- •Contents
- •1. Introduction 3
- •2. Prevalent Challenges in the sector 4
- •3. Solutions to the Challenges 5
- •Introduction
- •Macro-economic Variables
- •Solutions to the Challenges
- •Making Funding Available
- •Prevalent Challenges in the sector
- •Lack of Funding
- •Guarantee of Cash Flows
- •Forex Risk
- •Objective
- •Financing Structure
- •Exit Strategy
- •Case Study 2: Delhi Gurgaon Expressway
- •Introduction
- •Objective
- •Financing Structure
- •Obligations of Concessionaire and nhai
- •Exit Strategy
- •Case Study 3: Mumbai Metro
- •Introduction
- •Financing Structure
- •Process Analysis
- •Case Study 4: Bhiwandi Electricity Distribution Franchisee
- •Introduction
- •Financing Structure
Case Study 2: Delhi Gurgaon Expressway
Introduction
The National Highways Authority of India (NHAI), under the Ministry of Road Transport & Highways (MoRT&H), was entrusted the responsibility for implementation of the Golden Quadrilateral project (Highway Project connecting the four metro cities of New Delhi, Mumbai, Chennai and Kolkata). As a part of this project, it proposed the conversion of a very busy section of NH-8 connecting Delhi to Gurgaon into a 6/8 lane access controlled divided carriageway. The then existing 4 lane, 27.7 km section of NH-8 between Delhi and Gurgaon with as many as 20 intersections, experienced high vehicular density (145,000 Passenger Car Units (PCUs)/day in 2000) and non-segregation of traffic that led to increase in accidents, acute congestion, wastage of fuel and excessive pollution. The project was awarded to the consortium of Jaypee Industries and DS Construction Ltd to design, finance, construct, operate and maintain the facility for a concession period of 20 years. As in a typical BOT highway project, the Concessionaire is allowed to collect toll from the users of the project facility during the operation period to recover his investment and the expressway is required to be transferred back to the Government at the end of the concession period. This was the first BOT project in India to have been awarded on negative grant basis where in the concessionaire offered to pay an upfront fee to NHAI in return of the concession as against a capital grant from the Government. In consideration of robust traffic projections, the selected bidder offered to pay ` 61.06 crore to NHAI. The expressway was commissioned in January 2008 after much delay primarily owing to issues in land acquisition and changes in the scope of work. It carries more than 180,000 PCUs per day as on date.
Objective
The ASP was designed with the following objectives:
To provide better connectivity between metropolitan cities
To reduce traffic congestion which was caused by smaller roads and increasing vehicles
To prevent the wastage of fuel due to long traffic queues and to reduce excessive pollution
To reduce the number of road accidents
Financing Structure
The project was awarded to the consortium of Jaiprakash Industries Ltd and DS Construction Ltd on Built-Operate-Transfer (BOT) basis for a period of 20 years. The selected concessionaire offered to pay ` 61.06 crore upfront as negative grant to the NHAI. The Concessionaire was required to design, construct, operate and maintain the expressway in accordance with the specifications as approved by NHAI. The concession period included the construction period to encourage the concessionaire to complete the construction early. A Special Purpose Vehicle called the Delhi Gurgaon Super Connectivity Ltd (formerly Jaypee DSC Ventures Ltd.), was created for execution of the project. While at the time of bidding, Jaiprakash Industries had a controlling stake of 51% and DS Constructions held 49%, during the course of project implementation, Jaiprakash Industries reduced its stake in the SPV to about 1.2%. The SPV entered into a fixed time-fixed price Engineering, Procurement & Construction (EPC) contract with DS Constructions Limited for this project.