will government's massive surge in investment ... - Myiris.com

Apr-Jun 2013 Earnings Preview
Rupa Shah
rupashah@plindia.com
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The Cabinet Committee on Economic Affairs (CCEA) cleared the most awaited
proposal to facilitate substitution of concessionaire in the ongoing and completed
National Highway Projects (NHAI). This transfer will require involvement and
acceptance by lenders. This decision will be positive as:
! It will expedite the project execution which is stalled as they are facing issues
relating to financial closure
! Renew the interest of private parties as equity raising was the major issue
! Relieve National Highway Authority (NHAI) from heavy financial claims and
unnecessary disputes
Projects which are already awarded and have achieved appointed date, plus projects
to be bid out in future, as per the prescribed mechanism, will be taken into purview.
Post the procedure and permission given by the lenders, substitution will take effect.
However, the leading substituting entity shall be required to maintain atleast 51%
equity holding in the project SPV.
The Uttar Pradesh state government is in talks with potential bidders to develop 11
state highways, in what could be a big push to its mandate to develop road
connectivity across the state. It has been proposed that the highways will be
developed by Uttar Pradesh State Highways Authority (UPSHA) on the public-privatepartnership
(PPP) model.
The prominent projects included the Shahjahanpur‐Hardoi‐Lucknow State Highway,
Basti‐Mehendawal‐Tamkuhi road, Akbarpur to Jaunpur, Mirzapur and Dudhi Road,
Gorakhpur to Maharajganj Road and Muzaffarnagar to Saharanpur via Deoband
Road.
On April 24, 2013, the government held a pre-application conference for the Agra‐
Lucknow project in New Delhi where 15 prominent developers including GVK, GMR,
ESSEL Infra and IL&FS Transportation, among others, had participated. The project
will be developed at an estimated project cost of Rs96bn on Build-Operate-Transfer
(BOT) model, for a 30-year concession period.
In AP too, being an election year, the Union Minister of State for Road Transport and
Highways announced that the 1817km new National Highways will be developed at
the cost of Rs50bn through the PPP model in the state. Of this, 485 km of National
Highways were notified in Aug-Sep 2012 and are stretches of various lengths forming
part of NH 326. Rest of the 1332 state roads to be developed in National highways
has been notified on March 22, 2013.
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