Tuesday, July 14, 2009

>ROAD INFRASTRUCTURE SUMMIT (JM FINANCIAL)

Driving India’s economic growth – From IT to Infrastructure

Ushering in the change by reaching out to investors: We cohosted Mr Kamal Nath, Union Cabinet Minister for Road Transport and Highways. The panel members included other luminaries like NHAI chairman Mr Brijeshwar Singh and Mr Brahm Dutt, Secretary, Ministry of Road Transport and Highways. This was Mr Kamal Nath’s first investor meeting post taking over the Ministry and shows the new and progressive outlook the government has on building infrastructure.

Open to suggestions and new ideas that can help improve execution: Mr Kamal Nath emphasized the role of infrastructure and particularly roads in driving the economic growth. He highlighted the importance of domestic demand, in the current global downturn and India’s favourable demographics. The minister reiterated his commitment to achieve development target of 20km of roads per day. His commitment and zeal was seen in his eagerness to listen to
suggestions. He invited suggestions on improving transparency, efficiency in bidding/awarding projects and innovative means of financing to meet the investment target for NHDP. The minister was confident to smoothen out issues on an urgent basis and will look into ways to make road sector projects more investor friendly. He highlighted that his focus was to decentralize and work closely with all stakeholders like various state governments, investors, developers etc. in implementing best practices.

Aggressive targets have been well thought-out with clear workplans: The last 2 years have not seen much progress with NHDP projects with only 9 projects being awarded in 2008-09. Mr Kamal Nath explained that even though the progress appeared slow, this was an important phase as the government has gained tremendous experience. Mr Singh presented a detailed work plan to award 126 projects covering around 12,000 km in 2009-10. Of this, 65 projects are expected to be open for bidding in Q2/Q3 FY10.

Land acquisition remains a major concern for investors: Investors expressed concern the fact that land related issues caused delays in project implementation leading to cost and time overruns. Mr Nath highlighted that with 80% of land being made available even before bid and balance 20% being notified, risk should get reduced. He also seemed open to increase the availability to 90%. A number of suggestions were put forward: innovative structures for bidding (eg. Swiss Challenge), easy access to superior technology for developers, private investment in projects (eg, NPV based concession period, monetizing land value), relaxing exit clause for developers to allow entry of investors post-completion. Mr Kamal Nath invited suggestions/white papers on these topics directly addressed to him.

To see full report: ROAD INFRASTRUCTURE

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