3. Opportunities in India’s Infrastructure Sector
Presentation by
Abhaya K Agarwal
Vice President
INFRASTRUCTURE DEVELOPMENT
CORPORATION LIMITED

4. Presentation Structure
Country Focus
Section 1
Section 2
FDI caps in infrastructure sector
Section 3
Opportunities in infrastructure sector
Role of IL&FS and Public Private Partnerships
Section 4

5. SECTION 1
COUNTRY FOCUS

6. Country Focus
Adequacy in Infrastructure facilities is vital for acceleration of economic development
Increasing need of the country to compete in global market
Provision of efficient infrastructure services
Government's priority Infrastructure Sectors:
Railways
Roads
Power
Ports
Telecommunication
Water Supply
Sanitation
Sewerage
Airports

7. At present, approx 5.5% of GDP is invested in Infrastructure Sector
India Scenario
FY 2004
GDP Growth (%) (expected)
GNP-PPP ($ bn)
Inflation - WPI (%) %
Foreign Exchange Reserves ($ bn)
Exports Growth (%)
Foreign Investments ($ bn) (Targeted)
At present, approx 5.5% of GDP is invested in Infrastructure Sector

8. India Scenario (Contd.)
Indian Economy is projected to grow at 8 per cent by
Total expected investment requirement in infrastructure in next 5 years: Rs. 4,000-4,500 billion (US $ billion)
Investment requirement to be provided by various collective sources, FDI prime source:
Government funds, schemes and programs
Lending institution such as World Bank, ADB etc.
Private sector participation including Foreign Investment
Donor and multilateral agencies
Innovative financing measures such as User fees charges etc.
Estimated investment through FDI- US$ billion /year by , expecting 40% investments in infrastructure sector

9. FDI CAPS IN INFRASTRUCTURE SECTOR
SECTION 2
FDI CAPS IN INFRASTRUCTURE SECTOR

10. FDI caps in Infrastructure Sector

11. Approximate Cost (USD)
Some projects eliciting FI,approved in Union Budget
Project
Approximate Cost (USD)
Remarks
International Transshipment Terminal at Vizhinjam (Kerala)
1 Billion
Registered company will mobilize funds from the market for meeting the costs
Sethusamudran Ship Canal Project
0.5 Billion
To be implemented by a Special Purpose Vehicle (SPV). Hope to mobilize USD 0.30 Billion from the private sector
Six Lane Kundli-Manesar-Palwal Expressway
0.21 Billion
Construction of 130 Km road in Haryana. To be implemented on Build-Operate-Transfer (BOT) basis, in collaboration with Malaysian Government
Construction of 48 km six lane elevated expressway on Inner Ring Road and N-S and E-W Corridors (Delhi)
0.60 Billion
An SPV to be floated for development of the project. Cost to be recovered through toll charges over years. Backed by Noida Toll Bridge Company Limited (NTBCL)

12. OPPORTUNITIES IN INFRASTRUCTURE SECTOR
SECTION 3
OPPORTUNITIES IN INFRASTRUCTURE SECTOR

13. Opportunities in Urban Infrastructure sector
Tenth Plan fund allocation to MoUD & Poverty Alleviation= USD 6.46 billion
Investments required for provision of core urban infrastructure services like water supply, sanitation and roads

14. Opportunities in Rail Infrastructure sector
Annual Plan of Rail budget : USD 3.15 Billion.
Target Projects:
Removal of bottlenecks in critical railway network sections requires investment of USD 3.15 Billion, projects include:

15. Infrastructure Development
Strengthening of Golden Quadrilaterals and its diagonals to enable railways to run more long distance & freight mails at a higher speed of 100 Kmph:
Investment of USD 1.74 billion
Strengthening of rail connectivity to ports and development of multi modal corridors:
Investment of USD 0.65 billion

16. Infrastructure Development
Construction of 4 Mega bridges over Rivers-Ganga (2), Brahmaputra, Kosi:
Investment of USD 0.76 billion
Accelerated Completion of last mile & other important projects, at a cost of USD 0.17 billion

17. Expected Infrastructure Development through Plan Funds
Special Railway Safety Fund of USD 3.7 billion, to be utilized till 2007:
For renewal and replacement of overaged railway assets, bridges, rolling stock etc.
Total arrears in track renewal (km) = 34,990 km
Broad Guage renewal = km
BG, yard & sides = 6030 km
Metre Gauge = 7820 km
Narrow gauge = 1140 km
New Lines for 1310 km expected to be completed
Gauge conversion of 2365 km planned- till 2007

18. Infrastructure Development in Road Sector
Plan outlay for Central Sector Roads is USD billion.
Target projects:
National highway development project (NHDP) envisages development of 5,846 km of Golden Quadrilateral & 7300 km NS-EW corridors, required investment = USD billion.
National Highway network two laning within next 7 years for 4000 km and 4 laning 800 km of non NHDP stretches to be taken up.

19. Infrastructure Development
Improving riding quality of 10,000 km and rehabilitation of 200 bridges.
Plan expressways for high density corridors and conduct feasibility studies of about 1000 km of expressways.
State highways road surface to be black topped for 6800 km and 40,000 km on Major District Roads
Development of roads in North-Eastern Region
State Highways links carrying very heavy traffic to be laned for about 1000 km.
Providing rural connectivity through all weather roads

20. Road Development Schemes
National Highway Development Program
Length
(in Km)
Cost
(in USD Billion)
Golden Quadrilateral
5846 14
North South & East West Corridor
7274
Port Connectivity & other works
1133
100% FDI allowed in Road Sector

21. Other Road Initiatives
Pradhan Mantri Grameen Sadak Yojna (PMGSY)
Upgradation of 500,000 Km of existing Rural Roads
Estimated total outlay on project is USD 29 billion

22. Other Road Initiatives
Pradhan Mantri Bharat Jodo Pariyojna (PMBJP)
The 10,000 Km project envisages linking all State Capitals and important commercial centres not covered under NHDP with 4/6 lanes highways by 2009.
Estimated total outlay on project is USD 9 billion

23. Infrastructure Development in Power Sector
Investment requirement of Rs. 6,244 billion (US $ billion) from
Tenth plan working group reports estimates energy requirement of 7,19,097 MKWh
Target 80 Projects such as:
Electrification of 62,000 villages through grid supply
Accelerated Power Development Program envisages metering of 11 KV feeders
Schemes in Hydro Sector=14,393 MW capacity
Schemes in Nuclear Sector=1,300 MW capacity
Schemes in Thermal Sector=25,417 MW capacity

24. Infrastructure Development in Ports Sector
Ports capacity to be increased till 2007:
Plan outlay of USD 11.8 billion for port sector
Traffic expected to increase million tonnes in major and minor ports.
Target Projects:
Leasing out of assets of the ports
Construction and operation of container terminals, multiple cargo berths and specialized berths, warehousing, storage facilities, captive power plant etc
Leasing of equipment for cargo handling
Automation by vessel traffic management system for navigation, for cargo & document handling operations

25. Infrastructure Development Options
Major Ports : GoI has identified 26 projects for PSP:
Container berths at Mumbai port in Maharashtra
POL handling facilities at JNPT in Maharashtra
2 Coal berths at Mormugao port in Goa
2 oil jetties at Kandla in Gujarat
LPG Terminal at Vizag in Andhra Pradesh

26. Infrastructure Development in Civil Aviation Sector
Plan outlay in Central sector in 10th Plan is USD 2.81 billion
Target Projects:
Public private partnerships in major ports at Delhi, Chennai, Mumbai and Kolkatta
Air India considering phasing aircrafts, comprising small capacity long range small capacity short range aircrafts.

27. Large projects carried out in past
Krishna Water Supply Project in Andhra Pradesh, Rs. 8 billion water privatization project, project would bring 410 million lts/ day of treated water.
HUDCO financed water supply scheme in Jeypore, Orrisa, Project cost of Rs million, Rs. 79 million via HUDCO and rest State grant, cost recovery through hike in user charge & one time connection charge.

28. Large projects carried out with Private Sector Participation
Development & Implementation of Toll Bridge across the River Yamuna at NOIDA
Development & Implementation of Gujarat Toll Roads
Tirupur Industrial Water Supply Project
Visakhapatnam Industrial Water Supply Project
Development of International Convention Centre in Hydrebad, Andhra Pradesh

29. Investing in India – Foreign Direct Investments
Through financial collaborations
Through Joint Ventures and technical collaborations
Through capital markets via Euro issues (Global Depository Receipt – GDR)
Through private placement or preferential allotments

30. ROLE OF IL&FS AND PUBLIC-PRIVATE PARTNERSHIP
SECTION 4
ROLE OF IL&FS
AND
PUBLIC-PRIVATE PARTNERSHIP

31. IL&FS: Corporate Profile
Inception
Year 1987
Pioneer in infrastructure financing & project development
Role play includes project sponsor, developer, advisor, financier, operator and manager for variety of infrastructure projects
Vision
HDFC, CBI, UTI, SBI, IFC (W), Orix Japan
Government of Singapore, HSBC
Shareholders
Shri M. Damodaran, IAS, Chairman, ILFS
Shri Ravi Parthasarthy, Vice Chairman, ILFS
Board of Directors
Leading multilateral agencies like The World Bank, ADB, KFW, USAID, CIDA
Ongoing Relationships

32. IL&FS SHAREHOLDING PATTERN
ILFS-An Indian Investment Banking Institution
Strategic focus:
Commercialization of infrastructure projects, and,
Value added financial services

33. Public Private Partnership (PPP): Characteristics
A partnership between the public and private sectors
Delivers projects/services traditionally provided by the public sector
Leverages scarce public sector resources to attract private capital
Combines Capabilities & Social Focus of Government with Management Efficiency, Technical Capabilities and Commercial Focus of private sector
Combines the strengths of the public and private sectors with an emphasis on:
Private Capital
Value for money
Delivering quality public services

34. PPP Approach
Goal
Attract private capital and efficiency for infrastructure projects
Need
Lack of Budgetary Resources
Need to improve efficiency in service delivery
Private Sector contribution for:
Financial investments
Management practices
Efficiency in service delivery
Public Sector contribution limited to:
Financial gap funding
Providing institutional commitment to project
PPP Approach
Attracts market investments
Reduces cost to public sector
Improves service delivery
Advantages

35. IL&FS Projects IL&FS has played a catalytic role as sponsor-developer
Delhi Noida Bridge : 8-lane bridge linking Delhi to Noida
Vadodara-Halol Road : 32 kms road widening project
Ahmedabad-Mahesana Road: 62 kms road widening project
Tirupur Water Supply : 250 mld water supply project
Tamil Nadu Roads : 250 kms strengthening of roads
Mahindra Industrial Park :1200 acres industrial estate with
state-of-the-art facilities

36. Thank you
Infrastructure Leasing & Financial Services Infrastructure Development Corporation

37. Major Parties to an Infrastructure Project
Each party maximizes its own objectives subject to the constraints set by others’ willingness to participate.
Security of Debt Payment
(concession agreement)
and Collateral
Build, Operate, Raise
Finances to Provide
Infrastructure Services
Concession Rights,
Fiscal Incentives,
Guarantees
Government
Creditors
Project
Promoters
Security and Assurance
of Debt Repayment
Term Debt Capital