CHALLENGES IN A PATH TO DISCUSES THE mANAGEMENT OF RISKS TO A SUSTAINABLE ENERGY INFRASTRUCTURE BY 2030.

1. Challenges in Building the 21st Century Energy
Infrastructure
Management of Risks and Constraints of Low Carbon Economy
Presented By:
Himadri Banerji
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2. India Infrastructure Country Outlook
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3. Planned Infrastructure Investments: India

4. Infrastructure Investment Projections

5. Present Status:
A Visible Gap Target vs. Actual
Continuing mismatch between government
infrastructure development targets and realized
infrastructure development due to constraints in
project approval, lending, delivery and operations.
A continuation of some of the excesses of the pre‐crisis
pre‐
years, e.g. high debt loads and minimum contingencies
for project construction and completion risks is further
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6. The informal System of Jugaad
“India’s informal system of jugaad allows counterparties to
a project to recognize the systemic problems affecting most
infrastructure projects and evolve workable solutions on a
case‐by‐
case‐by‐case basis (whereas in other developed markets,
such situations may be deemed as contractual failures,
leading to the collapse of the projects).”
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7. Country Outlook India:
Ignore to Redress Common Project Risks
Financing structures and debt levels do not seem to adequately
address Common project risks
(a) Propensity for execution delays
(b) Cost over run
(c) Demand overestimation
(d) Lack of a strong regime for contract observance and enforcement.
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8. Sector Scenario
Power Sector Projects
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9. Five Yr Plan: Power Production Target Vs achievements

10. Region Wise: Power Generation and Peak Deficit
Eastern Regions Status
Western Regions Status

12. Region Wise: Power Generation and Peak Deficit
North- Eastern Regions Status
Southen Regions Status

13. Region-
Region-wise Installed Generating Capacity: India

14. Electricity Demand Projections: India

15. Electricity Demand Vs Achievements: India

16. Power Sector Projects
(EPC) route for construction, companies are choosing to break down the entire activity
into packages
System against the best practices in developed countries
New Merchant power plants as unrelated diversification of the promoters
Many projects continue to depend on Bharat Heavy Electrical Ltd (BHEL) for the supply of
the critical boiler‐turbine‐generator (BTG) island, even though it has an overflowing order
‐ ‐
book
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17. What to Watch
Financial health of state government‐owned
‐
utility off‐take counterparties.
‐
Visible constraints on land availability,
equipment vendor capacity, and sustainable fuel
supplies for projects under construction
Capacity of domestic commercial bank sector to
continue to finance mega power projects, given
lending exposure limits.
Impact, if any, of the on‐going Climate Change
‐
Summit 2009 discussions for restricting carbon
emissions.

18. The Challenges to Managing Growth of Infrastructure:
What is needed?
1. Innovative Approaches to Project Finance Needed
Encourage public private partnerships (PPPs) to raise additional
financing.
Encourage investment by pension funds and other large institutional
investors.
Make greater use of user charges for funding infrastructure.
Diversify and expand traditional revenue-raising sources.
Explore the funding possibilities offered by land value capture.

19. The Challenges to Managing Growth of Infrastructure:
Improving the Regulatory and Institutional Framework
Conditions
Examine the legal and regulatory framework conditions with a
view to encouraging the emergence of fresh sources of capital
and new business models for infrastructure.
infrastructure.
Avoid Patronization and Corrupt Practices
Place greater emphasis on the reliability of infrastructure
functioning.
functioning.
Strengthen the framework for standards.
standards.
Explore new institutional arrangements that may provide more
effective and efficient financing and or delivery of
infrastructure.
infrastructure.

20. The Challenges to Managing Growth of Infrastructure:
Strengthening Governance and Strategic Planning
Support the development of long-term, coordinated approaches to
infrastructure development.
Reduce the vulnerability of long-term infrastructure planning to short-
term thinking.
Ensure the involvement of a broader range of stakeholders in the
infrastructure process.
Step up efforts to reduce the length and complexity of the planning-
to-implementation process.
Strengthen international co-operation for trans-border infrastructure.

21. The Challenges to Managing Growth of Infrastructure:
Building Capacity in Executing Project and Managing Financial and
Project Risks
Financing constraints
Land acquisition problems
Delays in the supply of equipment
Environmental and governmental clearances
Problems of technology selection

22. The Challenges to Managing Growth of Infrastructure:
Building Capacity in Executing Project and Managing Financial
and Project Risks
Three factors in particular have contributed to the perception of this
dearth of execution capacity being a key Risk
- Growth in new project construction activity
- increasing scale and complexity of projects
- A small base of large, qualified developers available to accomplish
this task.

23. The Challenges to Managing Growth of Infrastructure:
Managing Risks in Execution of Infrastructure Projects
Risk management is an essential and integral part of project
management in major construction projects
Risks which have the major impact on any infrastructure
projects.
Financial risk
Project Risk

24. The Challenges to Managing Growth of Infrastructure:
Managing Financial Risk
Three main considerations with respect to financial risk.
Impact of higher debt loads and interest rates
Risk of Cash flows
The mix of equity in the capital structure

25. The Challenges to Managing Growth of Infrastructure:
Managing Project Risk: Probabilistic Risk Assessment (PRA)
Evaluation of the value of project risk
Probability of Completing activities project in Time and Cost
Criticality of Activities
Monte Carlo Simulation Techniques

26. The Challenges to Managing Growth of Infrastructure:
Infrastructure Growth Constraints and Low Carbon Economy
India contributes about 4 per cent of the total global CO2 emissions and the
country has conveyed that per capita emission levels would never exceed the
average levels of developed countries.
India's per capita carbon dioxide emissions will increase by nearly
three-
three-fold to 3.5 tones by 2030
Target Carbon emission intensity to decline by 20-25 per cent by
20-
2020

27. The Challenges to Managing Growth of Infrastructure
Infrastructure Growth Constraints and Low Carbon Economy
• Emerging markets will have the largest growth in CO2 emissions up to 2025

28. Infrastructure Development in Low carbon Economy
Infrastructure Development has traditionally been carbon
intensive.
• The energy sector is responsible for 58% of the country’s total
green house gas (GHG) gross emissions of 1.9 billion tons of
CO2eq
• electricity: 38%
• transport: 8%
• petroleum refining: 5%
• Urban and rural residential: 7%

29. The low carbon pathway :India ever green
Changing the institutional framework financing and creating
appropriate incentives for adoption of cleaner and green
technologies and practice
Target reduction in energy intensity through :
• Improvements in agricultural and non agricultural practice and
rural areas
• Development of local power generation capacities based on
renewable recourses to service unserved areas and reduction
pressure on grid
• Improvements in practices in urban manufacturing ,construction
and service

30. As an example, there are a range of policies and policy
instruments at the state level that have been passed in recent
years with the mandate to promote renewable energy projects
and initiatives. Solar Policy 2011 is the latest example. However,
when it comes to the legal framework it is the Electricity Act,
2003 and more specifically, the New Tariff Policy (2006) under
the Act—which states that a minimum percentage of energy, as
Act—
specified by the Regulatory Commission, is to be purchased
from renewable energy sources—that alone contains a legally
sources—
binding obligation requiring the creation, transmission, and
deployment of renewable energy to address the country’s
energy and environmental insecurity.
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31. Current transportation System: India

32. Investment Challenges in Logistic Growth:
India

33. NILP: From Strategy to Implementation

34. Model Mix for Balanced Strategy: Logistic India

35. THANK YOU
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