Indian Economy and Government current

1. PPP AND KELKAR COMMITTEE
By: Harveer Singh
harveersinh@gmail.com

2.  Around 900 PPP projects are in various stages of
development across the country
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3. THE DRAWBACKS WITH PPP
Issue of Risk Allocation
Lack of an Independent
Regulator
Lack of Renegotiation tools
Funding Requirement
Clearances hurdles in project
completion 3
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4. KELKAR COMMITTEE RECOMMENDATION
 Revival of a defunct proposal to establish 3P India.
 Rational allocation of risks .
 set up independent regulators for PPP projects
 amendment to the Prevention of Corruption Act
(POCA) to clarify the difference between cases of
graft and genuine errors in decision-making.
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5. 3 P INDIA
 3P India will take over work of
PPP Cell of finance ministry
3P India will set weekly targets
and have professionals in its fold
It will not have a regulatory role.
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6. It has rejected the Swiss
Challenge model for PPP
projects because of lack of
transparency.
Small projects should not be built
with PPP
Issue Zero Coupon Bonds for
easy credit availability. 6
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7. Review all MCAs for each
sector be reviewed to capture
the interests of all
participating stakeholders —
users, project proponents,
concessionaires, lenders and
markets 7
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8. ROADS:
 Increase concession period for BOT
projects.
 Introduce hybrid models,
 Relax exit norms
 Dispose pending cases between developers
and NHAI
 Shift to electronic tolling in time-bound
manner
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9. PORTS
Move from pre-TAMP (tariff
authority for major ports) to
current-TAMP
Strengthen and accelerate
environmental clearance
Provide support infrastructure
(including land, reliable access to
utilities, dredging, rail, roads) to
developer 9
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10. RAILWAY
Take up simpler projects first to
build credibility
Such projects can be brownfield —
monetisation of existing stations — or,
greenfield —development of new
stations
Set up regulatory authority to settle
technical issues such as track-access
charges 10
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11. POWER
Not many power projects are
under PPP.
But the sector has a far-
reaching impact on
infrastructure PPPs
Immediately address power sector
finances as they are hurting bank
loans 11
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12. AIRPORTS
 Prepare a policy that addresses the
expected growth parameters of the
sector and promotes PPPs
 Concession agreement should stipulate
important commercial parameters like
return on equity, treatment of land for
non-commercial purposes
 Develop brownfield and greenfield airports
with defined structure, revenue sharing
mechanisms 12
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13. ROAD
CAG Kelkar
Inconsistency in adopting carrying
capacity/tollable traffic as yardstick
for determining the Concession
Period by NHAI resulted in fixing
higher concession period and
higher toll burden on road users
Projects were approved despite the
known late realization of minimum
threshold traffic
The Total Project Cost (TPC)
worked out by the concessionaires
was higher as compared to TPC
worked out by the NHAI. In 25
projects, TPC worked out
by concessionaire was higher by
50%
In the case of BOT
toll projects, focus on projects with lon
ger concession period. NHAI,
concessionaire can opt for
revenue share on a case to case basis
In case of projects that are not viable on
BOT toll basis, options to fund through
hybrid models, grant of VGF, part annuity,
O&M grants, and debt instruments,
maybe explored.
The concessioning authority may
undertake detailed project development
activities including demand assessment,
soliciting stakeholder views on project
structure and financial viability analysis to
estimate a shadow bid, which could be
used to compare actual bids received 13
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14. NIIF

15. NIIF
 The Government has established the National
Investment and Infrastructure Fund (NIIF) with the aim
to attract investment from both domestic and
international sources for infrastructure development in
commercially viable projects.
 NIIF Limited has been incorporated as a company under
the Companies Act, 2013, duly authorized to act as
investment manager of National Investment and
Infrastructure Fund.
 The establishment activities of the NIIF are underway
and steps are being taken to operationalize the
initiatives with different investors including RUSNANO,
Abu Dhabi Investment Authority(ADIA) and Qatar
Investment Authority(QIA). 15
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16. FUNCTIONS OF NIIF
 Fund raising through suitable instruments including off-
shore credit enhanced bonds, and attracting anchor
investors to participate as partners in NIIF;
 Servicing of the investors of NIIF.
 Considering and approving candidate
companies/institutions/ projects (including state entities)
for investments and periodic monitoring of investments.
 Investing in the corpus created by Asset Management
Companies (AMCs) for investing in private equity.
 Preparing a shelf of infrastructure projects and providing
advisory services.
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17. FUNCTIONS….
 provides equity / quasi-equity support to those Non
Banking Financial Companies (NBFCs)/Financial
Institutions (FIs) that are engaged mainly in
infrastructure financing. These institutions will be able to
leverage this equity support and provide debt to the
projects selected.
 Invest in funds engaged mainly in infrastructure sectors
and managed by Asset Management Companies
(AMCs) for equity / quasi-equity funding of listed /
unlisted companies.
 provides Equity/ quasi-equity support / debt to projects,
to commercially viable projects, both greenfield and
brownfield, including stalled projects. 17
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18. 18
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19. The proposed NIIF entity
will be located in Mumbai
and it will be run by a
governance council with
“world class governance
standards.
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20. PROJECT RISK VERSUS FINANCIAL
CHALLENGES FOR PUBLIC PRIVATE
PARTNERSHIP (PPP)

21. 21
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22. HYBRID ANNUITY MODEL FOR HIGHWAY
PROJECTS
 the government will provide
40 per cent of the project cost
to the developer to start work
while the remaining investment
has to be made by the
developer.
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23. PRESENT MODELS
PPP Annuity: Project
completion, transferred back to
the govt.
PPP Toll : High Financial
Burden on Private Company
EPC : High Financial Burden
on Govt 23
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24.  Earlier MCAs provides an alternative model in the
form of Design, Build, Operate and Transfer
(DBOT) where the project is financed only to the
extent of a certain percentage of the cost by the
private investor.
 This investment is recovered through annuity
payments to be made by the government/Authority
over a specified period commencing from the date
of commissioning of the project,
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25. IN HYBRID MODEL
hybrid annuity means the first 40%
payment is made as fixed amount in
five equal installments
whereas the remaining 60% is paid as
variable annuity amount after the
completion of the project depending
upon the value of assets created
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26. BENEFITS
It gives enough liquidity to the
developer and the financial risk is
shared by the government.
While the private partner continues to
bear the construction and
maintenance risks as in the case of
BOT (toll) model, he is required only to
partly bear the financing risk.
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27.  stranded road projects worth Rs.25,000 crore.
 The government aims to complete construction of
6,325 km of highways in FY16, as against 4,410 km
in FY15.
 The rate of completion improved to 16 km per day
from 12 km per day in FY15. The required rate is 17
km per day in FY16.
 Companies such as Isolux Corsán of Spain and I
Squared Capital New York are scouting for road
assets in India
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28. MARITIME SUMMIT 2016
By : Harveer Singh

29. MARITIME INDIA SUMMIT 2016
 Maritime India Summit 2016 (MIS 2016) is a
maiden flagship initiative of Ministry of Shipping,
Government of India.
 It provided a unique global platform for investors to
explore potential business opportunities in the
Indian Maritime Sector.
 It showcase about 250 projects with an investment
potential of US $6 billion.
 It is an attempt to to attract investment and is
being partnered by South Korea which is known for
its ship-building capacities. /Har
veer
sir
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30. MIS SHOWCASED
 Shipbuilding, Ship Repair and Ship Recycling
 Port Modernization and New Port Development
 Port-based Industrial Development, Port-based Smart
Cities and Maritime Cluster Development
 Hinterland Connectivity Projects and Multi-Modal
Logistics Hubs
 Inland Waterways and Coastal Shipping for Cargo and
Passenger movement
 Dredging
 Lighthouse Tourism and Cruise Shipping
 Renewable Energy Projects in Ports
 Other Maritime Sector related services (Financing,
Legal, Design etc.)
/Har
veer
sir
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31. /Har
veer
sir
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32. BACKGROUND
 India has vast coast line of 7500 km offers
vast investment opportunities
 High logistics costs make Indian exports
uncompetitive.
 95 per cent of India's trading by volume and
70 per cent by value is done through
maritime transport.
 India has 12 major and 187 non-major
ports. Cargo traffic, which recorded 1,052
million metric tonnes (MMT) in 2015, is
expected to reach 1,758 MMT by 2017. /Har
veer
sir
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33. BLUE REVOLUTION
It would be an Umbrella program.
Envisages Integrated Development and
Management of Fisheries’.
The outlay is of Rs. 3000 crore.
It will cover inland fisheries, aquaculture,
marine fisheries including deep sea
fishing, mari-culture and all activities
undertaken by the National Fisheries
Development Board (NFDB) towards
realizing “Blue Revolution”
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34. SAGARMALA PROJECT
 A National Perspective Plan (NPP) will identify
projects including integrated development of
ports and efficient evacuation to and from
hinterland.
 National Sagarmala Apex Committee (NSAC)
and Sagarmala Coordination & Steering
Committee (SCSC) have been constituted.
 There is provision for setting up Sagarmala
Development Company (SDC) at the state
level, for constitution of State Sagarmala
Committees in maritime states.
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35. GOVT ANNOUNCEMENTS
 Government of India plans to invest Rs
70,000 crore (US$ 10.5 billion) in 12 major
ports in the next five years under
'Sagarmala' initiative.
 Government of India is planning to set up
low-cost non-major ports along coastline
under the Sagarmala project and has asked
all the 12 major ports to accord priority
berthing to such vessels and to encourage
quicker movement of cargo.
 Up to 100 per cent FDI would be allowed
under the automatic route for port
/Har
veer
sir
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36. /Har
veer
sir
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37. ELEMENTS OF SAGARMALA
Development of 10 CER (Coastal
Economic Region)
Inward linkages through multiple
freight options - rail, land & inland
waterways
Infrastructure Upgrade for Major and
Minor Ports
/Har
veer
sir
CER
Inward
Linkages
Port
Modernizatio
n
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38. THANK YOU
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