Public infra financing in india
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Transcript of Public infra financing in india
PUBLIC
INFRASTRUC-
TURE IN INDIA – direct financing
opportunities
Assessment
Identification
Profiling
Established Development Principles 1
Infrastructure Sectors 2
Transport | Utilities | Housing | Social | Tourism 3
Non Contemporary Financing – Smart Cities 4
JLL – Infrastructure Services 5
Outlines
Public Infrastructure Development Principles
Construction and Development Risks are mostly handled by the concessionaires
(private players)
Government evades Operations and Revenue Recognition responsibilities due to
chances of inefficiency and pilferage
In all PPP projects, financing responsibilities are the onus of private player only.
Government prefers multi lateral donor agencies over commercial borrowings in case
of public funded projects
The lending agencies generally prefer state guarantee or rights over revenue
Government doesn’t allow rights over or mortgage of assets as collateral
Established Development Principles
1. Transportation
2. Utilities
3. Housing
4. Social Infrastructure
5. Tourism Infrastructure
6. Smart Cities
Infrastructure Sectors
Transport S.
No.
Sub-sectors Development thrust by
government
Funding
Opportunity
Mode of
investment
Tenure of
Investment
Risk Profile
A. Roads
1 Highways High Indirect Through
Concessions 15 – 25 years
Low (user fee is
acceptable)
2 City Roads Low (already developed)
direct funding
can be
assessed
Annuity
concessions 8 – 10 years
Medium (user
fee not
acceptable) |
capital recovery
through cross
subsidization of
land assets
B. Road Transport
1. Intercity Bus Service Low (mostly private
players) Very less
Hire
Purchase of
Buses
5-10 years
Very high (most
of the RTCs*
are defunct and
out of revenue)
Transport S.
No.
Sub-sectors Development thrust by
government
Funding
Opportunity
Mode of
investment
Tenure of
Investment
Risk Profile
B. Road Transport
2.
Intra-city Bus
Service / Urban
Transport / Rapid
Mass Transit
High (by certain states /
municipalities deprived
of such facilities)
High
Direct
Funding /
Hire
Purchase of
Buses
5-10 years Operation Risk
is high
3.
Bus Depot /
Terminus
Development
High (by certain states /
municipalities deprived
of such facilities)
High
Commercial
Debt for
Depot
Development
15-20 years
Less risk -
terminus fee
component can
be introduced in
the tickets
which can be
transferred to
the financer
Transport S.
No.
Sub-sectors Development thrust
by government
Funding
Opportunity
Mode of
investment
Tenure of
Investment
Risk Profile
C. Railway
1. Rail Network
Connectivity
Low (by Government
of India) – Already
developed rail
connectivity to
maximum locations
Low (mostly public
funded through
budgetary
provisions)
Direct
borrowing by
Government
- -
2. Railway Station
Redevelopment
High (by Government
of India through
dedicated
organisation)
High (400 railway
stations; all may not
be taken up under
PPP)
Commercial
Debt for
Station
Development
15-30 years
(depending on
the size of the
station)
Less risk -
Station fee
component can
be introduced in
the tickets
3. Rolling Stock /
Components
High (setting up of
factories across
India)
Medium (opportunity
for long term capital
for factories may be
assessed)
Long term
debt or short
term working
capital
Variable
(dependent on
the project)
Less Risk –
demand for
rolling stock in
high
Transport
S.
No.
Sub-sectors Development thrust
by government
Funding
Opportunity
Mode of
investment
Tenure of
Investment
Risk Profile
D. Shipping
1. Ship Building &
Repairs
Medium (lately
government has
developed
Sagarmala Project)
Low (new industry;
less known markets)
Long term
debt or short
term working
capital
Variable
(dependent on
the project)
Medium (this
industry shall
have to establish
market)
2.
Port / Port
Estate
Development
High (by Government
of India through new
Sagarmala Project)
High (several new
minor / fishing ports
being planned)
Commercial
Debt for Port
Development
15-30 years
(depending on
the size of the
station)
Less risk - Port
fee component
can be
introduced as
user charges
3. Connecting
Logistics
High (by Government
of India through new
Sagarmala Project)
Moderate (projects
in nascent stage) - - -
Utilities
1. Utilities Infrastructure except power is mostly developed through public funding
2. Large portion of Non Revenue Water (NRW) is prevalent in most of the municipalities | No user fee concept for sewerage, drainage etc.
3. Smart City concepts aims to address these issues
4. Financing opportunities can be assessed in core infra development like distribution network augmentation, WTPs, STPs etc.
5. Subject to consent of government and provisioning in the regulatory framework, loan repayment can be mechanized through enhanced taxation.
6. However, at present, many municipalities are not even able to collect and realize the existing property taxes.
Housing
1. Financing opportunities in premium segment housing being developed
by Government Undertakings like Development Authorities, Housing
Boards
2. Financing of Affordable Housing Segment based on annuity payments.
3. However, multi lateral donor agencies offer soft loans and grants along
with term loan to subsidies it significantly and also tie up loan
arrangements of high value at state government level
4. Opportunity for financing rental housing, transit accommodations, shelter
for homeless is prevailing in many states through their ULBs.
Social Infrastructure
1. Education – Financing of schools , colleges and technical institutes with
loan repayments on annuity model by the Government.
2. Healthcare – Primary Health Centers and Specialty Hospitals are
potential opportunities.
3. Most of educational and healthcare infrastructure developments in
developed or developing states are developed through their budgetary
provisions and may not need financing
4. The under developed states mainly eastern and north eastern may
keenly appreciate such financing offer.
Tourism
1. High potential of tourism development in India across most of the states
2. States are deprived of funds – Neither State nor Central Government
schemes cater to the need
3. Municipal level awareness growing for improvement of local area for
booming economy and quality of life
4. High revenue generator with multiplier factor especially through tax
revenue to government from allied industries
5. Projects in various states can be identified for exploring opportunities
Public Infrastructure Development Principles
Captive investment into rental housing development
Pooled Municipal Debt Obligation Fund (Municipal Bonds)
Many municipalities are preparing to release their bonds for raising PMDOF to
implement key projects in their area.
Government of India supporting this activity through technical assistance in the form
of documentation and agency selection support
Smart City Development Components (primarily ICT, IOT and other
smart features)
Typically, ULBs will procure the technology by paying upfront from the funds being
made available by GoI
Required to develop the concept of Managed Service Contracts / Annuity payments
for utilities and other public services forming part of the smart city proposals.
Non Contemporary Financing
For further information, kindly contact: -
Sumeet Sharma
Asst. Vice President
Infrastructure Services
Jones Lang LaSalle Property Consultants India Pvt. Ltd.
Level 7, Tower A, Peninsula Business Park,
Senapati Bapat Marg, Lower Parel,
Mumbai – 400 013.
Tel: - +91 22 6620 7575
M: - +91 95722 80454
defining new horizon