Amritsar Terminal Project

Lalit Kumar

Assistant Professor (Financial Mgt.)

HIPA, Gurgaon.

Amritsar Intercity Bus Terminal Project

Project Description

PPP structure of the Project

Financing Information

Process Analysis

Development

In this presentation, we will go through:

Construction

Delivery

Exit

Risk allocation framework

Key Learning and Observations

In this presentation, we will go through:

Amritsar city is a spiritual centre for the Sikh community which attracts large number of tourists (as high as 50,000 per day) visiting particularly the Golden Temple and Wagah (India-Pakistan) border.

Feasibility : As there were 1,800 to 2,000 bus arrivals per day and the demand of services at terminal were rising, it was necessary to modernize and develop . Without using pubic sector comparator, The Punjab Infrastructure Development Board (PIDB) decided to modernize and develop the terminal through BOT.

What it covers - The project involves demolishing of existing terminal building and developing a modern state of the Intercity Bus Terminal to cater growing demands of the city.

Project Description

This project was signed in Feb 2004 for 11 years and 5 Months on BOT basis means in 2015, it will be transferred to Government of Punjab.

The Rohan Rajdeep Infrastructure (India) Pvt. Ltd. (a partnership between Rohan Builders (India) Pvt Ltd., Rajdeep Buildcon Pvt Ltd and Rajdeep Road Developers Pvt. Ltd.) completed the project and commissioned it in October 2005.

Presently, the terminal is handling only 1700 buses a day lower than its estimated number i.e. 2000 to 3000 per day.

Current Status

Through a two stage bidding process, Department of Transportation (DoT), Government of Punjab (GoP) awarded the contract to Rohan Rajdeep Infrastructure Ltd. for undertaking the project activities and develop a modern bus terminal on BOT basis.

The private operator established a Special Purpose Vehicle (SPV) called the Rohan Rajdeep Infrastructure (India) Pvt Ltd. for executing the project.


The private operator was responsible to finance, building, operations and maintenance of the Amritsar Intercity Bus Terminal complex.

Concession period : 11 years and 5 months Project Development Fees : 35 lakhs for the

project site lease and a lease rental of 50,000 per month were required to be paid by the private operator for use of the project site over the concession period.


Revenue streams identified: The first revenue stream was through the operations of the bus terminal in form of “Adda Fees”. The second was commercial rentals from shops located within the Intercity Bus Terminal complex. Other sources of revenue included the sale of advertising rights as well as parking fees.


Estimated : 19 crores at the time of project conception.

Actual: the project cost finally worked out to 21.34 crores.

Financing through: Debt component was 12 crores while the equity component was 9.34 crores.

Financing Information

Inception •Project conceived by DoT, GoP and PIDB and configured through project advisor in 2002

Procurement •2 Stage Bidding Process started in November 2002. During RFQ , 16 bids were received out of which 14 prequalified to the RFP stage. At RFP stage four bids were received and on the basis of meeting evaluation criteria specified in the RFP document, Rohan Rajdeep Infrastructure Developers Pvt. Ltd was declared the successful bidder and was issued a notice of award for the concession agreement in September 2003.

Development •Development was undertaken in two stages, the first was the Conditions Precedent period of 90 days and thereafter the Construction period of 18 months.

Delivery •Concession Agreement signed in February 2004 and still being operated by private operator.

Process Analysis

As per Conditions Precedent: Within 90 days of signing concession agreement –

The concessioning authority was required to (i) authorise the private operator to collect “adda fees” from buses using the Terminal (ii) making it mandatory for all intercity buses to halt and pay adda fees (iii) Facilitate the transfer of land at the project site from the Amritsar Municipal Corporation and (iv) Temporary shifting of the existing bus terminal to a different location.

Development Phase

The private operator on his part was required to (i) Obtain all necessary clearances and approvals, (ii) pay the project development fee of 35 lakhs to the concessioning authority, and (iii) Ensure financial closure of the project and submit proof of the same.

After completing the above 90 days conditions precedent, construction period of 18 months will be considered.

Development Phase

The project was to be developed based on the standards specified in the concession agreement including preparation, maintenance, and approvals of the project design.

The private operator was able to complete the work within 17 months including construction and carrying out necessary tests required to be carried out. Accordingly, the private operator was given the right to advertise license allotments for the passenger amenities in the Intercity Bus Terminal.

Development Phase

The Amritsar Intercity Bus Terminal construction was completed and commissioned in October 2005.

It includes long distance and local bus routes, parking provision for 54 cars, 102 rickshaws/autos and 1838 two-wheelers / cycles and 300 passenger seating berths, convenience stores, refreshment stalls etc.

Subsequent to receiving the completion certificate, the O&M period for the project commenced.

Delivery

At the end of the concession period all immovable and movable property relating to the project will be transferred to the concessioning authority and the authority will issue a certificate as proof of transfer of all rights, titles and interests in the Amritsar Intercity Bus Terminal assets and facilities.

Exit

Risk Type Sensitivity Risk Period Primary Risk Bearer Comments

A) Pre-Operative Risks

Delay in Land

Acquisition

Low 0-90 days from

signing of concession

agreement

Concessioning

Authority

Project development

involved transfer of

land from the

Municipal Corporation

of Amritsar to GoP.

Hence delay in land

acquisition was not a

major risk for this

project.

Financing Risk High 0-90 days from

signing of concession

agreement

Private Operator The private operator

was required to

ensure financial

closure of the project

within 90 days of

project acceptance .

Inability to ensure

financial closure

would have resulted in

a default on the part

of the private operator

.


A) Pre-Operative Risks

Delay in obtaining

Approvals/Permits

Medium 0- 90 days from

signing of the

concession

agreement

Private Operator The concessioning

authority was to

provide all necessary

support to the private

operator in obtaining

the clearances and

approvals. However

the responsibility of

obtaining the same

was with the private

operator.

B) Construction Phase Risk

Design Risk High 0-18 months from

compliance date

(Date of fulfilment of

conditions precedent)


was required to

submit detailed

construction design

for review along with

design warranties for

the project.


B) Construction Phase Risk

Construction Risk Medium 0-18 months from

compliance date


was required to furnish

a performance security

and to facilitate

periodic inspection

alongwith submission

of monthly progress

reports.

C) Operations Phase Risk

Revenue Risk Low Throughout Private Operator A notification was

issued that all intercity

buses would be

required to halt, drop

and pick up

passengers from the

Bus Terminal.

However, private

operator has to ensure

the use of the terminal

as scheduled.



Policy Risk Low Throughout contract

term

Concessioning

Authority

In case of any

changes/modification in

laws the concessioning

authority would take

necessary action to

ensure that there is no

change to the private

operator’s legal,

commercial and financial

position as a result of

such change.

Performance Risk High Throughout

Concession Period

Private Operator The private operator was

required to maintain

standards during the

construction as well as

O&M period as per the

detailed specifications in

the concession

agreement.

Risk Type Sensitivity Risk Period Primary Risk

Bearer

Comments


Operations &

Maintenance Risk

Medium Throughout Concession

Period

Private

Operator

The private operator was required to

create an O&M manual, detailing the

regular and preventive maintenance

which would be undertaken. In case of

non-compliance , the concessioning

authority had the right to invoke the

performance security and impose a

penalty for non compliance.

D) Other Risks

Handover risk Medium 6 months from termination

date

Private

Operator

The concessioning authority had the

right to appoint a consulting engineer

to assess the condition of the project

facilities so that if required shortfalls

can be remedied by the private

operator prior to handover of assets.

The VfM assessment on qualitative basis points out the following facts:

1. Assured revenues to the GoP through lease payments : the concessioning authority receiving a lease rental of 50,000 per month from the private operator during the concession period apart from the 35 lakhs received in starting of the project.

2. Development of a modern Intercity Bus Terminal with O&M being efficiently handled by the private operator: In addition to upgrade on basic passenger services like provision of adequate seating, designated bus bays, electronic displays and car and bike parking areas, this terminal also provided for eateries and convenience shopping area for passengers.

Post Facto VfM Analysis

3. No cash outlay for the concessioning authority during the construction as well as O&M period : The GoP had no cash exposure in the project during both construction and O&M period.

4. Demonstration effect : After success of this project, a number of other bus terminals in Punjab as well other cities in India are being bid out in a similar fashion.

Post Facto VfM Analysis

The project remained successful due to:1. Facilitation provided by Government to

ensure efficient execution: Government ensured the efficient leasing of land to the private operator , getting necessary approvals for project development, and providing support during the construction stage as well as the O&M stage of the project. This was a critical element in the timely execution of the project.


2. Favourable policy environment to ensure revenue stream : The Government issued notifications and ensured favourable environment for the project activities.

3. Flexible project structuring was undertaken to facilitate funding of the project: Collection of “adda fees” was similar to toll collections on road projects, the lenders were provided enough security through access to the revenue streams of the project and were provided substitution rights in case of a default by the private operator.


The project remained successful due to:4. Detailed and clear definition of project design

and scope : It is critical for success of a project and also helps in proper monitoring. In this project, necessary standards were maintained by the private operator for both project development and delivery; and Government support in project activities also set the success stone in the whole project.


Amritsar Terminal Project

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