airports for improving regional connectivity.
With our second-best core competency and focus sector being the construction of airfield infrastructure, we see good opportunities in this sector, which will have a positive impact on our company´s growth.
Currently, we are constructing two airport projects and pursuing all medium and large airport runway project opportunities coming up in the civil and defence sectors.
We have already been qualified on a standalone basis for upgrade, modernisation, operation and maintenance of Nagpur International Airport on PPP model by the Maharashtra Airport Development Company (MADC) along with five other developers. Techno-financial bids for this airport are expected to be invited in FY2017-18 and Rs 2,000 crore is expected to be invested by the selected developer for development of the project in two phases.
Allocation of Rs.1,773 crore in FY17-18 Ports have the potential to be the true drivers of economic development in India. Indeed, a major boost to infra in the Budget this year, and the focus on developing infrastructure and enhancing last-mile connectivity in coastal areas, have paved the way for port-led development.
Further, the continued focus on the Sagarmala programme, including development of coastal economic zones (CEZs) and improving hinterland connectivity, is expected to boost the maritime sector in the long term and stimulate economic growth. ´?Port-led developmental projects are funded from internal resources,´ says A Janardhana Rao, Managing Director, Indian Ports Association. He adds, ´But, in the case of dredging work or if the port operation is not profitable, the Central Government provides budgetary provision for special projects, considering financial affordability and the need for a particular project.´
Heralding good times ahead, the Ministry of Shipping´s allocation has gone up from Rs 1,531 crore in 2016-17 to Rs 1,773 crore in 2017-18. According to the Ministry, with the focus being on promoting port-led-development, Rs 600 crore has been allocated for the Sagarmala programme. Besides this, the internal resources of ports are also being utilised for the development of the sector.
What´s more, under Sagarmala, over 400 projects have been identified that are expected to mobilise investment of more than Rs 8 lakh crore and generate about 1 crore new jobs, including 40 lakh direct jobs, over a period of 10 years. These projects are expected to increase port capacity to more than 3,000 mtpa by 2025, and generate annual logistics cost-savings of close to Rs 35,000 crore. Sanjay Bhatia, Chairman, Mumbai Port Trust, says, ´It is expected that once these projects see the light of day, the country will save logistics costs up to Rs 40,000 crore per annum and export will go up to $110 billion.´
These projects have been identified across the following areas:
Port modernisation and new port development: A total of 189 projects worth Rs 1.42 lakh crore have been identified in this area. The master planning for 12 major ports has been finalised, under which 142 port capacity expansion projects (total cost: Rs 91,434 crore) have been identified for implementation over the next 20 years. Of this, 46 projects are already under implementation or have been awarded. Techno-economic feasibility reports (TEFRs) have been finalised for six new port locations: Vadhavan, Enayam, Sagar Island, Paradip Outer Harbour, Sirkazhi and Belekeri. While the detailed project report (DPR) has been prepared for Sagar Island, the ones for Vadhavan, Paradip Outer Harbour and Enayam are under preparation. For major improvement of port operational efficiency, 69 initiatives have been implemented and 80 mtpa of port capacity has been unlocked so far.
Port connectivity enhancement: 170 projects worth Rs 2.3 lakh crore have been identified in this area. About 27 rail connectivity projects have been identified, of which 21 projects (~3300 km; total cost: Rs 28,000 crore) are being taken up by the Ministry of Railways and six projects (~151 km; total cost: Rs 3,590 crore) are to be taken up through JV/NGR model.
About 79 road connectivity projects have been identified including 10 freight-friendly expressways; 14 projects are already under implementation. Also, a DPR is under preparation for the heavy haul rail corridor between Talcher and Paradip, and five of seven multimodal logistics parks are already under implementation.
Port-linked industrialisation: In this area, 33 projects with an estimated investment of Rs 4.2 lakh crore have been identified. The perspective plans for 14 CEZs covering all the maritime states and union territories have been prepared. The master plans will be prepared in a phased manner with four CEZs to be taken up in Phase-1. Also, 29 potential port-linked industrial clusters have been identified and master plans have been prepared for maritime clusters proposed in Gujarat and Tamil Nadu. The Ministry is also developing a SEZ at JNPT, free trade warehousing zone at Ennore, and smart port industrial cities at Kandla and Paradip.
Coastal community development: Here, projects worth Rs 4,216 crore have been identified. Also, the Ministry is part-funding select fishing harbour projects under Sagarmala in convergence with DADF, and over Rs 56 crore has been released for eight projects so far, across Karnataka, Kerala, Tamil Nadu and Maharashtra. In fact, projects worth Rs 1 lakh crore are already under various stages of implementation and development and over Rs 390 crore has been released for 35 projects under Sagarmala.
Mumbai Port Trust: Implementing projects worth Rs.7,780 crore
Likely to be commissioned in the next couple of years, the Mumbai Port Trust (MbPT) is implementing around 35 projects worth Rs 7,780 crore.
Sanjay Bhatia, Chairman, MbPT, shares more:
We are constructing one of the biggest oil berths in India - Jawahar Dweep 5, or JD-5 - with a total outlay of Rs 800 crore. We are also establishing India´s first Rs 50 crore bunkering terminal at Jawahar Dweep Island in collaboration with HPCL and BPCL.
Another big-ticket project in the pipeline is a Rs 2,690 crore floating storage and re-gasification unit. The Maharashtra Coastal Zone Management Authority (MCZMA) has already cleared the project and sent it to the Ministry for consideration. We are awaiting approvals from the Cabinet Committee on Economic Affairs (CCEA). For this project, bidders have extended their validity up to March 31, 2017.
The detailed plan is ready for our plans for a cruise terminal. With a total cost of around Rs 250 crore, we have invited tenders and bids will be opened on February 28.
In the next financial year, we intend to award 17 projects worth Rs 2,704 crore. One of the biggest PPP projects we are undertaking in the next fiscal is an offshore container terminal worth Rs 1,290 crore. We are likely to award this project by September.
Another major project we are considering for FY17-18 is a super-speciality hospital worth Rs 500 crore on a PPP basis. We are expecting this project to be awarded in May 2018.
We have also prepared a preliminary plan to construct a marina project worth Rs 200 crore.
MbPT is implementing all Sagarmala projects through its internal accruals and we are not seeking any budgetary support for the same.
In the current year, we will be floating or will have floated tenders worth Rs 320 crore. These projects include a facelift of Indira Dock at a total cost of Rs 50 crore; lease of the waterfront for floating restaurant with a total cost of Rs 20 crore; a floating dry dock project worth Rs 100 crore that will be awarded in May 2017; and construction of a jetty at Choti Chowpatty at Rs 50 crore, for which MbPT has already received the DPR.
Vizag Port Trust: Projection of around Rs.180 crore
Vizag Port Trust had budgeted around Rs 230 crore for 2016-17 for various projects, and has projected roughly around Rs 180 crore for FY17-18. PL Haranadh, Deputy Chairman, Vizag Port Trust, shares more on the five important projects that will be awarded this year:
Having reached 98 million tonne, we have expansion plans to reach 133 million tonne in the next three years.
Plans are being laid to improve the capacity utilisation of oil beds worth about Rs 193 crore to make the port fit for Panamax vessels of about 14-m draft.
We will award two rail projects worth Rs 17 crore this year and 50 per cent of our volumes will go by rail.
As for Sagarmala, we are doing two projects related to roads: One is four-laning of the existing two-lane road of port connectivity, and the second is to build a flyover to segregate the port traffic. Fifty per cent of the flyover project will be funded by Sagarmala.
We also plan to widen the road network to our container terminal as the present capacity is 0.5 million TEU. T2 is going to come up, which is another 0.5 million TEU.
Haldia Port: Budgeted amount for FY17-18 at Rs.60.88 crore
While the Budget in FY2016-17 was Rs 49 crore, Haldia Port has allocated an amount of Rs 60.88 crore for 2017-18. This is for specific projects such as the Outer Terminal 2 for handling liquid cargo, upgrade of the railway facility, procurement of oil spill response, upgrade of roads, etc. G Senthivel, Deputy Chairman, Haldia Port, shares more on the opportunities related to the port:
We have completed procurement of a mobile harbour crane and fixed crane worth Rs 150 crore, and development of trans-loading operations of around Rs 250 crore in the PPP mode.
We are in the process of purchasing two floating cranes at Rs 65 crore. These will offload cargo from bigger vessels; we are constructing a jetty to handle the barges at Rs75 crore.
We are issuing tenders for Outer Terminal 1 in the BOT mode worth Rs 412 crore to handle drivable cargo. We are going to construct a liquid handling cargo jetty with 2.5 million tonne additional capacity at Shalukkhali at Rs 172 crore. We will construct one more LNG terminal at Rs 200 crore and 0.2 million tonne additional capacity. With these three projects, the total throughput of Haldia Port will go up by 21.7 million tonne.
We have two main schemes - one is the road-over-bridge worth Rs 150 crore, of which Rs 50 crore is funded by Sagarmala, and the balance Rs 100 crore by National Highways Authority of India. Second, we are doubling the railway line from Durgachak to Haldia, which is around 8 km, to ease railway movement.
Government spending will give a boost to the port´s economy and the economy around the port because all these activities will create indirect employment for around 800 people.
Capex for 2017-18 at Rs.1.31 lakh crore
In a way, the year has been epic for the railways sector. For the first time in 93 years, the Railway Budget was merged with the Union Budget. And, overall, things have been positive with a 22 per cent rise and allocation at Rs 1.31 lakh crore.
Indeed, Indian Railways has an ambitious investment plan of Rs 8.56 lakh crore spread over a five-year period (2015-19) and the allocation of Rs 1 lakh crore for safety in the Budget 2017-18 (track renewal, bridges, signalling and telecom, railway crossings, ROBs, RUBs) has been perceived as a step in the right direction. YD Murthy, Executive Vice President-Finance, NCC, views the rail safety fund with a corpus of Rs 1 lakh crore (that will be created over a period of five years) as one of the biggest announcements, especially after the recent spate of train accidents.
What´s more, as many as 500 rail stations will be made differently-abled-friendly with lifts and escalators. At least 25 train stations are expected to be upgraded during 2017-18. By 2019, all coaches of the Indian Railways will be fitted with bio-toilets.
´The four main priorities the government has set out for the Railways are passenger safety, development work, cleanliness and a reform in railway accounts,´ says Sunil Srivastava, Managing Director, BARSYL. He adds that major investment will be directed towards solar power for 7,000 railway stations; redevelopment of 25 railway stations; 70 projects for development through JVs with nine states; and commissioning of 3,500 km of railway lines in 2017-18.
Highlighting other development opportunities, Rajeev Mehrotra, Chairman & Managing Director, RITES, says, ´Indian Railways has embarked upon capacity augmentation and network decongestion through projects like dedicated freight corridors, doubling and third line and new lines to improve connectivity to ports, mines and industrial hubs.´
Added to this is the announcement of a new metro rail policy, which is expected to open up new jobs for the youth. The Centre has provided over Rs 17,810 crore for metro projects across the country in the recent Budget announcement - a 14 per cent increase over last year´s allocation. However, Srivastava says, ´This may not be adequate, looking at the number of metro-rail projects planned for implementation.´ There are about seven ongoing projects; another five will be implemented shortly; and few more are awaiting government approval. A strong Budget allocation is certainly a signal for development. Considering the focus areas, apart from regular construction companies and equipment suppliers, opportunities are already evident for real-estate developers, solar power companies and railway safety equipment manufacturers. For his part, Srivastava suggests, ´The formation of JVs with various state governments will encourage the states to take up railway projects beneficial to them, and so there will be few projects that will come up under this route.´ As for metro-rail opportunities, he believes the new projects announced will give a fillip to the number of specialised support services needed by metro projects ´that are hitherto not available´.
All this augurs well not just for the railways and metro-rail but the nation as a whole.
Rajeev Mehrotra, Chairman & Managing Director, RITES, shares more on the firm´s offerings and the opportunities it perceives for itself in the future:
Being at the forefront of consultancy for transport infrastructure, RITES is set to grow at a reasonable rate of around 10 per cent. The Budget announcements for rail, roads, highways and ports will definitely contribute to the growth of the company.
RITES is involved in the study of future dedicated freight corridors and high-speed passenger corridors, and in the survey of new railway lines. We are also involved in construction projects of doubling, third line, railway electrification and modernisation and upgrade of railway workshops.
RITES is also exporting railway rolling stock to foreign railways in the SAARC region, Africa, and other related markets. Accordingly, we are gearing up to take up these projects and deliver them within the budgeted time and cost.
Owing to the investment push, we have succeeded in getting a record order book from projects in the railways sector, port and coal connectivity, airports, highways, metro rail, etc. In a limited way, we have also started taking up projects in railway line construction and electrification on an EPC basis.
YD Murthy, Executive Vice President-Finance, NCC, on the company´s sentiments, considering public spending on this sector:
We believe that areas ranging from dedicated freight corridors to port connectivity projects are all opening up for private investment. NCC will be looking for opportunities in the railways sector.
The Railway Division is planning to ramp up its operations in the coming years. We will be open to opportunities that come our way, especially in upcoming tenders, which may be floated in the range of Rs 1,000 crore to Rs 1,500 crore.
Stimulating Economy; Creating Employment
Sunil Srivastava, Managing Director, BARSYL, shares his views on the prospects in the Railways and Metro-rail:
Railways: Any major spending on the Railways will have a far-reaching and cascading effect on the economy. For example, if stations are indeed redeveloped, it will give a fillip to the real-estate sector as most stations are situated in prime locations. Similarly, if JVs with various states are able to implement their projects, this will provide better connectivity for the movement of natural resources, thereby creating direct and indirect employment for the locals.
Metro-rail: It is a well-known fact that spending (government or private) on any infra project stimulates the economy and creates both direct and indirect employment. This also stimulates manufacturing as rolling stock and other equipment manufacturers see long-term business, and hence, set up manufacturing bases to be competitive, which in turn creates employment. Once a metro is operational, there is a need of operations and maintenance staff, which is usually in the range of about 5,000-6,000 people per metro. So, with Chennai, Hyderabad, Lucknow and other ongoing operations this year, these alone will create direct employment to the tune of 20,000. Indirect employment will be generated through transit-oriented development, retail outlets and para-transit services.
Allocation of Rs.64,900 crore for 2017-18
It´s evident: Highways along with railways top the priority list of the government. In fact, the allocation for the highways sector was increased by about Rs 7,000 crore in the Budget this year, about 12 per cent higher than the previous year´s allocation. However, when CW connected with the National Highways Authority of India (NHAI), a member confirmed that the authority is currently working on the kilometres to be awarded this year, and hence is not in a position to reveal numbers. He confirmed that for the year 2016-17, NHAI achieved around 5,000 km in terms of projects awarded as against its target of around 6,000 km. Also, while top officials from the Ministry of Roads, Transport & Highways (MoRTH) were not available for a response, an official from the ministry revealed that it has budgeted Rs 64,900 crore for 2017-18. This apart, he shared that NHAI plans to leverage Rs 59,079 crore from market borrowing; and that NHAI and MoRTH together, intend to award about 25,000 km of roads and highways in 2017-18.
As for the Budget allocation, according to the recent Budget Analysis report by CARE Ratings, increased budgetary allocation and the proposal to enhance coastal connectivity through road construction of 2,000 km is expected to boost the sector and increase award and execution of new projects. The new projects are expected to offer investment opportunities of around Rs 24,000 crore for the sector, assuming four-laning of identified stretches.
´NHAI has raised Rs 8,500 crore from LIC for 30 years and Rs 10,000 crore from EPFO for 25 years,´ says Yogesh Kumar Jain, Managing Director, PNC Infratech, New Delhi. ´The authority is also in the process of raising funds from overseas through masala bonds apart from working towards recycling its brownfield assets through the new TOT (toll-operate-transfer) model and has identified about 75 projects with an annual toll collection potential of around Rs 2,700 crore.´ The first set of TOT projects are expected to be rolled out by NHAI in the next couple of months. Also, as Jain informs us, with the successful introduction of highway development projects on the hybrid annuity model (HAM), available government funds could be leveraged up to three times with active private-sector participation. And both, HAM and TOT model projects, are expected to provide assured flow of funds to NHAI to undertake more projects sustainably in the long term.
While Anil Kumar Singh, Managing Director, APCO Infratech, welcomes the Government´s decision to give a larger budgetary allocation for this sector, he opines, ´The government needs to take effective steps and actions to deliver the land required for the project; otherwise, these allocations remain unutilised.´
The government´s focus, with increased allocation and robust fundraising initiatives for the highways sector, is expected to boost the development momentum, which includes initiation of new projects, expeditious award process and upgrading important state highways to national highways.
As a whole, the sector is expected to grow at a much faster pace in both the short and long terms.
The Northeast opportunity, with projects worth around Rs.10,000 crore The National Highways and Infrastructure Development Corporation (NHIDCL) is planning to award around 1,000 km this year, which would on an average be worth around Rs 10,000 crore. What´s more, this amount to be invested comes from MoRTH and the department of northeastern development. Anand Kumar, Managing Director, NHIDCL, shares more with CW: Under NHIDCL, roads are being developed in the northeast and strategic areas such as Andaman, Jammu & Kashmir, etc. While these developments will also exploit the potential of human resources along with agricultural produce and minerals, NHIDCL is making serious endeavours to develop local contractors as well. This is because, going forward, the local developers will hire local people and the money will go to the local community, leading to inclusive development. We want to become an agent of inclusive development in the northeast and bring-in new technology to enable faster construction of roads and minimise the impact on the environment (during construction) in remote areas.
In terms of bidding, we follow the e-tendering process. To date, we have awarded about 40 projects of more than 1,100 km, and are processing tenders for more than 700 km. Among the challenging projects being implemented by NHIDCL is the development of the Zozila tunnel, which will connect Srinagar with Leh. It will be a 14-km-long tunnel with a total cost of about Rs 8,000 crore. It will be executed in the EPC mode and we have opened the project for bidding. We are also trying to build certain tunnels in Uttarakhand, which will be a part of the Char Dham Yatra, to reduce travel time for pilgrims. Further, we plan to build a bridge between Chatham Saw Mill and Bamboo Flat in the Andamans. So, NHIDCL is going to be handling many challenging jobs, and our endeavour is to complete these ahead of time.
The Maha Opportunity of around Rs.90,000 crore worth projects
The state of Maharashtra has laid an ambitious plan to reduce the travel time between the cities of Mumbai and Nagpur by half, with the development of the Maharashtra Samruddhi Corridor (MSC). And, spearheading this project - what is slated to be Asia´s iconic infrastructure development - is the Maharashtra State Road Development Corporation (MSRDC) (Read more on Pg 78). But this is not just it, Kiran V Kurundkar, Joint Managing Director, MSRDC, says ´The state government has approved around Rs 90,000 crore worth of projects last year, to be undertaken by MSRDC.´
He adds that while Rs 46,000 crore is the total project cost of the Nagpur-Mumbai Super-Communication Expressway, the remaining amount would be invested in projects including the Bandra-Versova seal-link, capacity augmentation of Mumbai-Pune expressway, and Thane Creek Bridge No. 3. Also, Kurundkar adds, ´There are two more projects being undertaken in Thane - Thane-Ghodbunder Elevated Road and the Thane-Borivali tunnel passing under the Borivali National Park.´
The Growth Bug
While they see a huge opportunity for jobs, most road contractors are not eyeing any specific big-ticket project.
´As an infrastructure development company, we regularly monitor upcoming projects in various sectors and selectively bid for the projects suitable to us,´ says Anil Kumar Singh, Managing Director, APCO Infratech. ´In upcoming days, opportunities in HAM projects are anticipated and we expect minimum competition in these projects. Hence, our winning ratio may increase in these types of projects.´ PNC Infratech foresees a huge number of bidding opportunities in the EPC, HAM and TOT models and a sizeable number of expressway projects by various state governments. As Yogesh Kumar Jain, Managing Director, PNC Infratech, New Delhi, says, ´Construction being our core competency, we are keenly looking at the highway projects, essentially on EPC format. Currently, more than a hundred EPC project opportunities are available for bidding in the highway sector with an aggregate estimated value of over Rs 30,000 crore, mostly in the state of Maharashtra, which we are pursuing.´ Jain is certain that being one of the key players in the highways sector in India, the momentum of market growth will have a direct and positive impact on the company´s performance as well.
For his part, Devendra Jain, Director and CEO, Dilip Buildcon, says, ´There is a lot of work and, hence, companies will have to increase the strength of their workforce to be able to execute jobs.´ Further, he adds that while the Budget allocation is 12-13 per cent more than the allocation made last year, ´We expect our growth also to be in a similar percentage.´ Having grown by a CARG of 95 per cent in the past two years, Dilip Buildcon expects internal growth of 10 per cent this year. ´We are working in around 17 states and will bid for all good HAM and EPC projects,´ he confirms.
Expenditure of Rs.1.31 lakh crore in the next five years
It took three rounds of assessment to identify and shortlist 60 Indian cities chosen to be smart. However, while smart cities did not make headlines in the Budget speech this year, Finance Minister Arun Jaitley did keep aside Rs 9,000 crore for the Atal Mission for Rejuvenation and Urban Transformation (AMRUT) and Smart Cities Mission, as against Rs 7,296 crore in the previous Budget. That said, the year 2016 was a landmark one for India´s Smart Cities´ vision, and the ripple effect continues to be evident in 2017 as well.
When the 60 winning cities (with proposals worth over Rs 1.31 lakh crore) become smart, it is expected to positively impact the lives of an urban population of more than 72 crore. And while Rs 1.05 lakh crore will be spent on area-based development plans, Rs 26,141 crore will be the expenditure on pan-city solutions in the next five years.
Tracking the progress report, 60 smart cities have submitted 731 project proposals worth Rs 43,769 crore, of which Rs 25,902 crore will be spent on core infrastructure and Rs 10,629 crore on other area-based development. As for pan-city development, the overall budgeted amount of the 60 winning cities is Rs 5,175 crore and Rs 5,468 crore on smart solutions. However, of the 60, to date only 28 cities have formed special purpose vehicles (SPVs) and appointed a board of directors to carry out their plans.
The numbers also indicate that of the 731 projects, cities with SPVs in place have initiated only 384 projects. WhatÆs more, to date the feasibility report for only 108 projects is in progress, of which 31 projects have completed their feasibility reports. Interestingly, 22 DPRs have been completed, coupled with cities issuing 87 requests for qualification (RFQs) and singing 26 project contracts.
In terms of sector-wise preferences, the housing sector with an estimated spending of Rs 10,055 crore tops the chart, followed by urban transport (Rs 7,272 crore), area development (Rs 6,890 crore), energy (Rs 4,360 crore), water supply (Rs 3,207 crore), IT connectivity (Rs 2,991 crore) and sewerage (Rs 2,356 crore). (For budgeted amount on real estate, turn to page 104.) Further, a few cities have massive funds deployed for making their cities smart. Topping the list is Indore with Rs 4,857 crore, followed by Jabalpur with Rs 4,311 crore, Pune with Rs 2,907 crore, Surat with Rs 2,597 crore and Ahmedabad with Rs 1,976 crore.
Considering that the Smart Cities Mission will complete two years in June this year, though, the overall progress by the first 20 smart cities has not been encouraging for others in the fray. In fact, of the 642 projects, implementation on only 49 projects has been initiated, whereas only 24 projects witnessed completion status. Evidently, it´s high time for India to make its smart move!
Investment worth Rs 50,000 crore is likely to be pumped into the ambitious greenfield project NAINA û slated to house 23 smart cities within it - in Navi Mumbai. V Venugopal, Additional Chief Planner, NAINA, CIDCO, says, ´Projects including Navi Mumbai Airport, Mumbai Trans Harbour Link, JNPT´s Rs 3,000 core connectivity project and Rs 2,000 crore dredging programme, and the Virar-Alibaug multi-modal corridor will also come up.´ Apart from the investments made, these projects will complement NAINA, creating a lot of employment opportunities.
- SHRIYAL SETHUMADHAVAN