road infrastructre - a legal perspective
TRANSCRIPT
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Conference on Infrastructure Development
Road Sector
A Nation’s Growth Engine
ROAD INFRASTRUCTURE – A LEGAL
PROSPECTIVE
By Ms. Anjuli Sivaramakrishnan
Partner – Transactional & PE Practice
Kochhar & Co.
September 25, 2010
“There are risks and costs to a
program of action. But they are
far less than the long-range risks
and costs of comfortable
inaction”.
John F. Kennedy
35th president of US 1961-1963 (1917 - 1963)
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3
Year Kms.
2003 58112
2004 65569
2005 65569
2006 65569
2007 65569
2008 66754
(Source: Road Transport Yearbook 2006-07, Ministry of Road Transport and Highways, 2009).
ALARMING STATISTICS
The National highway account for only 2-3% of the total
roads but they carry more than 40% of traffic of the
country according to various estimates (NRTP, 2008).
In few states construction of roads of 3 m width, 16 cm
crust thickness with two coats surface dressing is in
practice. As per IRC code these roads are unsuited even
for a single commercial vehicle per day.
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ALARMING STATISTICS
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Scheme for support to PPP on infrastructure
Guidelines for formulation, appraisal and approval of PPP
Guidelines for Invitation of Financial Bids for PPP Projects
Guidelines under Viability Gap Funding scheme
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CENTRAL GUIDELINES ON PPP
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The Andhra Pradesh Infrastructure Development Enabling
Act, 2001
Bihar Infrastructure Development Enabling Act, 2006
Punjab Infrastructure (Development & Regulation) Act, 2002;
PIDB Unsolicited Proposal Bye Laws 2008
SWISS
CHALLENGE
APPROACH6
STATE LEGISLATIONS
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Conceptualization
of Project
Risk Analysis
Financial
Technical
RFQ & RFP
Concession
Agreement
BOT Annuity
BOT Toll
PPP PROCESS
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Framework for evaluating revenue & return
of project is not well developed
No time bound procedures for granting
approvals
No details about the feasibility study have
been enunciated
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CURRENT ISSUES
1. Evaluation of
Returns of
Projects
2. Timelines
3. Feasibility
Study
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Lack of Public participation
No penalties laid out to minimize delays
for the purpose of PPP projects
5. EIA
6. Acquisition
of Land
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CURRENT ISSUES
4. VGF
Guidelines
Complex
Flexible
5. EIA
6. Acquisition
of Land
4. VGF
Guidelines
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PPP PROCESS
Risk CategoryCriticality
Index
Coimbatore
Bypass
Vadodara –
Halol Toll Road
Bharatpur
Bypass
Second
Narmada
Bridge
Delhi-Noida Bridge
FlyoverNardhana ROB
Traffic revenue risk
(other than
demand/market risk)
0.88 30% loss 5-10% loss 25% loss Marginal 5-10% loss 10-15% loss
Delay in land
acquisition 0.83
Minor delay –
No Impact
Marginal
increase in cost4 months delay Nil
1 year delay in
Flyover6 months delay
Demand/market risk 0.8120%
reduction
45-55%
reduction
15-18%
reduction25% reduction 50-55% reduction
20-25%
reduction
Delay in financial
closure0.77
6 months
delay4 months delay 4 months delay 8 months delay Marginal delay Nil
Completion risk 0.77 1 month
Yes–But
completed as
per schedule
through
deployment of
additional
resources
Completed well
ahead of
schedule
Completed well
ahead of
schedule
Completed well
ahead of schedule-
additional resources
deployed
Completed
before schedule
by deployment
of additional
resources
Cost overrun risk 0.74Change in
scope
1.6% of the
project costNo
Marginal
increase
Yes – Marginal
increase
About 7% net
increase in cost
Debt servicing risk 0.74Marginal
impact
Yet to be
realized, but
expected
Yes NoYes –Yet to be
realizedNo
Political risk 0.71 Yes No Yes Not realized yet
Yes – mainly during
developmental
phase
Yes – Marginal
impact
Source: A.V. Thomas 2002
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RECOMMENDATIONS
Comprehensive Feasibility Study
Accountability
Flexibility in VGF
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Legislation to provide for timeframes and
accountability for Breach
Innovative methods of raising Finance
Saving Costs
RECOMMENDATIONS
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CONTACT US
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Thank You
Kochhar & Co.