Roads and Highways

SUMMARY

  1. USD 8.21 billion outlay planned for highways during 2016-17. In addition, NHAI has been authorised to generate Internal & Extra Budgetary Resource (IEBR) of USD 8.85 Billion during 2016-17. NHAI shall raise its resources under IEBR through 54 C Bonds, Tax Free Bonds and others as approved by the Ministry of Finance.
  2. USD 22.6 billion budgetary support for central road sector development during 2012-17.
  3. 5.23 million kms of roads and highways in the country.
  4. 1.01 million kms of National Highways.
  5. Ministry of Road Transport & Highways (MoRTH) aims to expand the National Highway network to 0.2 million kms over the next 4-5 years. MoRTH has so far approved in-principle about 38,750 kms of State roads as new NHs subject to outcome of their detailed project reports (DPRs). Further, about 14,000 kms of additional State road stretches are proposed to be upgraded under the "Bharatmala Pariyojana".
  6. The type of PPP project implementation models used in the highways sector are Build Operate Transfer (BOT) Toll, BOT (Annuity) and the Hybrid Annuity Model (HAM).
  7. The implementation agencies of MoRTH include the following:
    • National Highways Authority of India (NHAI)
    • State/UTs PWD (Public Works Department)
    • National Highway and Infrastructure Development Corporation Limited (NHIDCL)
    • Border Roads Organisation (BRO)

FDI POLICY

  • 100% Foreign Direct Investment (FDI) is allowed under the automatic route in the road and highways sector, subject to applicable laws and regulation.

SECTOR POLICY

  1. Development and maintenance of road infrastructure is a key Government priority­ the sector has received strong budgetary support over the years.
  2. Standardised processes for PPP and public funded projects and a clear policy framework relating to bidding and tolling have been developed over the years.
  3. Major policy initiatives undertaken by MoRTH during last two years include:
    • Mode of delivery - MoRTH is now empowered to decide on mode of delivery of projects-EPC/PPP.
    • Enhanced Inter-Ministerial coordination - An Infrastructure Group has been created under Chairmanship of Hon'ble Minister (Road, Transport & Highways) to resolve approval/clearance issues related to Environment & Forests, Railways and Defence, and most of the issues have been resolved.
    • Exit Policy -Private developers can now exit all operational BOT projects two years from start of operations irrespective of the date of award of the project.
    • Revival of Languishing projects - Now revival of BOT projects which are languishing in the construction stage is possible through one-time fund infusion by NHAI, subject to adequate due diligence of such projects on case to case basis through an institutional mechanism.
    • Promoting innovative project implementation models- The Hybrid Annuity Model (HAM) has been developed and adopted for implementation of highway projects. The model takes into consideration appropriate risk allocation. Fifteen projects have already been awarded under this model.
    • Amendments to the Model Concession Agreement (MCA) for BOT projects - Certain changes in the MCA have been approved by an empowered Committee headed by the Cabinet Secretary based on stakeholders feedback. This would facilitate streamlined development and operation of highway projects 

FINANCIAL SUPPORT

  • The Union Budget of 2016-17 mentions that the total investment in the central road sector would be USD 8.21 billion [including USD 30 million for Road Transport] during 2016-17.
  • NHAI has been authorised to generate Internal & Extra Budgetary Resource (IEBR) of USD 8.85 billion during 2016-17

INVESTMENT OPPORTUNITIES

Current investment opportunities in the sector include the following:

  1. Project Highways- Construction & O&M
  2. Expressway projects including the following:
    • Vadodara Mumbai Expressway - 650 km
    • Bangalore - Chennai Expressway (Green field) - 262 km
    • Delhi-Jaipur Expressway (Greenfield)- 196 km
    • Delhi-Ludhiana-Amritsar-Katra with connectivity to Chandigarh Expressway- 600 km
    • Hyderabad- Vijayawada- Amravathi (HVA) Expressway- 300 km
    • Nagpur- Hyderabad- Bangalore (NBH) Expressway-1,100 km
    • Kanpur Lucknow (KL) Expressway- 75 km
    • Ringroad/ Expressway at Amravathi -186 km
  3. Asset recycling ToT (Toll-operate-Transfer) model - proposed
  4. Innovative technologies, material, equipment etc.
  5. Tunnel projects- many are at bid stage
  6. Projects related to efficient operations & network management for improving logistics including development of Transport Nagars and Logistic Hubs, enabling seamless inter-state traffic movement, improved public transportation etc.
  7. Intelligent Transport Systems (ITS)
  8. Other opportunities- Road Safety, Driver Training Institutes etc.
  9. 'Bharatmala Project' (yet to be formally launched) is a new highways development programme that has been recently identified as a premier, long-term, initiative.

INDUSTRY UPDATES

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Air India Improvement In Operational And Financial Performance

Air India Improvement In Operational And Financial Performance

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