INFRA FINANCE UPDATE, AUGUST 2021
Assets currently owned by Food Corporation of India and the Department of Food and Public Distribution, with warehousing capacity of 210 lakh MT will fall under the monetisation plans of the governmentto realise Rs 28,900 crore. Finance Minister Nirmala Sitharaman announced a pipeline of assets the government is looking to monetise to collect about Rs 6 trillion to partly fund its ambitious infrastructure projects over four years ending 2024-25. The National Monetisation Pipeline (NMP) will constitute 14 per cent of the Centre’s share of Rs 43.29 trillion in the National Infrastructure Pipeline (NIP). The plan covers 20 asset classes spread over 12 line ministries and departments. The top three sectors by value are roads (Rs 1.6 trillion), railways (1.5 trillion) and power (Rs 85,032 crore).
In the roads sector, about 26,700-km stretch would be monetised to mop up around Rs 1.6 trillion. The National Highway Authority of India (NHAI) and the Ministry of Road Transport and Highways will drive this through the toll, operate and transfer (TOT) and Infrastructure Investment Trusts (InvITs) models.
The plan includes monetising power transmission lines of 28,609 ckt km to garner Rs 45,200 crore. These will be driven by Power Grid Corporation. Monetisation of hydro and solar power generation assets of 6 Gw would help the government realize Rs 39,832 crore, and would be undertaken by National Thermal Power Corporation, National Hydroelectric Power Corporation, and NLC India. Natural gas pipeline of 8,154 km would be monetised by GAIL with an indicative value of Rs 24,462 crore.
The plan also includes petroleum product pipelines of 3,930 km to be monetised by Indian Oil Corporation, Hindustan Petroleum Corporation and the Ministry of Petroleum and Natural Gas. This would help in realising Rs 22,503 crore through public private partnerships (PPPs) and InvITs.
For railways, the plan is to monetise railway stations, passenger trains, good sheds, Konkan Railway, Hill Railways, dedicated freight corridor, and railway stadiums to get Rs 1.52 trillion. In the telecom sector, 2.86 lakh km fibre and 14,917 towers of BSNL and MTNL are planned to be monetised that will help in realising about Rs 35,100 crore.
In aviation, the plan is to sell 25 airports and reduce the Airport Authority of India’s (AAI) stake in existing airports such as Delhi, Mumbai, Hyderabad, and Bangalore. This would garner proceeds of Rs 20,782 crore.
In the shipping sector, 31 projects in nine major ports would be monetised to realise Rs 12,828 crore.
In the coal mining sector, 160 projects have been identified involving a value of Rs 28,747 crore. In sports, two national stadiums and two regional centres would be monetised to get a value of Rs 11,450 crore. In urban real estate, redevelopment of colonies and hospitality assets worth Rs 15,000 crore will be monetised.
In the sector of roads and highways, Adani Road Transport Ltd (ARTL), a wholly-owned subsidiary of Adani Enterprises Ltd (AEL) announced that it will be acquiring Maharashtra Border Check Post Network Ltd (MBCPNL), a subsidiary of Sadbhav Infrastructure Project Limited (SIPL) at an enterprise value of Rs 1,680 crore. ARTL, which develops, constructs, operates and manages roads and highway projects in India, will acquire a 49% stake in MBCPNL at first, with an option to acquire additional stake subject to regulatory approval, the company said in a statement. The gateway connects Maharashtra with 6 neighboring states, will cover over 20% of the commercial road traffic in India. It has 24 integrated check posts with exclusive service fee collection rights from commercial vehicles for all key traffic routes in and out of Maharashtra.
The National Highways Authority of India (NHAI) earned Rs 165 on every FASTag in the first half of 2021, an 8 per cent decline from Rs 179 a year ago, as the Radio Frequency Identification (RFID) compliance led to a fall in revenue. These tags come with a discount and, therefore, adherence to them means less revenue collection for the NHAI. It collected Rs 15,518.8 crore in toll from January to June 2021, more than double the previous year’s figure, with 635 million vehicles passing through. Between January 2020 and June 2020, the total collection was Rs 7,786.76 crore, while the traffic volume was 435 million.
The Jharkhand government has approved six highway projects to be executed at a cost of around Rs 271 crore, a state government. The projects include Rs 114.83-crore proposal for widening, strengthening and reconstruction of a 38.56-km stretch, and another Rs 39.34 crore for bolstering a 30.67-km stretch. The state cabinet, during a recent meeting, cleared the projects.
The National Highways Authority of India (NHAI) has incurred an estimated revenue loss of Rs 3,512.62 crore in financial year 2020-21, due to COVID-19-related restrictions, Parliament was informed. Replying to a question in Lok Sabha, the Minister of Road Transport and Highways Nitin Gadkari said the approximate user fee collections in FY 2019-20 and 2020-21, stood at Rs 27,682.89 crore and Rs 28,548.05 crore, respectively. Based on the proposals received from state governments/ Union Territories (UTs), the ministry has approved about Rs 1,03,700 crore in FY 2021-22, for sanction of projects for the development of National Highways entrusted with state governments/UTs, as part of the National Infrastructure Pipeline, to be implemented in the next 2-3 years.
The project-based funding model or the special purpose vehicle (SPV) model of the National Highways Authority of India (NHAI) will replace some projects the authority had earlier envisaged to set up on a build-operate-transfer (BOT) mode. It is learnt that the replacement is being done after several considerations, including keeping the financial aspect of the project in mind. The Delhi-Mumbai expressway (e-way) was the first project to be transferred to the SPV. The estimated cost of the project, which will connect Delhi and Mumbai on a new alignment, is around Rs 90,000 crore.
Indian Railway Catering and Tourism Corporation (IRCTC) and Bharat Heavy Electricals (BHEL) are in talks for a partnership to run private trains. The two public sector undertakings (PSUs) are planning to form a special purpose vehicle (SPV) to run passenger trains on routes for which IRCTC has put in bids. The Ministry of Railways has received bids from both private and public sectors to operate 29 pairs of trains with around 40 modern rakes, entailing an investment of around Rs 7,200 crore. The ministry will expeditiously complete the evaluation and decide on the bids.
Afcons Infrastructure Ltd., a Shapoorji Pallonji Group firm, said it had bagged a $530-million contract for the Male to Thilafushi link project, popularly known as the Greater Male Connectivity Project (GMCP). This will be the largest-ever infrastructure project in the Republic of Maldives and would be funded by the Exim Bank of India under the Indian grant and Line of Credit (LoC) scheme. The project, which includes a 6.7-km-long bridge and causeway network connecting Male, Villingili, Gulhifalhu and Thilafushi Islands, would be completed in 32 months. The bridge would connect the islands of Hulhumale, Hulhule and Male with the proposed Gulhifalhu Port and the Thilafushi Industrial Zone. The new bridge includes three navigation bridges of 140 metres across very deep channels between the four islands, 1.41 km of marine viaduct in deep water, 2.32-km marine viaduct in shallow water and land, and 2.96 km of at-grade roads.
JSW Infrastructure is planning a capex of Rs 10,000 crore by 2025 which will also include investments in logistics. The company has been accessing opportunities in rail connectivity since the last six-eight months. It could invest in rakes.
In the sector of real estate, Godrej Properties reported a consolidated net profit of Rs 17.01 crore for the first quarter of the financial year 2021-22, it said in the BSE filing. The company had posted a net loss of Rs 19.26 crore in the corresponding quarter previous year. The company’s total consolidated income rose to Rs 261.99 crore in Q1 FY22, from Rs 195.66 crore in the similar period of the last year.
Dalmia Nisus Finance has invested around Rs 80 crore in two real estate projects in Chennai and Bengaluru being developed by Puravankara Ltd and Shriram Properties and is in process of closing three more investments of Rs 125 crore. Dalmia Nisus Finance Investment Managers LLP, an alternatives manager, has invested this amount from its Real Estate Credit Opportunities Fund – I (RECOF – I). These maiden investments are part of the Rs 500 crore RECOF-1 Fund that primarily invests into structured credit and mezzanine investments across the residential space in India. RECOF-1 fund had announced its first close in March 2020.
PNB Housing Finance is now looking to raise Rs 35,000 crore debt, after facing legal hurdles in the Carlyle group deal, days after SAT gave a split verdict in the matter. The company will seek shareholders’ nod at its annual general meeting (AGM) on September 3, PNB Housing Finance. The company said it will seek shareholders’ approval for further fund raising by way of debt issue.
In ports, Adani Ports and Special Economic Zone Limited (APSEZ) reported a 77.04 per cent rise in consolidated net profit at Rs 1,341.69 crore for the first quarter of the current fiscal. The country’s largest integrated logistics player had clocked a consolidated net profit of Rs 757.83 crore in the corresponding period a year earlier. Its total income rose to Rs 4,938.43 crore in the latest June quarter as against Rs 2,749.46 crore in the year-ago period.
The Cabinet Committee on Economic Affairs approved the FDI proposal of Anchorage Infrastructure Investment Holding Ltd, proposing an investment of Rs 15,000 crore in the country. The investment is expected to be a major boost to the infrastructure and construction sector and also to the airport sector. It is also a significant boost to the recently announced National Monetisation Pipeline (NMP). An official release said that investment also includes the transfer of the share of Bangalore International airport Limited to Anchorage, and investment of Rs 950 crore in Anchorage Infrastructure Investment Holding Ltd by 2726247 Ontariao Inc., a wholly-owned subsidiary of OAC which is the administrator of OMERS”, one of Canada’s largest defined benefit pension plans.
Infrastructure major GMR group unveiled its plans to modernise and develop Nagpur Airport following a ruling by the Nagpur Bench of Bombay High Court. As part of the plan, Delhi-based GMR Group, which currently runs Delhi and Hyderabad International Airports, is looking to develop Nagpur’s Babasaheb Ambedkar International Airport in a phased manner with an ultimate capacity of around 30 million passengers annually, representing a capacity increase of over 1,000 per cent over the coming years, a release said. Besides running Delhi and Hyderabad airports, GMR is also constructing greenfield airports in Goa and Bhogapuram in Andhra Pradesh.
The government would be redeveloping two national stadiums, including the marque Jawaharlal Nehru Stadium in New Delhi and two regional sports centres at Bengaluru and Zirakpur on a public-private partnership (PPP) mode as part of its asset monetisation plan. The mode of monetisation for these would be operation, management and development agreement (OMDA) model adopted for airports like Delhi and Mumbai. The agreement period or concession period in airports is 30 years with a joint venture (JV) company formed with Airports Authority of India to run the asset having right to seek further extension of 30 years subject to no event of default in the preceding five years. The Jawaharlal Nehru Stadium monetisation would be similar both for sports and non-sports facilities. The capital expenditure planned for the stadium is Rs 7,853 crore.
In telecom sector, Canada’s Brookfield has bought 30 acre land parcel in Navi Mumbai, Maharashtra, for Rs 600 crore from K Raheja Corp to build a data centre on the plot. K Raheja Corp, which bought the land parcel in the Ghansoli area of Navi Mumbai from the US chemicals company Cabot Corporation in 2015 for Rs 210 crore, will be making three times the returns from the sale of the land parcel to Brookfield. The Brookfield JV is also looking to buy land parcels in the other parts of the country to set up data centres. The JV will expand Brookfield Infrastructure’s global data infrastructure portfolio, which includes USD 23 billion in assets across data transmission, distribution and storage. It has 1, 39,000 operational telecom wireless towers in the country and intends to expand to 1, 75,000 in near term.
Asset Monetisation Pipeline envisages lease of specific assets for 15 to 30 years to a private anchor investor who could either hold the asset in a corporate or in a specially created Investment Trust (InvIT), registered with SEBI, with minority shares issued to the public. When it will be fully implemented, cross-border merchandise traders will have to deal with private companies that run ports, airports, oil, mines on a more regular basis. Import and export volumes are expected to rise by double digits in the next years. Global firms such as Blackstone, Blackrock, and Macquarie have expressed interest in engaging in the asset monetisation process, which could signal the start of the privatisation of additional government assets in some manner.
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