amritsar terminal project
TRANSCRIPT
Lalit Kumar
Assistant Professor (Financial Mgt.)
HIPA, Gurgaon.
Amritsar Intercity Bus Terminal Project
Project Description
PPP structure of the Project
Financing Information
Process Analysis
Development
In this presentation, we will go through:
Construction
Delivery
Exit
Risk allocation framework
Key Learning and Observations
In this presentation, we will go through:
Amritsar city is a spiritual centre for the Sikh community which attracts large number of tourists (as high as 50,000 per day) visiting particularly the Golden Temple and Wagah (India-Pakistan) border.
Feasibility : As there were 1,800 to 2,000 bus arrivals per day and the demand of services at terminal were rising, it was necessary to modernize and develop . Without using pubic sector comparator, The Punjab Infrastructure Development Board (PIDB) decided to modernize and develop the terminal through BOT.
What it covers - The project involves demolishing of existing terminal building and developing a modern state of the Intercity Bus Terminal to cater growing demands of the city.
Project Description
This project was signed in Feb 2004 for 11 years and 5 Months on BOT basis means in 2015, it will be transferred to Government of Punjab.
The Rohan Rajdeep Infrastructure (India) Pvt. Ltd. (a partnership between Rohan Builders (India) Pvt Ltd., Rajdeep Buildcon Pvt Ltd and Rajdeep Road Developers Pvt. Ltd.) completed the project and commissioned it in October 2005.
Presently, the terminal is handling only 1700 buses a day lower than its estimated number i.e. 2000 to 3000 per day.
Current Status
Through a two stage bidding process, Department of Transportation (DoT), Government of Punjab (GoP) awarded the contract to Rohan Rajdeep Infrastructure Ltd. for undertaking the project activities and develop a modern bus terminal on BOT basis.
The private operator established a Special Purpose Vehicle (SPV) called the Rohan Rajdeep Infrastructure (India) Pvt Ltd. for executing the project.
PPP structure of the Project
The private operator was responsible to finance, building, operations and maintenance of the Amritsar Intercity Bus Terminal complex.
Concession period : 11 years and 5 months Project Development Fees : 35 lakhs for the
project site lease and a lease rental of 50,000 per month were required to be paid by the private operator for use of the project site over the concession period.
PPP structure of the Project
Revenue streams identified: The first revenue stream was through the operations of the bus terminal in form of “Adda Fees”. The second was commercial rentals from shops located within the Intercity Bus Terminal complex. Other sources of revenue included the sale of advertising rights as well as parking fees.
PPP structure of the Project
Estimated : 19 crores at the time of project conception.
Actual: the project cost finally worked out to 21.34 crores.
Financing through: Debt component was 12 crores while the equity component was 9.34 crores.
Financing Information
Inception •Project conceived by DoT, GoP and PIDB and configured through project advisor in 2002
Procurement •2 Stage Bidding Process started in November 2002. During RFQ , 16 bids were received out of which 14 prequalified to the RFP stage. At RFP stage four bids were received and on the basis of meeting evaluation criteria specified in the RFP document, Rohan Rajdeep Infrastructure Developers Pvt. Ltd was declared the successful bidder and was issued a notice of award for the concession agreement in September 2003.
Development •Development was undertaken in two stages, the first was the Conditions Precedent period of 90 days and thereafter the Construction period of 18 months.
Delivery •Concession Agreement signed in February 2004 and still being operated by private operator.
Process Analysis
As per Conditions Precedent: Within 90 days of signing concession agreement –
The concessioning authority was required to (i) authorise the private operator to collect “adda fees” from buses using the Terminal (ii) making it mandatory for all intercity buses to halt and pay adda fees (iii) Facilitate the transfer of land at the project site from the Amritsar Municipal Corporation and (iv) Temporary shifting of the existing bus terminal to a different location.
Development Phase
The private operator on his part was required to (i) Obtain all necessary clearances and approvals, (ii) pay the project development fee of 35 lakhs to the concessioning authority, and (iii) Ensure financial closure of the project and submit proof of the same.
After completing the above 90 days conditions precedent, construction period of 18 months will be considered.
Development Phase
The project was to be developed based on the standards specified in the concession agreement including preparation, maintenance, and approvals of the project design.
The private operator was able to complete the work within 17 months including construction and carrying out necessary tests required to be carried out. Accordingly, the private operator was given the right to advertise license allotments for the passenger amenities in the Intercity Bus Terminal.
Development Phase
The Amritsar Intercity Bus Terminal construction was completed and commissioned in October 2005.
It includes long distance and local bus routes, parking provision for 54 cars, 102 rickshaws/autos and 1838 two-wheelers / cycles and 300 passenger seating berths, convenience stores, refreshment stalls etc.
Subsequent to receiving the completion certificate, the O&M period for the project commenced.
Delivery
At the end of the concession period all immovable and movable property relating to the project will be transferred to the concessioning authority and the authority will issue a certificate as proof of transfer of all rights, titles and interests in the Amritsar Intercity Bus Terminal assets and facilities.
Exit
Risk Type Sensitivity Risk Period Primary Risk Bearer Comments
A) Pre-Operative Risks
Delay in Land
Acquisition
Low 0-90 days from
signing of concession
agreement
Concessioning
Authority
Project development
involved transfer of
land from the
Municipal Corporation
of Amritsar to GoP.
Hence delay in land
acquisition was not a
major risk for this
project.
Financing Risk High 0-90 days from
signing of concession
agreement
Private Operator The private operator
was required to
ensure financial
closure of the project
within 90 days of
project acceptance .
Inability to ensure
financial closure
would have resulted in
a default on the part
of the private operator
.
Risk Type Sensitivity Risk Period Primary Risk Bearer Comments
A) Pre-Operative Risks
Delay in obtaining
Approvals/Permits
Medium 0- 90 days from
signing of the
concession
agreement
Private Operator The concessioning
authority was to
provide all necessary
support to the private
operator in obtaining
the clearances and
approvals. However
the responsibility of
obtaining the same
was with the private
operator.
B) Construction Phase Risk
Design Risk High 0-18 months from
compliance date
(Date of fulfilment of
conditions precedent)
Private Operator The private operator
was required to
submit detailed
construction design
for review along with
design warranties for
the project.
Risk Type Sensitivity Risk Period Primary Risk Bearer Comments
B) Construction Phase Risk
Construction Risk Medium 0-18 months from
compliance date
Private Operator The private operator
was required to furnish
a performance security
and to facilitate
periodic inspection
alongwith submission
of monthly progress
reports.
C) Operations Phase Risk
Revenue Risk Low Throughout Private Operator A notification was
issued that all intercity
buses would be
required to halt, drop
and pick up
passengers from the
Bus Terminal.
However, private
operator has to ensure
the use of the terminal
as scheduled.
Risk Type Sensitivity Risk Period Primary Risk Bearer Comments
C) Operations Phase Risk
Policy Risk Low Throughout contract
term
Concessioning
Authority
In case of any
changes/modification in
laws the concessioning
authority would take
necessary action to
ensure that there is no
change to the private
operator’s legal,
commercial and financial
position as a result of
such change.
Performance Risk High Throughout
Concession Period
Private Operator The private operator was
required to maintain
standards during the
construction as well as
O&M period as per the
detailed specifications in
the concession
agreement.
Risk Type Sensitivity Risk Period Primary Risk
Bearer
Comments
C) Operations Phase Risk
Operations &
Maintenance Risk
Medium Throughout Concession
Period
Private
Operator
The private operator was required to
create an O&M manual, detailing the
regular and preventive maintenance
which would be undertaken. In case of
non-compliance , the concessioning
authority had the right to invoke the
performance security and impose a
penalty for non compliance.
D) Other Risks
Handover risk Medium 6 months from termination
date
Private
Operator
The concessioning authority had the
right to appoint a consulting engineer
to assess the condition of the project
facilities so that if required shortfalls
can be remedied by the private
operator prior to handover of assets.
The VfM assessment on qualitative basis points out the following facts:
1. Assured revenues to the GoP through lease payments : the concessioning authority receiving a lease rental of 50,000 per month from the private operator during the concession period apart from the 35 lakhs received in starting of the project.
2. Development of a modern Intercity Bus Terminal with O&M being efficiently handled by the private operator: In addition to upgrade on basic passenger services like provision of adequate seating, designated bus bays, electronic displays and car and bike parking areas, this terminal also provided for eateries and convenience shopping area for passengers.
Post Facto VfM Analysis
3. No cash outlay for the concessioning authority during the construction as well as O&M period : The GoP had no cash exposure in the project during both construction and O&M period.
4. Demonstration effect : After success of this project, a number of other bus terminals in Punjab as well other cities in India are being bid out in a similar fashion.
Post Facto VfM Analysis
The project remained successful due to:1. Facilitation provided by Government to
ensure efficient execution: Government ensured the efficient leasing of land to the private operator , getting necessary approvals for project development, and providing support during the construction stage as well as the O&M stage of the project. This was a critical element in the timely execution of the project.
Key Learning and Observations
2. Favourable policy environment to ensure revenue stream : The Government issued notifications and ensured favourable environment for the project activities.
3. Flexible project structuring was undertaken to facilitate funding of the project: Collection of “adda fees” was similar to toll collections on road projects, the lenders were provided enough security through access to the revenue streams of the project and were provided substitution rights in case of a default by the private operator.
Key Learning and Observations
The project remained successful due to:4. Detailed and clear definition of project design
and scope : It is critical for success of a project and also helps in proper monitoring. In this project, necessary standards were maintained by the private operator for both project development and delivery; and Government support in project activities also set the success stone in the whole project.
Key Learning and Observations