Infrastructure Sector Prospects

8/8/2019 Infrastructure Sector Prospects

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Infrastructure SectorInfrastructure Sector

ProspectsProspects


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INFRASTRUCTUREINFRASTRUCTUREThe basic physical and organizational structures and facilities(e.g. buildings, roads, power supplies) needed for theoperation of a society or enterprise.

Infrastructure sector plays an important role to counter

balance against slowing economic activity and lowerconsumption.

In India the infrastructure sector currently accounts for26.7% of Indias industrial output and thus remains a usefultool to balance the economy.

Infrastructure is the lifeline of any business activity, properinfrastructure increases business activity manifold.


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y Indias economic growth is attracting wideattention

y

Indian economy The 4th largest & 2ndfastest growing economy in the worldy In 2006-07 Indias growth was 9.4%y Economic prosperity is placing huge

demands on infrastructure

Economy GrowthEconomy Growth


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InfrastructureInfrastructure RequirementsRequirements

y World Economic Forum has noted thatIndias annual investments in infrastructurebetween 1998 and 2005 averaged 4% of

GDP compared to 8.2% for Chinay Government of India is addressing the

infrastructure requirementsy 11th Five Year Plan (2007-2012) calls for

more than doubling the financial outlay forinfrastructure


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Infrastructure SectorsInfrastructure Sectors

y Powery Oil & Gasy Telecomy Roads & Bridgesy Aviationy Ports & Shippingy Watery Finance


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Infrastructure DeficitInfrastructure Deficit

y Roads 66,590 Km of NH (2% of network, 40% of traffic): only 12%

Four-lane; 50% Two-lane; and 38% Single-lane

y Ports Inadequate berths, rail / road connectivity and draft are

constraintsy Airports

Inadequate capacity: Runways, aircraft handlingcapacity, parking space & terminal buildings

y Railways Old technology; saturated routes: slow average speeds

(freight: 22 kmph; passengers: 50 kmph); low payload toTare ratio (2.5)y Power

13.8% peaking deficit and 9.6% energy shortage; 40% T&Dlosses; absence of competition; and inadequate privateinvestment


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Projected Eleventh Plan SectorProjected Eleventh Plan SectorShareShare

Electricity

32%

Roads15%Telecom

13%

Railways13%

Irrigation12%

Water Supply andSanitation7%

Ports4%

Airports2%

Storage1%

Gas1%


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y PPPs in India are at a nascent stagey Slew Measures by government 100% foreign investment allowed in infrasectors

Model Concession Agreements evolved Viability Gap Funding (VGF) Setting up of IIFCL (Indian InfrastructureFinance Company) Regulatory institutions (Telecom Regulatory

Authority, Port Tariff Authority)y PPPs in India are accelerating 118 projects valued at $13.4 billion areprogressing in roads, ports, airport sectors

Development of PPP market inDevelopment of PPP market inIndiaIndia


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Transport SectorTransport Sector the potential inthe potential inIndiaIndia

y 46,000 km to be developed by 2012: $ 59 bn

y PPP programmes approved so far: 21,036 km

6-laning of 6,500 km of GQ & Other NH

EW & NS Corridors: 4-laning of 6,736 km

4-laning of 6,800 km in selected sections on BOT

1,000 km of new expressways

y Safety

Setting up of Directorate of Safety & TrafficManagement

Setting up of a dedicated road safety fund


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RailwaysRailways

y India has one of the largest railwaynetworks in the world (63,000 route KMsnetwork)

y Accounts for 30% of total freight traffic

y Traffic volumes set to double by 2012

y Potential for rollingstock, locomotives, passengercoaches, track equipment, signallingequipment


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AviationAviation

y Passenger traffic is projected to cross100 million passengers p.a. by 2010

y Cargo traffic to grow at over 20% p.a.

over the next five years- To cross 3.3 million tonnes by 2010y Maintenance, Repair and Overhaul (MRO)

growing in a big way MRO market expected to grow by 10%


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PortsPorts

y India has coastline of 7500 KMsy 12 major ports; 187 minor portsy Traffic has grown by a compounded

average of 8.5% Traffic expected to reach 880 million tonnes by2011-12

y 95% of Indias exports & imports moved bysea

y India expects to double its exports to $150billion in the next five years


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Role of IIFCLRole of IIFCL

y IIFCL is a SPV to provide long term financeto infrastructure projects Overriding priority to PPP projects

Finance projects in sectors like roads, airports,ports, power, urban infrastructure etc

y Since inception in April 2006 Financed 77 projects to the tune of $4.3 billionwith a total project cost of $31 billion


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ConclusionConclusion

y Investment requirements of infrastructuresector huge

y India growth story to continue 50% of the population is below 25 years

Huge domestic demandy Need to bridge infrastructure gaps to

sustain economic growthy Opportunities for international investors

significanty India can leverage on its vast human

capital to successfully adopt the PPP model


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Documents

Infrastructure Sector Prospects