India – Projects, energy and infrastructure update

In July 2014, RBI had allowed banks to issue long-term bonds (LTBs) for lending to long-term projects in infrastructure sub-sectors, and affordable housing. However, cross-holding of such bonds amongst banks was not permitted.

Smart cities mission and urban rejuvenation scheme (AMRUT) approved with an outlay of Rs. 100000 Crore
The Cabinet headed by the Prime Minister, in a bid to reform the urban landscape of the country to make them more efficient, smart and sustainable besides fostering economic growth, has cleared 100 Smart Cities Project and Atal Mission for Rejuvenation and Urban Transformation (AMRUT) for 500 cities. While the Smart Cities Mission will receive an outlay of Rs 48,000 crore, the AMRUT mission will get Rs 50,000 crore over the next five years.

While the government will put in Rs 1 lakh crore under the two missions, states and urban local bodies would organize matching resources for development of urban areas over the next five years, taking the total flow of investment close to Rs 2 lakh crore. In addition, significant private investments would be mobilized by states and urban local bodies through PPP model as required to meet project costs.

Indian railways to e-auction re-development of stations through public-private partnership (PPP)
The Indian Railways is working on a policy for e-auctioning contracts for about 100 railway stations to overcome the hurdles faced by private sector partners while executing PPP projects. The private concessionaires involved in converting the railway stations into world-class transit facilities could be given a specified area within the station premises for commercial exploitation. The blue-print of the policy is being readied.

New hybrid annuity model of PPP introduced for the road sector to revive the private investment
The government is targeting the award of half the 8,500 km of road development projects up for awards this financial year under the new ‘hybrid annuity’ model, under which the government will pay 40 per cent of the project cost

to the concessionaire during the construction phase in five equal instalments of 8% each. This assured return is likely to ease the concessionaire’s reliance on the toll. The government would also take up the responsibility of revenue collection. The government will provide 90 per cent of land and the related environment along with forest clearance. The balance 60% cost would be funded by the concessionaire. Operation and maintenance of the toll road will also rest with the concessionaire.

Energy
Shell set for global acquisition of BG for US$ 70 Billion
In the industry’s biggest deal in at least a decade, Royal Dutch Shell Plc has agreed to buy BG Group Plc for about $70 billion, making Europe’s largest oil company a leading player in global natural gas and adding fields in Brazil.

With this acquisition Royal Dutch Shell Plc is all set to become the top international firm in India’s thriving gas import and marketing business.

BG’s core strengths lie in the logistics of liquified natural gas or LNG, therefore, Shell, which has a 2.5 million tonnes per annum (mtpa) LNG terminal at Hazira in Gujarat, could tap into BG’s vast global network to source and sell LNG in India.

IFC signs master co-operation agreement with Indian renewable agency to finance renewable energy projects
International Finance Corp and the Indian Renewable Energy Development Agency (IREDA) have signed the former’s master cooperation agreement to provide infrastructure financing for renewable energy projects in India. The partnership with IFC will help IREDA increase its portfolio in financing renewable energy projects to support the Government of India’s plans to establish up to 175 gigawatts of renewable energy projects over the next seven years.

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