Presentation on Strategies for Infrastructure Development in Karnataka By: V. P. Baligar

Importance of Infrastructure  Basic requirement for economic growth  Growth rates could have been higher with better infrastructure  Essential for improving quality of life  Positive impact on Human Development Indices.

Initiatives of Govt of Karnataka  Created a separate Department for Infrastructure in Sept 1996  Formulated an Infrastructure Policy in 1997  Incorporated ‘Infrastructure Development Corporation (Karnataka) Ltd’ (iDeCK) in June 2000  Incorporated ‘Rail Infrastructure Development Company (Karnataka) Ltd (K-RIDE) in Nov 2000  A Special Purpose Vehicle – Hassan Mangalore Rail Development Company Ltd (HMRDC) set up in July 2003  Other Departments have set up institutions such as KRDCL, K-SHIP, KUIDFC, etc

Central Govt Initiatives  Set up a PPP Cell in Dept of Economic Affairs  Formulated a Scheme: ‘Viability Gap Funding’ (VGF) to financially support PPPs  Established ‘India Infrastructure Finance Company Ltd’ (IIFCL) to provide long term finance to infrastructure projects  Model Concession Agreements drafted for Road Sector Aims to raise infrastructure investment from 4.7% of GDP to 8%

Infrastructure: Challenges A. Policy Level  Frequent changes in the policy  Lack of information on the policy and procedures  Complicated concession agreements B. Demand Side  One Billion people  Rising aspirations  Unpredictable demand

Challenges C. Accountability issues  Maintenance of transparency  Accountable to the legislature  Scrutiny by C&AG D. Bureaucratic hurdles  Clearances from a large number of agencies  Delay in processing  Corruption and harassment

Challenges…..  E. Environmental issues  F. Legal problems  G. Land acquisition and rehabilitation  H. Operation and maintenance

Infrastructure: Opportunities A. Agriculture:  Agriculture and Horticulture markets  Floriculture parks  Agro-food processing  Cold storages B. Energy:  Generation  Transmission  Oil and Gas pipe line

Opportunities…. C. Industrial Infrastructure:  Industrial parks  SEZ  Industrial townships D. Irrigation:  Canals and dams E. Tourism:  Hotels and resorts  Convention centers  Trade fairs  Amusement parks

Opportunities…. F. Transportation and Logistics  Roads and Bridges  Railways  Airports and Airstrips  Urban transport  Minor ports  Inland water ways  Truck terminals  Ware houses

Opportunities…... G. Urban infrastructure  Townships  Water supply and sewerage  Solid waste management

New Initiatives and Strategies  New Infrastructure Policy 2007 Drafted Objective: To provide a fair and transparent policy framework to facilitate and encourage Public Private Partnership (PPP) in upgrading, expanding and developing infrastructure in the State.

Benefits of New Policy Savings in costs due to innovative designs, timely project implementation and higher efficiencies in operations Enhanced quality of services to users due to better managerial practices & efficiencies Reduction in, and gradual elimination of, pricing constraints Enabling public funds to be earmarked for other commercially non-viable but socially justifiable projects Financial innovation and development of cost- effective solutions Greater employment opportunities in the infrastructure sector

Strategies…..  Payment for Services - Inculcation of “Provider charges” and “User pays” Principles - Subsidies in user charges for economically weaker sections

Strategies… Contractual Structure  Existing Assets: O & M Contracts, Lease of Assets, Rehabilitate, Operate Maintain Transfer (ROMT) Contract  New Assets: BT, BLT, BTO, BOT, BOOT, BOO, BOST, BOOST, BOLT B: Build, O: Own/Operate, L: Lease, S: Share, T: Transfer

Strategies…  Setting up Special Purpose Vehicles(SPVs) where appropriate - Selection of Private Sector Partner through a transparent procurement process.  Procurement in all Projects to be on the basis of a transparent bidding process

Strategies… Regulatory Framework  Suitable mechanisms to be worked out to facilitate expeditious land acquisition  Set up independent regulatory authorities for some sectors

Institutional Framework  Infrastructure Development Department(IDD) to be the nodal agency to coordinate PPP projects  A PPP Cell to be set in IDD to assist in identification, development, implementation review of PPP projects  District Level Committee under DC to assist PPPs  Single Window Agency under the Chairmanship of CS/ACS to approve projects up to Rs 50 cr and to recommend projects over Rs 50 cr to HLC  High Level Committee under the Chairmanship of Chief Minister to approve projects above Rs 50 cr.

THANK YOU