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Outlook for infrastructure in 2008

December 27, 2007 09:40 IST
Aviation

The Rajiv Gandhi International Airport, which is being developed by GMR on the outskirts of Hyderabad, will be the first greenfield public-private partnership (PPP) airport to be operational in March 16.

The Rs 2,478-crore (Rs 24.78 billion) project is being developed at Shamshabad by GMR Hyderabad International Airport Ltd (GHIAL), a joint venture between GMR, Malaysia Airports Holding Berhad, the Andhra Pradesh government and the Airports Authority of India (AAI).

The project will have a 4,620-metre Code F-stipulated runway, suitable for handling large aircraft like the Airbus A380, and a terminal covering an area of 100,000 square metres. The airport will have annual passenger handling capacity in excess of 10 million.

The airport developers have major plans to introduce 75 bus services from 15 destinations across the city.

The second such airport to come into operation will be the Bangalore International Airport near Devanahalli.

The greenfield airport, which is a joint venture between Siemens-Zurich Airport-L&T consortium, Karnataka State Investment and Industrial Development Corporation and the AAI, entails a project cost of around Rs 2,000 crore (Rs 20 billion), and is slated to handle 10 million passengers annually after the first phase is over.

The Karnataka government has proposed to set up a special purpose vehicle (SPV) to create a rail link from Bangalore to the airport in Devanahalli. The project cost is estimated to be around Rs 4,000 crore (Rs 40 billion).

In addition, Bangalore International Airport Ltd (BIAL) is spending Rs 117 crore (Rs 1.17 billion) more to build a two-lane trumpet flyover at the intersection of the main access road to the airport and NH-7.

The Delhi airport will also have its third runway ready in the coming year. The Code F runway will increase the aircraft handling capacity, which currently stands at 40-75 per hour.

The AAI is also developing 35 airports in non-metros, including Nagpur, Udaipur, Pune and Trichy, which are slated to be completed in 2008. Twenty-four of these non-metro airports like Amritsar, Vizag, Raipur, Thiruvananthapuram, Ranchi and Udaipur are undergoing city-side development.

The first two to be taken up are Amritsar and Udaipur, which have already got bids from several real estate and infrastructure companies like GMR, Omaxe and Unitech.

Ahmedabad and Vizag will be taken up early next year. Also, in order to encourage night flights, the AAI plans to make night-landing facilities available to all the airports in the country.

Power

The situation in the power sector in the coming year would be almost the same as 2007 with deficit in peak demand hovering around 12 per cent and above.

The electrical energy requirement is expected to grow about 8 per cent. The power ministry has set a power generation capacity addition target of 12,039 Mw (scaled down from the original target of 17,000 Mw) by March 2009, which experts feel is difficult to achieve considering that just about 5,000 Mw has been added so far. The balance of the capacity addition would spill over to the target of 2008-09, which has been fixed at 9,000 Mw.

Also, some of the projects of the 10th Plan would also be implemented next year, which would see a marginal increase in generation. However, the demand is also growing fast at about 8-9 per cent as more industries are coming up.

This would affect the power generation and the gap in demand and supply would remain at around 12 per cent, say analysts. Some states like Gujarat and Maharashtra, which have been reeling under huge power crisis, are likely to get some respite as projects get commissioned next year.

But states like Uttar Pradesh and Bihar would continue with the severe shortage. The capacity addition is not expected to be substantial to dramatically improve the power scenario next year, says Shekar Reddy, a Delhi-based power expert.

The coming year, however, would be good for equipment manufacturers who would see a growth of 25-30 per cent in their business as they bag more orders for upcoming power projects, according to a Mumbai-based analyst.

"It would be a year of hope because so far the government hasn't been able to implement the policies it has announced to turn around the power sector," says N Nagarajan, CRISIL Research & Information Services.

He recommends speeding up power reforms, which have been underway for over a decade. The notable initiative taken during the 10th Plan was restructuring and unbundling of electricity boards of 14 states into separate entities for transmission, distribution and generation.

Shipping

The prospects for the maritime sector seem brighter in 2008, as far PPP initiatives in the port sector are concerned.

According to the decision of the Prime Minister's Committee of Infrastructure, the 12 major ports engaged international consultants for preparing their business plans for 20 years, including an action plan for the next seven years.

This exercise forms the main part of the National Maritime Development Programme (NMDP), which had been unveiled by the government a couple of years back with the aim of inviting PPP in the sector.

All the port authorities have prepared the plans along with a consolidated National Development Plan. These plans are expected to serve as guides for the major ports in preparing their annual plans and undertaking various developmental projects in future. The year 2008 would witness the implementation of these plans.

Also, the new year would witness the implementation of the model concession agreement (MCA) for ports.

Highways

The highway sector scenario for 2008 does not promise an impressive outlook, as the Ministry for Road Transport and Highways is struggling to meet its earlier targets, even as it has been asked to focus on six-laning of existing highways and development of expressways during the coming year.

The National Highways Development Programme (NHDP), which has been moving sluggishly for the last three years, received a thrust this year when Prime Minister Manmohan Singh urged the ministry to look at six-laning of highways and also develop greater number of expressways.

While the first phase of the NHDP, called the Golden Quadrilateral, which included four-laning of highways connecting the four metros, is finally over, it is the second phase called North South East West (NSEW) Corridor, which is flagging.

This phase includes four-laning of 7,300 km of highways connecting Porbandar to Silchar and Srinagar to Kanyakumari. Supposed to have been wrapped up by this December, the government has shifted its deadline to December 2008.

However, till date only 845 km or 11.5 per cent of the work has been done, and in the coming year the ministry would have to struggle hard to wrap up this phase.

With the ministry mandated to start six-laning of around 1,000 km of expressways under the sixth phase during 2008, it already has its plate full. On the brighter side though, 2008 would see some policy initiatives from the ministry, which is planning to unveil a new transport policy and road safety policy for the country.

Apart from this, there are plans to amend the Motor Vehicle Act, with the aim to facilitate speed-limit norms for private cars (currently there is no speed limit prescribed for them) and revising speed limits for commercial and heavy vehicles.

The government would also come out with a new toll policy which would prescribe toll rates for all categories of vehicles.

Railways

In 2008, the railway ministry hopes to attract more private players to its PPP bandwagon, especially in its container-train endeavour.

In 2006, it had opened the container-train segment for the private sector, which has been a monopoly of Container Corporation of India (Concor). The move allowed private logistics as well as transport and shipping firms to run their container trains. Till January 2007, 14 players had applied for licence to participate in the endeavour.

However, due to a delay by the ministry in finalising the model concession agreement, only one more player could be added. The ministry would be hoping to attract more players in the scheme in the coming year.

Apart from this, it would also like to finalise the designs and layouts submitted by around 30 private players for setting up budget hotels across the country.

These designs had been submitted in May this year by the players who had been shortlisted by the railway ministry for setting budget hotels. But their designs are still awaiting clearance from the ministry. With its PPP-friendly image being dented, sources say the ministry would be keen to start the project in 2008.

The ministry would be keen to finalise fresh alignments for the dedicated rail-freight corridor project, which it could start in the coming year.

The current alignments for the Delhi-Kolkata and Delhi-Mumbai corridors had come under a cloud as the SPV set up for implementing the project observed that if the existing alignments decided by the ministry were to be followed, then many physical structures would either have to be removed or heights of overbridges would have to be increased, and the implementation of entire project would take 10 years instead of the projected five years.

Additional reporting by Sapna Dogra Singh & Animesh Singh

Anirban Chowdhury in New Delhi
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