Infrastructure Planning and Management

SYLLABUS
UNIT 1

Basic Concepts Related To Infrastructure: Introduction to

Infrastructure, an overview of the Power Sector, Water Supply
and Sanitation Sector, Road, Rail, Air and Port Transportation
Sectors, Telecommunications Sector, Urban Infrastructure,
Rural Infrastructure in India. Introduction to Special Economic
Zones, Organizations and layers in the field of Infrastructure,
The Stages of an Infrastructure Project Life cycle.
 Introduction to Infrastructure
The underlying foundation or basic framework (as of a system or organization). The system of public works of state,
country or region.
The term “Public Works” is applied to facilitates that usually require substantial capital investment; provide services or
solve problems perceived to the public's responsibility; and are planned, designed, constructed, and proposed by or
under the auspices of government agencies.
Private companies may also construct and /or operate public works, to serve their own manufacturing or other need, or
for profit.
“Process of integrating, design, construction, maintenance and rehabilitation to maximize the benefits to the users and
minimize the cost to the owners and users”
“Systematic, coordinated, planning and programming of investments or expenditures, design, construction,
maintenance, operation and in-service evaluation of physical facilities”
 Introduction to Infrastructure
Rather than describing infrastructure through a single definition, it might be more
helpful to describe infrastructure through a set of characteristics that are attributed to
it.
Some of these characteristics that are popularly associated with infrastructure are:
▪ Infrastructure facilities are generally available to large groups of people.
▪ Infrastructure helps deliver essential services for the functioning of an
organization or society.
▪ Infrastructure helps achieve economic and social objectives
▪ Infrastructure is the base upon which society and its activities rest
Examples of infrastructure are waterways, roads, railway network etc.,
 Types of Infrastructure
Several systems can be characterized as infrastructure (including Computer Systems that network and serve
data and applications). For the purpose of this study, we will narrow down our perception of infrastructure
and restrict it to PHYSICAL INFRASTRUCTURE of the following types:
❑ Transportation Infrastructure
Roads, Bridges, Airports, Ports, Waterways, Tunnels, Parking
❑ Water and Sanitation Infrastructure
Water Supply Systems, Sewage treatment systems
❑ Energy Infrastructure
Dams, power plants, power distribution facilities
❑ Telecommunication Infrastructure
Dams, power plants, power distribution facilities
❑ Housing and Recreational Infrastructure
Swimming pools, Sports facilities
 Role of Infrastructure
Greater focus needs to be placed on QUALITY NOT QUANTITY of Infrastructure services. It is
important from mainly following perspective:
1. As a key driver for all round growth with enhancement in the efficiency level
2. Most infrastructure utilities touch the population at all levels.
3. Up keeping of environment for safe living.
4. Poverty alleviation as a consequence of overall development of productive sectors.
5. Easy and cost efficient access to markets both for inputs and outputs is possible out of infrastructure
developments.
▪ The availability of adequate infrastructure is imperative for the overall economic development of the
country.
▪ Infrastructure adequacy helps determine success in diversifying production, expanding trade, coping with
population growth, reducing poverty and improving environmental conditions.
 Categories of Infrastructure Projects

1. Development of new projects (new highways, new water distribution

systems) or provision of additional capacity or capability because of
increased demand (add additional lanes, expand a water treatment
facilities).
2. Rehabilitation and/or reconstruction of existing facility without
changing the capacity or capability of the facility
3. Routine maintenance and operation of infrastructure systems (municipal
systems for transportation, water supply, sewage and storm water and solid
wastes)
4. Improve the system efficiency by modify the operation and management
(Improve pumps efficiency by cleaning or/and lubrication)
POWER SECTOR
 POWER SECTOR

the power sector is normally divided into three sub-systems

▪ …Power Generation which is done at power plants or stations
Power Transmission which describes the process of transferring the generated power to a distribution system
Power distribution which involves conveying the transmitted power to individual homes, commercial areas etc.

However such a system need not always be followed Generated power can directly be transmitted to Industries
Industries can themselves have power generation plants
 POWER SECTOR

POWER GENERATION MODES

Power generation falls into four broad categories
▪ Thermal power, which is often produced through centralized thermal power plants using coal as a fuel.
▪ Hydropower that is often produced by trapping river flows via the construction of dams and hydroelectric power
stations
▪ Nuclear Power.
▪ Renewable sources of power such as Wind Energy, Solar Energy, Tidal Power etc.

Renewable sources of energy are the most environment-friendly, while thermal energy often causes
the greatest amount of pollution
 POWER SECTOR
▪ Pre-Independence: In this era, 65% of power generation was done by the private sector
▪ 1975-1991: During this era, the trend of moving away from the private sector towards the
public sector continued in the power industry. This phase was characterized by greater
involvement from the Central government. Centralized organizations such as the National
Thermal Power Corporation (NTPC). The National Hydro Power Corporation (NHPC), the
National Power Trading Corporation (NPTC) etc. were set up at the central level „.
▪ Post 1991: After the liberalization of the Indian Economy, there has once again been
greater involvement of the private sector in the power industry, and a rapid growth of this
industry as well
 POWER SECTOR

POWER SOURCES IN INDIA

India currently generates 135,781 MW of power. As Indicated in the previous slide, most of India’s power is currently
generated through thermal Power Plants that use coal as a fuel. Hydropower sources also account for a non-trivial amount
of power generated in India. As per India’s current policies, a lot of emphasis is being given to developing hydro, nuclear
and renewable sources of Power.

PERFORMANCE OF POWER SECTOR

The current performance of the power sector leaves much to be desired. Average Return on Investment for State
Electricity Boards (SEBs) is -26%, indicating that several SEBs are loss making agencies. Aggregate Transmission and
Distribution (AT&D) losses are close to 40% implying that almost half the generated power does not make its way to the
intended consumers.
There is a peak power deficit of 12.6% and energy deficit of 7.5% at the All India Level in 2002. As per current 5 year
plan estimates, we do not have the generating capacity to meet our current needs if we plan to grow at 8-9% p.a. This
implies that there should be more investment in power generation.
 POWER SECTOR
POWER TARGETS AND SUBSIDIES IN THE POWER SECTOR
60,000 more MW of power generation capacity to be added by 2021. 23% of
this should be from Private sources. 50,000 MW of power to be generated
through Renewable sources by 2025. AT&D losses to be cut to 15% by 2012.
Costs of power generation are typically higher that the cost at which power is
sold. This is partially due to subsidies – for instance, farmers get power at
virtually no cost.
Although industry is expected to cross-subsidize the farmers, the costs to
industry are so high that many firms prefer to set up their own captive plans that
generate power. As a result, SEBs are deprived of potential revenues. This in
turn has led to several SEBs making losses. As a result, they have insufficient
funds to invest in capital renewal, upgradation and maintenance, leading to a
negative cycle of poor performance, large losses and in turn, a greater loss of
revenue.
 POWER SECTOR
REFORMS AND POLICIES
The Electricity Act of 2003 is one of the key policy acts in the Power Sector.
This act encourages private sector involvement in Generation, Transmission and Distribution. Open Access Provisions
are provided in the Act wherein private generators can sell directly to consumers.
Privatization and Corporatization of SEB’s is encouraged. State Governments pay off or write-off the debts of the SEB’s.
Competition is promoted in Generation and Distribution.
Unbundling of Generation, Transmission and Distribution is proposed in order to increase the number of players in
this sector and thereby promote efficiency, consumer choice and satisfaction.
Cross subsidies will be reduced and State governments will pay SEBs the subsidies they mandate. SEBs can also set
appropriate tariffs so that they are financially viable.

APDRP – Accelerated Power Development and Reform Program. Some highlights are
▪ States unbundle Generation, Transmission and Distribution, and take over SEB debts.
▪ States agree to an audit, use of IT and Metering
▪ Investment is provided to upgrade infrastructure
▪ Funding is contingent on whether targets were met for previous projects
▪ Incentive amount is pegged to reduction in difference between cost of production and revenue
 POWER SECTOR
POWER PRIVATIZATION – A SHORT NOTES
IPP - Independent Power Producers, Private agencies that generate power PPA - Power purchase agreement, an agreement
that an IPP or another private entity might have with a buyer such as the government to buy a certain quantity of power at
certain rates IPPs take on the capital costs of generating power, and recoup these costs by selling to the SEBs in accordance
to the PPAs. The SEBs can themselves transmit and distribute the power, or they can privatize this function also

In general, transmission efficiency depends on economies of scale and as a result it is difficult to have more than one
transmission agency for a given area. Transmission thus has monopolistic characteristics in contrast to power generation
and distribution.
A regulator is often necessary for this sector in order to control power prices from becoming too high, and to foster
competition in this sector.

ULTRA MEGA POWER PROJECTS (UMPP)

Power plants of capacity >= 4000 MW are considered as UMPPs. The government has come up with a separate policy for
these plants in order to encourage power generation in the country.
Power Finance Corporation (PFC) will do the groundwork, create a Special Purpose Vehicle (SPV), acquire land, permits
etc. This SPV will then be sold to private vendors who will build and operate the power plant, and supply power.
5 plants of 4000 MW have been proposed initially at an outlay of INR 3,20,000 Cr for the Indian government.
 WATER & SANITATION SECTOR

CHARACTERISTICS
The W&S sector can be considered in three parts/phases listed below
▪ Water harvesting/storage
▪ Water supply (piping and distribution from the reservoir to the consumer)
▪ Waste management and sanitation
This sector also has monopoly and economies of scale characteristics. As a result, it is not feasible
for several W&S firms to co-exist in the same area.
Social issues play a very important role in guiding the policies and the performance of this sector.
There is a perception that water is a basic human right. This puts pressure on public agencies to
ensure good quality of service in this sector.
Pricing of water is also a very contentious issue since it is considered a basic human right from
some quarters. This makes it very difficult to privatize water supply services.
 WATER & SANITATION SECTOR

HOW IS INDIA DOING?

50% urban households do not have a piped connection. 44% of households have no sanitation at all.
Unaccounted For Water (UFW) - water that is lost or stolen during transmission is as height as 25- 50% of stored
water. Water is not available all day in most places. 2, 80,000 rural people are partially or fully not covered. Another 2,
17,000 face severe quality problems. Another 60,000 are exposed to arsenic etc.
The price of water is artificially low due to the social issues mentioned in the previous slide.
This affects the profitability of local water boards and therefore the quality of service.
Very often, the urban and rural poor are not connected to the municipal water supply systems. As a result, they often
purchase water from water tankers at rates that are higher than what the average, connected citizen pays. The poor
therefore pay more for water.
The W&S scenario in India is in need of considerable improvement.
 WATER & SANITATION SECTOR
POLICIES IN THE W&S SECTOR (REFORMS AND POLICIES)
a. Water Harvesting
▪ NWP (National Water Policy) in 1987 has laid down groundwater recharge guidelines.
▪ NWP 2002 has laid down guidelines on rainwater harvesting, watershed management etc. These policies should help
augment our water storage.
b. Water Supply
▪ 11th 5 year plan discusses improving distribution and efficiency of water. The plan indicates that an initially outlay of INR
80,000 Cr is required and that all rivers are to be “bathing class”
▪ RGNWDM (Rajiv Gandhi National Water Development Mission) and the ARWSP (Accelerated Rural Water Supply
Program) are two centrally funded schemes set up to improve the efficiency of water supply.

As per the ARWSP, the State provides matching grant funds for rural infrastructure upgradation. In addition, capacity building
and community participation is also given importance. Reduction in subsidies, shifting of government role from direct service
delivery to planning, policy formulation, partial financing etc, ensuring community participation and management, and school
sanitation are other thrust areas of this program.
 WATER & SANITATION SECTOR

❑ 10th 5 year plan and Urban Reforms Incentive Fund (URIF)

▪ The URIF encourages urban bodies to reform, increase operational efficiency and reduce subsidies. The plan
mandates providing water access to the urban poor, setting tariffs to discourage overuse, introducing water efficient
flushes etc, providing drinking water to all, increasing community participation and NGO participation and so on. In
return, funding and financial incentives are given to urban
bodies.
❑ AUWSP (Accelerated Urban Water Supply Program)
▪ This program is promoted by the Ministry of Urban Development (MoUD) and provides funds for providing water
connections to smaller urban cities. Launched in 93-94, INR 2000 crore was spent by 2001.
Central support for sanitation has also been increased since many people die due to water-borne diseases.
 VARIOUS TRANSPORTATION SUBSECTORS

❑ Roads and Ground Transportation

❑ Airports
❑ Ports
❑ Railways
 NATIONAL ROAD SECTOR
India has 3.3 million kms of roads. Roads carry 61% of freight and 85% of passenger traffic We have spent Rs
18,000 Cr annually on roads.
Flagship projects
▪ Golden Quadrilateral (GQ) - National Highways Development Program (NHDP) Phase 1
▪ North South East West Corridor (NSEW) - NHDP Phase 2
▪ Both these projects are behind schedule due to Finance and Implementation Issues
▪ Both projects are nearing completion

NATIONAL HIGHWAYS
▪ Key players
▪ NHAI (National Highways Authority of India - a Government backed organization)
▪ MoSRTH (Ministry of Surface Road Transportation and Highways - a Government ministry)
▪ Key Programs
▪ NHDP (National Highways Development Program - conducted in seven stages)
▪ Central Road Fund
 ROAD DEVELOPMENT IN INDIA
➢The first attempt for proper planning of the highway development programme in India on
a long term basis was made at the Nagpur Conference in 1943.
➢After, the completion of the Nagpur Road Plan targets, the Second Twenty year Plan was
drawn for the period 1961-1981.

➢ The Third Twenty Year Road Development Plan for the period 1981-2001 was approved
only by the year 1984.
First 20-Year Road Plan (Nagpur Road plan):
➢This plan was formed in the year 1943 at Nagpur.
➢The plan period was from 1943-1963.

➢Two plan formulae were finalized at the Nagpur Conference for deciding two categories o
road length for the country as a whole as well as for individual areas (like district).

➢This was the first attempt for highway planning in India. The two plan formulae assumed th
Star and Grid pattern of road network. Hence, the two formulae are also called “Star and Gr
Formulae”.
 Salient Features of Nagpur Road Plan
The roads are classified as,

o Primary System (NH/Expressways)

o Secondary System (SH/MDR)
o Tertiary System(ODR/VR)

➢Construction and Maintenance of NH was assigned to Central government

➢ It aimed for 2, 00,000km of bituminous road and 3, 32,700km of other types.
 Salient Features of Nagpur Road Plan
The formulae were based on star and grid pattern of road network and were
considered as two equations:
I –Category: NH/SH/MDR
II-Category: ODR/VR

➢NH/SH/MDR are meant to provide main grids and ODR/VR as internal road system.
➢The development allowance is 15%.
➢ The length of railway track was deducted.
Second Twenty Year Road Plan (Bombay
Road Plan):
As the target road length of Nagpur road plan was completed nearly earlier in 1961 a long term
plan was initiated for twenty year period which was initiated by IRC.

Hence, the second twenty year road plan came into picture which was drawn for the period of
1961-81.

The second twenty year road plan was envisaged overall road length of 10, 57,330 km by the
year 1981.
 Salient Features of Second 20 year Road
Plan:
➢Aim to provide 32km/100 sq km area
➢Every town with population above 2000 in plains should be connected by a bituminous
road or metalled road.
>2000 in plains
>1000 in semi-hill area
>500 in hilly area
➢1600 km length of expressways was proposed
➢Development allowance is 5% only
➢Length of railway track was not deducted.
➢Five equations are given to find NH/SH/MDR/ODR/VR.
 Third twenty years road plan
(1981-2001)
The future road development should be based on the revised classification of roads system
Primary, secondary and tertiary
•Develop the rural economy and small towns with all essential features.
•Population over 500 should be connected by all weather roads.
•Density increases to 82kmper [Link]
•The NH network should be expanded to form a square grids of 100kms ides so that no part of
country is more than 50km away from the NH
 Third twenty years road
plan (1981-2001)
Expressway should be constructed along major traffic corridors
•All towns and villages with population over 1500 should be connected by MDR and villages
with population 1000-1500 by ODR.
•Road should be built in less industrialized areas to attract the growth of industries
•The existing roads should be improved by rectifying the defects in the road geometry,
widening, riding quality and strengthening the existing pavement to save vehicle operation
cost and thus to conserve energy
 4th twenty years road plan
(2001-2021)
Half of the national Highway length should have four/ six lanes,
and the remaining half should have two-lane carriageways with
hard shoulders.
 4th twenty years road plan
(2001-2021)
Half of the national Highway length should have four/ six lanes,
and the remaining half should have two-lane carriageways with
hard shoulders.
NATIONAL ROAD SECTOR
 NATIONAL ROAD SECTOR
NATIONAL ROADS – WHAT IS PROPOSED?
A lot of work is going on and will go on. For instance,
▪ 4-laning of 7900 km of NSEW corridor
▪ Two laning of 20,000 km (NHDP Phase IV) of highways with only one lane
▪ Six-laning of 6,500 kms of 4 lane GQ
A lot of money is to be spent
▪ NHDP plans to invest 2,20,000 crore by 2012
▪ 10th plan – 60,000 Crore invested
▪ 11th plan – 180,000 Crore proposed

NHAI given more independence to select and implement projects in order to aid speedy
development of infrastructure
▪ 100% Foreign Direct Investment permitted
▪ 100% income tax exemption for a period of 10 years
▪ Automatic tolling proposed to reduce operational costs on toll-roads
▪ Planning for Expressways undertaken in 11th plan
 NATIONAL ROAD SECTOR
PRIVATE PUBLIC PARTNERSHIPS (PPP) IN ROADS
NHDP Phase I and II were publicly financed through fuel cess and federal grants. NHDP Phase III
to VII will be undertaken in PPP mode. Toll collections will be used to finance the project.
a. Viability Gap Funding (VGF)
▪ If the project is not commercially viable through collection of tolls and other revenue
generation mechanisms, VGF funding will be provided as a grant to bridge the gap between
revenue generated and outlay.
▪ Total value of VGF can be 40% of the total project cost.
▪ Contracts will be awarded to the firm/consortium that requires the least amount of viability
gap funding.
b. Negative Grants
▪ This is the opposite of VGF
▪ If a project is expected to be very profitable, the firm/consortium that is planning to bid for
the project might offer a portion of the profits to the government, thereby providing revenue
to the government. This is the negative grant.
▪ There is no limit to the negative grant. Firms/consortia will be awarded the contract based
on the highest negative grant that is proposed
▪ E.G. 504 Cr -ve grant for the Bharuch-Surat Highway project costing 492Cr.
 NATIONAL ROAD SECTOR

PRIVATE SECTOR PARTICIPATION IN ROADS

❑ Model Concession Agreement (MCA)
▪ MCA has evolved over several iterations and is now used as a standardized
contract.
▪ Private and Public partners share risks.
▪ Standardized agreement increases the speed of awarding the contract.
❑ Government subsidies and alternate arrangements in India
▪ Shadow tolls where users do not pay toll directly, but the government pays the
sponsor an amount equivalent to the toll collected from vehicles using a designated
stretch of roadway.
Annuity payments where the government pays a fixed annual or semi-annual amount
to the project developer so that costs can be recouped. Toll is not charged to users
directly.
 NATIONAL ROAD SECTOR

STATE ROADS
Often receive less attention as compared to National or Rural roads.
❑ Multilateral funding has been provided for some states ▪ WB is giving $348 million to TN govt. to improve the
quality of 750 km of road,
maintain 2000km and construct 14 bypasses. Govt. will provide $102 mill
In MP, ADB is investing 180 million, State Govt. $160 million to upgrade 1900km worth of roads.
❑ Central Road Fund (CRF) was set up to finance state roads
▪ CRF is not working well - funds are not being used
X. RURAL ROADS
A large part of Rural India (40%) are not yet connected by roads Several Plans afoot to do so.
▪ 1000 habitations to be connected to all weather roads in 11th 5 year plan
▪ 1.72 lakh unconnected habitations will be connected in the 11th plan
▪ Pradhan Mantri Gram Sadhak Yojana (PMGSY) has been set as a centre-funded scheme to provide funds for rural
roads
▪ Rural Infrastructure Development Fund (RIDF) has also been set up to provide funds for rural road development
 NATIONAL ROAD SECTOR

ISSUES / CHALLENGES WITH ROADS

▪ Land Acquisition for road alignment
o This involves the political will to acquire tracts of land, compensate the existing landholders adequately and
handover the land to the project developers. Very often this process is time-consuming and leads to delays.
▪ Environmental and Societal Concerns regarding displacement of people, deforestation etc.
o NGOs and Special Interest Groups often raise these issues, (e.g. in the NICE corridor project in Karnataka) and this
leads to delays if these concerns are not effectively mitigated.
▪ Ridership concerns, Tariffs
o The exact tariff that should be charged according to varying categories of consumers is a difficult decision that must
be made. In addition, there are always risks that by adding a toll- charge the ridership on the road might decrease
leading to an infeasible project.
 Introduction
• This is the fastest mode of transport flying at more than 300 Kmph to a
modern speed which is nearly 3 times the speed of sound.

• Boeing 747 is flying at 885 Kmph

• X-43 aircraft flies at 11,265 Kmph

Advantages & Disadvantages of Air Transport
Advantages Disadvantages
• Accessibility • Flight Rules
• Continuous Journey • Operating Expenses
• Demand for Technical • Safety
Skill
• Weather conditions
• Emergency use
• Engineering use
• Saving in Time
Role of Air Transport
• Creates opportunities for employment, business,
commerce, trade and tourism industry

• Airports not only provide infrastructure for airline but also

contribute to the economy of the region

• Vital role in facilitating economic growth

• 40% of international tourists travel by air / 40% of inter-
regional exports of goods
• Air transport industry generates a total of 29 million jobs
globally
 AIRPORT SECTOR

New Airport
▪ 2 Greenfield airports in Bangalore and Hyderabad (1300 Cr each) are being built and
are in operation
▪ 35 new non metro airports are to be developed.
❑ Privatization in airports
Greenfield airports are to be developed in the PPP mode. Hyderabad is being developed
by a consortium headed by GMR and Bangalore by a consortium headed by L&T.
Modernization of Delhi (lead by GMR) and Mumbai (lead by GVK) airports are already
completed.
Modernization of Chennai and Kolkatta airports are also completed, however PPP might
not be the answer. 10 non-metro airports including Trichy, Trivandrum and Shimoga will
be modernized by with (Rs 1500 Cr) through PPP
 AIRPORT SECTOR

ISSUES IN THE AIRPORT SECTOR

Huge Growth of 24% in this sector and lots of delays and bottlenecks in air travel due to inadequate
infrastructure
Airports authority of India is the key governmental agency in charge of developing this sector
▪ Bangalore airport faced some problems initially
❑ Airport PPP policies had not been evolved and AAI policies indicated that private
ownership was not possible in this sector
❑ These policies have since been modified and the route has been cleared for private
investment in this sector
▪ In terms of PPP
❑ Major portion of the revenue accrues from leasing airport space to retail outlets as
compared to revenues from airlines
❑ Landside and airside operations can be privatized, but air traffic control cannot be
privatized
A new regulator is being mooted for this sector to oversee the interactions between AAI, the private
airport operator and the airlines
 Railways
• The transportation along the railways track
could be advantageous by railways between
the stations both for the passengers and
goods, particularly for long distance.
• It depends upon the road transport i.e. road
could serve as a feeder system.
• Energy require to haul a unit load through
unit distance

• Safety
 Railways
Until very recently this sector made huge losses, suffered from gross inefficiencies and was not the
preferred mode of choice for freight or passengers. After Laloo Prasad Yadav took over as Railway
Minister, this sector recorded an INR 2000 Crore surplus in revenues in 06- 07.
I. SOME KEY INTERVENTIONS
▪ Increasing the utilization of existing capacity (bogeys) by cutting costs/fares
▪ Tying up with private players to run trains, depots to improve quality and operational
efficiency
▪ Offering Volume based discounts to boost sales
▪ Developing owned land and generating profits through these developments
▪ Computerizing operations to improve transparency and efficiency
▪ Lower passenger prices
 Railways
RAIL REFORMS ON THE ANVIL
A New Investment (60,000 Cr in current plan) for a dedicated Mumbai-Delhi freight corridor is in
the works
▪ Other dedicated corridors may come up soon
Private participation is being sought in track laying, freight, maintenance etc. (through the National
Rail Vikas Yojana scheme). Plans are being formulated to bring in world class trains, and stations
are to be built to standards that will compete with air-travel.
 PORT SECTOR

A Large Increase in Port Handling Capacity is planned

▪ More ports have been and are to be added
▪ Increase in Container terminals to the tune of INR 10,000 Crore is planned
▪ JNPT (Jawaharlal Nehru Port Trust) alone is planning to spend 3000 Cr in expanding Capacity .

Since the plan is to attract a larger volume of maritime traffic, the objectives in the port sector are to increase capacity of existing ports
and to add new ports in order to decrease turnaround time of ships berthed and to increase productivity

Focus is on increasing Private Sector Participation

❑ Model Concession Agreement is being prepared
❑ Fees will be collected on a licensing and revenue-sharing model
TAMP (Tariff Authority for Major Ports) is the regulator in this sector and does a good job specifying fair tariffs. Plans are afoot to
improve Road and Rail connectivity to ports thereby reducing transportation costs on goods and making the port sector more attractive.
Plans are being made to Corporatize Ports to increase operational efficiency
❑ Will lead to independence from a Central Authority like Port Trust of India.
❑ Finds favor with port operators.
 PORT AUTHORITIES, BODIES AND
ASSOCIATIONS
❖ National Association of port Authorities
❖ National Coast Guard
❖ National Bureau of Customs
❖ Immigration and Naturalization Service
❖ National maritime Administration
❖ The Bureau of Foreign Commerce
❖ Interstate Commerce Commission
❖ Department of Agriculture
❖ Quarantine
❖ Security Associations
❖ Waterfront Commissions
HISTORY OF KANDLA PORT

Commissioning of
Container Terminal

12th cargo berth and Essar Oil 2006

Marine facilities commissioned
1999 The eighth cargo
Container handling
jetty started
operations commenced with
operations and the
1,217 TEUs being handled in
1981 port crossed the
the first year
40 million mark
1983
The port sailed past the 10
The four newly million tonne milestone
constructed cargo 1978
jetties started The Offshore Oil Terminal was
operations commissioned at Vadinar when the
giant tanker Netaji Subhashchandra
1957 1975 Bose carrying 86,105 tonnes of
Kandla was declared as a Crude Oil was brought in at the First
major port by the then Single Buoy Mooring (SBM)
Transport Minister, the late
Lal Bahadur Shastri
1955
The second oil jetty was
Maharao Khengarji III of Kutch commissioned
1931
built an RCC jetty where ships
with draft of 8.8 meters could
berth round the year
OVERVIEW OF KANDLA PORT
KOLKATA / HALDIA
◆ Old and established port with
promising hinterland,
◆ 0.045 million TEUs handled every
year,
◆ Closer to land locked countries of
Nepal and Bhutan.

◆ Acute shortage of space and

hence often congested,
◆ Riverine Port - severe draft
restrictions ,
◆ Absence of efficient
container handling systems,
◆ No possibility of further
expansions.
VISAKHAPATNAM

• In the middle of the fastest developing region in India.

• Efficient container handling infrastructure
• Ample space and un-congested
• Deepest container terminal on the East Coast of India
• Possibility for further expansions
• Well connected to central, eastern, and southern India
both by road and rail
• Feasible to cater to 5 ICDs across India and Nepal
• Proximity to the straits of Malacca
CHENNAI

• Efficient container handling infrastructure

• 1 million plus throughput
• New capacity added ( CITPL )
• Hinterland with large manufacturing base
• Presence of major Mainline and Feeder services
TELECOMMUNICATION SECTOR
 TELECOMMUNICATION SECTOR

TIME LINE
▪ Prior to 1980s
State owned players and infrastructure dominated this sector. In many cases the equipment
used was outdated and the reach of telecommunications services was poor. Tele-density –
the number of telephone connections per 1000 people was very low as was connectivity in
rural areas.
▪ 1980s
Private sector was allowed to enter this sector. However, in the initial stages they were only
allowed to manufacture equipment.
▪ 1990s
After the liberalization of the Indian economy, the Private sector was also allowed to
provide services. This led to a sharp decrease in prices, improvement in service quality and
increased access to telephony services
 TELECOMMUNICATION SECTOR
NATIONAL TELECOM POLICY (NTP) - 1994
This policy paved the way for the entry of the private sector and opened up both the Cellular market and the
landline market for competition. Another defining feature of this plan was the concept of a Universal Service
Obligation (USO) designed at providing infrastructure and telephony services to rural areas
However this policy had some problems
▪ An Auction system was used to select players and to allocate spectrum. However, the fixed license fees bid by
the bidders were too high and uneconomic, leading to
requests for renegotiations
▪ Competition was also inadequate
III. NATIONAL TELECOM POLICY (NTP) - 1999
The shortcomings of NTP 1994 were addressed issues in NTP 1999. A Revenue sharing model was introduced as
opposed to a fixed license fee approach. More competition was introduced which in turn led to falling prices. Rs
500 Billion of Investment was slated for this sector.
National and International Long Distance were opened up to private players in 2001. BSNL, the state owned
telecom provider was Corporatized in 2001 and now competes with other private firms for revenues and market
share. USO fund was set up for rural connectivity. As opposed to having private players directly provide
connectivity in rural areas, an alternate approach was adopted whereby private operators contributed a portion of
the revenues to a USO fund, which would then be used by BSNL to provide rural connectivity.
 TELECOMMUNICATION SECTOR

TELECOMMUNICATIONS REGULATORY AUTHORITY OF INDIA

(TRAI)
TRAI was set up in 1997 as a Regulator. Due to a large number of private players entering this
industry, an independent regulator was necessary to ensure that consumers were treated fairly.
Initially TRAI was set up with few powers but was subsequently given more power to
▪ Manage spectrum licenses
▪ Regulate prices
Most experts feel that TRAI can be given more independence
▪ For instance, the regulator can be given a decision making role on issues such as the
convergence of technologies, allocation of spectrum etc.
 TELECOMMUNICATION
KEY PLAYERS IN THE TELECOMMUNICATIONS SECTOR SECTOR
❑ BSNL – a public sector player in the local, long distance, cellular, and internet
communications space
❑ MTNL – a public sector player active in Delhi and Mumbai as regards local telephony, and
active across India in the cellular space
❑ VSNL – a public sector player in the Internet and long distance space
❑ Private providers
▪ Bharti, Reliance, TATA, Vodafone, Aircel etc.
▪ They provide landline, cellular and internet services, they
The graph below, adapted from the Indian Infrastructure Report 2006, clearly shows the effects of
reforms in the Indian telecommunications sector, particularly on the usage of mobile telephones.
Prices for consumers have decreased dramatically and have been accompanied by an equally
dramatic rise in the number of subscribers or users of mobile telephones.
 TELECOMMUNICATION SECTOR
CURRENT STATUS OF THE TELECOM SECTOR IN INDIA
We have 165 million subscribers (this includes mobile as well as landline users)
❑ Target is to achieve 1.4 billion subscribers by 2022
❑ Currently there is a 50-50 split between BSNL and Private Operators in terms of the number
of subscribers
❑ In the landline segment private players account for 15% of the market, with BSNL
accounting for the rest
❑ In the mobile telephony market on the other hand, private players account for nearly 80% of
the subscribers. Growth in this market has been fuelled by the availability of cheap and
affordable handsets
Currently Tele-density is greater than 10
❑ It is currently 2 in rural areas, the target is to increase this to 10
In terms of Internet usage, there are more than 762 million Broadband customers. A rapid increase
is envisaged in this sector.
 TELECOMMUNICATION SECTOR

CURRENT STATUS OF THE TELECOM SECTOR IN INDIA

Policy Decisions on 3G
❑ Currently the government plans to auction spectrum for 3G technologies on a firstcome first-served basis
❑ Policy decisions must also be taken on allocating extra spectrum. Currently a controversy exists on the rationale for
allocating this extra spectrum, with protests by CDMA and GSM operators
❑ Decisions need to be taken on the mode of licensing spectrum and fees
▪ Should it be based on the number of existing customers or on fresh bids?
▪ Should a revenue sharing approach be followed or a license fee approach
 TELECOMMUNICATION SECTOR

OTHER DECISIONS FACING THE TELECOMMUNICATION

SECTOR
New Policies need to be crafted for convergence of technologies that can lead to a unified medium that delivers voice,
data and images.
Policies needed on decreasing in interconnect charges to bring down call costs.

Decisions to be made on merging of Access Deficit Charges (paid to BSNL to subsidize some of their non-profitable
operations such as rural access) and USO, since they both fulfill similar obligations
New Policies are needed regarding rural Telecom
❑ Particularly on using Wi-Fi for last mile connectivity, and releasing spectrum appropriately
❑ Incentivizing private players to provide rural connectivity
Urban Infrastructure in India Urban Infrastructure in India
Urban infrastructure refers to the physical and organizational structures, facilities, and services essential for
cities to function efficiently. In India, urban infrastructure is rapidly evolving to meet the demands of growing
urban populations. Key components include:
1. Transport
•Public Transport Systems: Metro rail networks in cities like Delhi, Mumbai, and Bengaluru.
•Road Infrastructure: Expansion of urban roadways, flyovers, and expressways.
•Smart Transport Solutions: Adoption of intelligent traffic management systems and electric buses.
2. Water Supply and Sanitation
•Water Distribution Networks: Efforts to ensure 24x7 water supply in major cities.
•Sewage Systems: Urban areas are expanding sewage treatment facilities under programs like AMRUT (Atal
Mission for Rejuvenation and Urban Transformation).
•Solid Waste Management: Initiatives like waste segregation and waste-to-energy projects.
3. Energy
•Power Supply: Modernization of grids to ensure uninterrupted power.
•Renewable Energy: Solar and wind energy integration in urban spaces.
•EV Charging Infrastructure: Promotion of electric vehicle adoption.
 Urban Infrastructure in India
4. Housing and Real Estate
•Affordable Housing Projects: Under schemes like PMAY (Pradhan Mantri Awas Yojana).
•Smart Cities Mission: Urban rejuvenation with advanced facilities and planning.
5. Urban Governance
•E-Governance Services: Digitization of municipal services for better efficiency.
•Public Participation: Initiatives to involve citizens in urban planning.
 Rural Infrastructure in India

Rural infrastructure is critical for the socio-economic development of India's

vast rural areas, where a significant portion of the population resides. Key
components include:
1. Transport and Connectivity
•Rural Roads: Pradhan Mantri Gram Sadak Yojana (PMGSY) aims to provide
all-weather roads to rural areas.
•Bridges and Ferry Services: Connecting remote areas.
2. Water and Sanitation
•Drinking Water Supply: Jal Jeevan Mission targets providing tap water to
every rural household.
•Sanitation Facilities: Construction of toilets under Swachh Bharat Mission
(Rural).
3. Energy
•Rural Electrification: Saubhagya scheme ensures electricity connections to
rural households.
•Solar Power Initiatives: Encouragement of decentralized renewable energy
solutions.
 Rural Infrastructure in India

4. Healthcare
•Primary Health Centers (PHCs): Strengthening basic healthcare facilities.
•Ayushman Bharat Scheme: Providing health insurance to rural families.
5. Education
•Schools and Digital Education: Improved access to primary and secondary education.
•Skill Development Centers: Focus on vocational training for rural youth.
6. Agricultural Infrastructure
•Irrigation Facilities: Enhancing irrigation through canals, borewells, and rainwater harvesting.
•Storage and Market Access: Construction of cold storage units and rural mandis.
7. Communication
•Digital Connectivity: BharatNet project aims to connect all gram panchayats with high-speed internet.
•Mobile and Internet Penetration: Expanding rural network coverage.
8. Rural Development Programs
•MGNREGA: Employment generation through rural infrastructure projects.
•Self-Help Groups (SHGs): Empowering rural women through microfinance.
KEY ISSUES – URBAN INFRASTRUCTURE
ULBs are autonomous in theory, but guided by Govt. regulations. Poor financial position of ULBs (urban local bodies). Political interference in
operations, managerial decision making and tariff setting.
Tariff fixing should be based on incremental cost including operation and maintenance charges,depreciation charges, debt. dues.
Current institutional arrangements do not create proper structures and incentives for improvement of operational efficiency and quality of
service
Issues concerning International Water Operators: Inadequate information about current financial and physical condition of existing service
provider and assets, tariff well below cost recovery levels ULBs do not have the institutional capacity to manage complexities and tasks
involved in operating infrastructural services.
Need to explore pooled financing of identified projects – Pool water and sanitation projects to float bonds (14 ULBs in TN); 50 ULBs are
experimenting with private sectorBparticipation in Solid Waste Management
XII. KEY ISSUES – URBAN INFRASTRUCTURE
▪ Population density is much lower than urban areas
▪ Rural density > 500/[Link] only in Delhi, West Bengal, Kerala; lower than 300 in other states
▪ Cheaper to have generators than wired networks connected to the main grid
▪ Telecom- Mobile may be cheaper than landlines
▪ Av. population size 2000 (approx.)
▪ Setting of large water treatment plants, modern piped water supply, sewerage networks are ruled out.
▪ Per capita income of rural India is lower than Urban India
▪ Pricing of infrastructure services (recovery of capital and operating costs during the life
time of the asset) cannot be structured
▪ Subsidy needs to be provided to the consume
 INTRODUCTION TO SPECIAL ECONOMIC ZONES

Introduction to Special Economic Zones (SEZs)

Special Economic Zones (SEZs) are designated areas within a country that operate under distinct economic
regulations and policies designed to attract investment, foster economic growth, and promote exports. These
zones are characterized by their business-friendly environment, including tax benefits, relaxed labor laws, and
simplified procedures.

Key Features of SEZs

[Link] Policies: SEZs offer tax exemptions, duty-free imports, and other financial incentives.
[Link]: High-quality infrastructure, including transport, power, and communication facilities.
[Link]-Window Clearance: Streamlined processes for approvals and regulatory compliance.
[Link]-Oriented: Focused on promoting goods and services exports.
[Link] Participation: Encourages private and foreign investments in infrastructure and business ventures.
 INTRODUCTION TO SPECIAL ECONOMIC ZONES

Objectives of SEZs
[Link] Exports: Enhance the country’s export capabilities by creating specialized
hubs.
[Link] Investment: Encourage foreign direct investment (FDI) and private capital.
[Link] Generation: Create jobs in manufacturing, services, and other sectors.
[Link] Advancement: Facilitate the adoption of advanced technologies.
[Link] Growth: Contribute to GDP growth by developing industrial and service
sectors.

History of SEZs in India

•Initial Phase: The concept originated with Export Processing Zones (EPZs) in the 1960s, with Kandla (Gujarat)
being the first EPZ.
•Formal Introduction: SEZs were formally introduced through the Special Economic Zones Act, 2005.
•Growth Phase: Over the years, several SEZs have been established, focusing on sectors like IT, pharmaceuticals,
textiles, and electronics.
 INTRODUCTION TO SPECIAL ECONOMIC ZONES

Advantages of SEZs
[Link] Growth: Contribution to industrial development and GDP growth.
[Link] Opportunities: Direct and indirect job creation across sectors.
[Link] Development: Enhanced infrastructure in and around SEZs.
[Link] Promotion: Increased foreign exchange earnings through export-oriented activities.
[Link] of Doing Business: Simplified regulations attract investors

Challenges of SEZs
[Link] Acquisition Issues: Conflicts over land use and displacement concerns.
[Link] Development: Concentration of SEZs in specific regions, leading to regional disparities.
[Link] Hurdles: Despite simplifications, businesses may face bureaucratic delays.
[Link] Success: Not all SEZs achieve their intended goals due to lack of proper planning or
market demand.
[Link] Dependence: Over-reliance on incentives may deter long-term sustainable
development.
 INTRODUCTION TO SPECIAL ECONOMIC ZONES

SEZs Worldwide
•China: Home to highly successful SEZs like Shenzhen, which transformed the
region into an industrial powerhouse.
•United Arab Emirates: Free zones like Jebel Ali Free Zone in Dubai focus on
trade and logistics.
•India: Prominent SEZs include SEEPZ in Mumbai, Sriperumbudur SEZ in
Tamil Nadu, and Mundra SEZ in Gujarat.
Future Prospects
[Link]-Driven SEZs: Integration of smart infrastructure and digital
tools.
[Link] SEZs: Promoting sustainable and environmentally friendly industrial
practices.
[Link] Competitiveness: Enhancing competitiveness by aligning with
global trade norms.
[Link]: Expanding beyond traditional sectors to emerging
industries like AI, renewable energy, and biotechnology.
 ORGANIZATIONS INVOLVED IN INFRASTRUCTURE PROJECTS

❑ Governments and Government Agencies

❑ …EPC Contractors
❑ …Financiers …
❑ Project Affected Communities and NGOs
❑ …Insurance and Guarantee Providers …
❑ Project Sponsors …
❑ Regulator
 PLAYERS IN AN INFRASTRUCTURE PROJECT

Infrastructure Projects are often more complex than conventional civil engineering projects such as
residential and commercial structures and as a result involve a multitude of players. „
The figure on the next slide describes the various players and the relationships between them.
 PLAYERS IN AN INFRASTRUCTURE PROJECT

GOVERNMENT AGENCIES
Government Agencies are often key players in infrastructure projects. They can be involved directly in procuring the infrastructure, or
they can act as concession granting authorities that
authorize private sector players to procure and maintain infrastructure.
Government agencies involved in infrastructure could be at the national level – e.g. the NHAI (National Highways Authority of India),
at the state level (e.g State Government and Line
Agencies) or at the Urban level (e.g. Water and Sewerage Boards, municipalities).
Government agencies sign various agreements with other organizations for the procurement of infrastructure such as
▪ Engineer-Procure-Construct Contracts with construction firms …
▪ Concession Agreements, Power Purchase Agreements, Annuity Agreements with private sponsors
▪ Loan and Equity agreements with financiers

ENGINEER-PROCURE-CONSTRUCT (EPC) FIRM

EPC firms are typically engineering and construction firms that help design and/or construct the infrastructure facility. They may be
contracted by the government agency, or by private parties in
charge of providing the infrastructure „ Typically they take on completion, construction delay and construction cost-overrun risks.
Leading construction firms such as Larsen & Toubro, HCC etc perform EPC contracts in India
 PLAYERS IN AN INFRASTRUCTURE PROJECT

FINANCIERS
Infrastructure projects are often financed through a mixture of grants, debt (loans), equity (investments) and user charges. Debt
lines of credit are often raised through the regular banking system.
Debt is often also provided by multilateral agencies such as the World Bank, the Asian Development Bank, the Japanese Bank for
International Cooperation etc.
Equity is often provided through a variety of sources including large organizations in the infrastructure space, Foreign Institutional
Investors, Private Equity houses etc.
Grants for infrastructure projects are often provided through programs such as the Jawaharlal Nehru National Urban renewal
mission.

PROJECT AFFECTED COMMUNITIES AND NGOS

Any infrastructure project affects the surrounding community in multiple ways …
It promises to yield benefits to these communities (e.g. improving the water supply or the transportation infrastructure) …
It might need to displacement of some families (e.g. in cases of w idening of roads and highways). Sustainable Infrastructure
Development must be equitable and must yield benefits to the community. As a result the impact of infrastructure on these
communities must be carefully assessed. Very often NGOs are the “voice” of these communities to ensure that their needs are met.
Stakeholder consultations and socio-economic analysis of infrastructure must therefore be conducted to ensure that infrastructure
development is equitable.
 PLAYERS IN AN INFRASTRUCTURE PROJECT

INSURANCE AND GUARANTEE PROVIDERS

Several kinds of insurance and guarantees are taken on infrastructure projects. Insurance relating to the construction phase, force Majeure
events, and insurance during the operation of the facility are often provided „
In the case of Private participation in infrastructure, government guarantees are often given to private players. Third party Political Risk
Insurance is also taken to insure against government reneging on a contract with a private sector. MIGA and OPIC are two organizations that
provide PRI, subject to meeting certain criteria
VIII. PROJECT SPONSORS AND CONSULTANTS
Project Sponsors are private organizations that take on the responsibility of providing infrastructure. Project sponsors sign “concession
agreements” with government agencies that describe the term for which they will operate the infrastructure, quality standards that they will
need to maintain, revenue generation opportunities and so on „
Project sponsors may either develop the projects themselves or may sign contracts (such as EPC contracts) with other companies. Both
project sponsors and government agencies hire consultants to perform feasibility analysis, structure projects and to manage the process of
selecting sponsors and contractors.

INDIAN PLAYERS
▪ Government – Planning Commission, Ruling parties, NHAI etc.
▪ Consultants – Feedback Ventures, PwC, KPMG „
▪ Financiers – IDFC, IL&FS, ICICI, IIFC „
▪ Sponsors – TNRDC „
EPC Firms – L&T ECC, HCC „
▪ Regulators - TRAI
 STAGES OF PROJECT

Infrastructure Planning can be conceived as a multistage process. The infrastructure Planning

Process must take into account the local context
❑ Local needs should be satisfied …
❑ The project should comply with the existing institutional and legal frameworks …
❑ The project should align with political objectives and ideology …
❑ The project should be technically and economically feasible
 STAGES OF PROJECT
The preliminary feasibility stage of the project establishes the need for the project. Existing
information as well as field visits are conducted to substantiate the need for a project. This phase
also determines the kinds of detailed studies that need to be undertaken

The Detailed Studies and Project Structuring stage is often the most time-consuming. Technical Studies (e.g. geotechnical
studies, land surveys) need to be undertaken to help design the
infrastructure. …
Economic and Market studies (e.g. Willingness to Pay studies) must also be undertaken.
Other studies that are undertaken are …
▪ Environmental Compatibility and Environmental Impact Assessment …
▪ Socio Economic Cost Benefit Analysis …
▪ Financial Analysis
At the conclusion of this stage, a Detailed Project Report (DPR) is also prepared with detailed
technical specifications
Financial Engineering and Structuring must also be done during this stage …
▪ Lenders, Terms of Loan (Tenors and Rates of Interest), mix of debt and equity, and
user charges can all be modeled to determine the financial viability of the project
For Private participation in infrastructure, the private sector may be tasked with many of these
studies
 STAGES OF PROJECT
Once the DPR is prepared, the project can be contracted out.
▪ Expressions of Interest are sought …
▪ Requests for Proposals are sought …
▪ Pre-bid conferences are held to clarify terms of the project …
▪ Proposals are evaluated and a successful bidder is selected

The successful bidder then proceeds with the construction of the project. Material, manpower and productivity risks must be
managed in this phase. Once the project has been built and commissioned, operations can commence and the infrastructure
service can be availed by the
citizens.
An Operations and Maintenance Contract can be given to a separate party. Maintenance Parameters can be fixed well in
advance
❑ Technical Maintenance and quality issues, Revenue generation issues and
Administrative risks must be considered in this phase…
In the case of Private Provision of Infrastructure, a winning bidder is selected based on their ability to build and operate the
infrastructure. The greater the time spent on project preparation and structuring, the more likely it is that the
project can be implemented smoothly and in a cost-effective manner. Hasty project preparation
often leads to rework of documents, leads to false or missing information, and leads to project
delays.
STAGES OF PROJECT