M.E.

(Civil Infrastructure Engineering) Semester-I

Private Sector Participation Infrastructure Planning and Management
Q-1. Explain Transportation Infrastructural System
 In all infrastructure system, necessary for development of any Nation, Transportation
facilities are basic infrastructural system with proper transportation infrastructures
available in Region, all other activities and infrastructures are possible to develop.
 The transportation systems are necessary to link locations where activities takes place and
there by provide the necessary mobility required by the society.
 This system is consisting of physical links like racks, roads, railways, pipelines,
cableways, belt conveyors etc.also navigation links like airways and waterways are part of

this system.

 The transportation infrastructure provider means of moving persons and goods over the
links shown above:-
 These are:-
(1) Large Terminals: - Ports, Airports, Railway stations, Bus terminals, Parking facilities
(2) Medium Terminals: - Loading docks, bus stops, garages etc.
(3) Small Terminals: - Curb parking and loading-unloading
 The major transportation systems and modes can be classified as follow:-
(A) Land Transportation:-
(1) Human porters
(2) Animal transport
(3) Road transport
(4) Railway transport
(B) Water Transport:-
(1) Canal navigation
(2) River transport
(3) Lake transport
(4) Ocean transport
(C) Air Transport:-
(1) Passenger aeroplane
(2) Cargo planes
(3) Fighter planes
(4) Helicopters

Mr. J.D.RAOL & Ms Pooja Z Podar,

Department of Civil Engineering, L.D.R.P Institute of Technology & Research, Gandhinagar (Page 1of 9)
 M.E. (Civil Infrastructure Engineering) Semester-I
Private Sector Participation Infrastructure Planning and Management
(D) Pipe lines: - Gas, liquid & solids also.
(E) Cable ways.
(F) Conveyor systems.
 Human Porters: - The places where road do not exist, human porters are utilized for
transporting goods, for example on railway stations and hilly areas.
 Animal Transport:- In many places, where proper development of infrastructure is not
available, animals are used to carry the materials from one place to another by directly
carrying or through carts-horses, bulls, camels, elephant, yaks etc are used in
transporting.
 Road Transport: - It uses several types of carriages such as cars, buses, trucks, cycle,
two-wheeler, vans, loading rickshaws etc.
 Rail Transport: - It is significant and potential means of transporting. Men and
material over long distance.
 Canal Transport:- Bulk communication can be transported through canal network over
shorter distances.
 River Transport:- The river is the oldest source of transportation since long past. It
gives free right of passage to all. It can largely contribute to commerce and economy
long stretch is available for moderate terrain.
 Lake Transport:- Where huge or large lake are available it can be used for
transportation more economically then roads and railways.
 Ocean Transport: - It is also historical means of trade among different countries
through the steamers or diesel ships. Ocean is a very large source of transport which
connects different states and countries as well as continents, due to large depth; heavy
loads can be carried to places with very less expenditure as compared air transport.
 Air Transport: - Air transport is most speedy mode of transportation but it is very much
costly.
 Cable ways: - This type of aerial mode is used to transport mainly materials like
granular materials; sand etc. if trolleys are attached to it, then it can be used to
transport passengers especially in hilly areas.

Mr. J.D.RAOL & Ms Pooja Z Podar,

Department of Civil Engineering, L.D.R.P Institute of Technology & Research, Gandhinagar (Page 2of 9)
 M.E. (Civil Infrastructure Engineering) Semester-I
Private Sector Participation Infrastructure Planning and Management
 Conveyor Belts: - It can be used to transport loose granular materials, to be used in
form of escalators, ride walks for short distances. It can carry grains, cement, coals,
aggregates etc.
 These all modes of transportation are the major components of transportation and
infrastructure system.
Q-2. Case Study : Konkan Railway
 The mode of transportation by railway is one of the critical infrastructures for Indian
growth of economy. As far as railway infrastructure is concerned, it is fully owned and
controlled by central government in India. But huge investments is required in
development of railway facilities and due to financial constraints, some of the PSP
(Private Sector Participation) schemes were introduced in railways in 1990’s.
 The PSP schemes adopted were BOLT (Build-Operate-Lease-Transfer) and BOT
(Build-Operate & Transfer).
 The Case of Konkan railway is one of the examples of BOT scheme. In the BOT
scheme the projects are built and operated by operator for a pre-defined period, after
which is transferred to a licenser public body. The scheme was applied for Konkan
railways co-operation (KRC).
 Konkan railway is very challenging project under-taken in the western part of Indian
Coastal Region. The project is covering coastal areas of Maharashtra, Goa and
Karnataka States.
 The total length of railway line is 768km from which 382km, belongs to Goa and
273km is belonging to Karnataka State.
 The project involved construction of 2000 bridge and all tunnels in the difficult terrains
of states of Maharashtra & Karnataka.
 The KRC was setup as a separate corporation to execute the project as a subsidiary of
Indian Railways. The original estimated cost of project was Rs.1400 Crores. The
financing details of the project are explained in subsequent section.
(1) Original Estimated Cost : Rs.1400 crores
(2) Sources of Finance : partly through debt & equity

Mr. J.D.RAOL & Ms Pooja Z Podar,

Department of Civil Engineering, L.D.R.P Institute of Technology & Research, Gandhinagar (Page 3of 9)
 M.E. (Civil Infrastructure Engineering) Semester-I
Private Sector Participation Infrastructure Planning and Management
(3) Original Portion of equity : Rs.400 crores.
(4) Finance of Equity : 51% from Centre & 49% from the states in which railway
is passing.
(5) Actual Cost incurred : Rs.3375 crores
(6) Actual Portion of equity : Rs.800 crores
(7) The Finance through Cost : The Company went to Public 13 times from 1993 to ’96
 Thus a project of Konkan railway was costly project & the KRC has experienced
financial issues in completing the project. Initially it was dedicated to open the project
in whole stretch, but due to delayed work, it was commissioned in short stretches from
both sides. It became operational on January 25, 1998.
 Some of the issues worth to be noted about KRC are given below:-
 The agitation from local people from Goa had created risk of delay & it was born by
KRC. This type of situation may become problematic when BOT type of scheme is
adopted.
 The main Traffic in addition to the traffic originating on the KRC comes from Indian
railways. The KRC is dependent on the neighbouring railway zones for traffic. The
Indian railway does not commit itself to offering only traffic the KRC. Thus KRC
bears the market risk completely.
 The BOT project should be adopted by breaking the project into small section, so that
the revenue generated can be started from completed section & would be used for
another section.
 The expected traffic potentials for the project was over estimates, so the volumes
which were anticipated could not be materialized, some details are:-
 Consultant’s RITES has estimated the traffic potential on KRC.
 Maharashtra and Karnataka had indicated mega investment projects in the region.
 CMIE had projected investment of Rs.500 crores in Maharashtra only.
 The region has 3 well developed parts offering services at lower rates, the diversion
could not be achieved as expected of course, and KRC has taken major share of cargo
from road transportation.

Mr. J.D.RAOL & Ms Pooja Z Podar,

Department of Civil Engineering, L.D.R.P Institute of Technology & Research, Gandhinagar (Page 4of 9)
 M.E. (Civil Infrastructure Engineering) Semester-I
Private Sector Participation Infrastructure Planning and Management
 The revenue generation details of KRC is shown below:-
(1) Estimated revenue details Rs.20.49lacs/day.
(2) Actual revenue generations of Rs.39.30lacs/day.
(3) The surplus expenditure per day of RS.1.0crores.
 To adjust this surplus, ministry of railway has agreed to lend KRC Rs.200 crores every
year for 20years to tide over its crisis.
 Some of the initiatives by KRC for revenue generation is shown below :
 Running of 4 pairs of train on the roote to make the corporation economically viable.
 Utilisation in consultancy, the rich expenditure in building High quality infrastructure.
 KRC to become an internet service provider by making use of its spare capacity of
optical fibre cables.
 KRC is considering to run train on the lines of palace on wheels to top tourist potential.
 Conclusion: By studying the case of KRC, we come to know the BOT system and its
implementation, finance, for Infrastructure projects, risks involved in any project.
 Some other notable points regarding Konkan railway projects:-
 The technology of Seg established tracks is used in the project, it gives benefits over
open ballast system as under.
Open ballast system
Cost Rs 27 laces/km Rs 25 laces/km
Ballast maintenance cost Rs 27 laces/km/yr Rs 0.7 laces/km/yr
Machinery for maintenance
of ballast
(1) Operation cost (1) Rs 4 laces/km ----
(2) Running cost (2) Rs 0.4 laces/km/yr ----
(3) Maintenance cost (3) Rs 0.4 laces/km/yr ----
Life of Gauge (4)
10yrs ----
(5)
Cost of ballast Rs 7 laces/km
% 0f reusable of ballast 69%
 The estimated net present value of cash inflow to KRCL:
 SST system Rs 330-390 crores.
 ACD technology Rs 680-805 crores.

Mr. J.D.RAOL & Ms Pooja Z Podar,

Department of Civil Engineering, L.D.R.P Institute of Technology & Research, Gandhinagar (Page 5of 9)
 M.E. (Civil Infrastructure Engineering) Semester-I
Private Sector Participation Infrastructure Planning and Management
 Overall from all technology Rs 1875-2375 crores.
Q-3. Explain Basics of PSP Model
 “This is the method of undertaking the project with the help of privates stake-holder”,
so that financial burden can be reduced from the government, thus it is called Private
sector Partnership (PSP) model of projects.
 As we know that any infrastructure project requires very large quantum of investment.
Only government cannot fulfil requirement for great demand of infrastructural facility.
 A proper framework is needed to tap the various financing sources in a cost effective
manners, by taking into account constraints project cash flow profile, risk anticipated,
positioning and access to capital markets.
 Fiscal Constraints: In developing countries there is a need to improve infrastructure to
promote commerce and for socio-economical development, but the budgetary support
for their projects is not adequate. Therefore, Non-budgetary sources like debt and
equity from corporate investors, constructors, sector funds, operator’s financial
institutes, commercial banks and bilateral agencies and development institutions with
a sector focus, are required to participate in the project financing.
 Project cash flow:- In spite having less operating and maintenance cost, by
infrastructure projects need very huge capital investment. Thus, it required a large
upfront investment that yields returns over the long term.
 The ability to recover the economic price from consumers becomes the principal issue
in ensuring a feasible each flow profile that determines the extent of viability-The
revenue generation ability of a project determines the (debt, equity).The market profile
of debt funds the frame work & security.
 Phasing of project Expenditure & Financing :-
 Due to having long construction period, the strict control and monitoring of project
expenditure in accordance with the implementation plan for this purpose on
appropriate financial strategy is required so that funds to be raised by matching
mobilisation of funds with the project draw down schedule. This is required because
non availability of in time of funds can impacts the implementation of project and also

Mr. J.D.RAOL & Ms Pooja Z Podar,

Department of Civil Engineering, L.D.R.P Institute of Technology & Research, Gandhinagar (Page 6of 9)
 M.E. (Civil Infrastructure Engineering) Semester-I
Private Sector Participation Infrastructure Planning and Management
it increases the project cost of cores. Over a deployment of funds will increase the
burden of interest during construction.
 Financial Plan: For these all potential sources of funds are examined and compared for
tenure, cost attached, tax benefits and existing policy guidelines.
 To Financing and infrastructure project on PSP format following steps should be taken.
(A) To determine the scope of the project and the related engineering, procurement &
construction (EPC) costs.
(B) Determine another expenditures such as
 Development, preliminary & pre-operative expenses.
 Financing cost and socio-economic impact mitigation costs.
 Total landed cost and revenue potential f project.
 O & M costs.
 Projections of cash flow & financial analysis.
 The Proper steps should be followed for the decision to implement an infrastructure
project. If the project is viable on its own it should be undertaken by PSP, otherwise
alternate projects can be consider.
 The infrastructure projects should be implemented on “pay-per use basis”, supported
by the government & the principle stakeholders in the project. To recover O&M cost,
to provide reasonable return to investors and to promote habit, to pay for received in
the users.
 SPV (Special Purpose Vehicles):- The perfect should be implemented through, a SPV
expressly setup for the purpose & promoted & supported by the principle stakeholders.
To get sufficient “In time” flow by cash, it should be partly financed by marked
borrowers.
 To ensure a disciplined operation & maintenance regime and therefore the provision of
quality service, A specialist agency should be established. It will bring wider support
for the project and greater “Willingness to pay” for use.
 There should be a robust & fair concession for competitive and efficient projects
through careful agreement.

Mr. J.D.RAOL & Ms Pooja Z Podar,

Department of Civil Engineering, L.D.R.P Institute of Technology & Research, Gandhinagar (Page 7of 9)
 M.E. (Civil Infrastructure Engineering) Semester-I
Private Sector Participation Infrastructure Planning and Management
 The government support to the SPV and the tenders is essential for the projects which
are financially unavailable on basis of user generated revenue.
 To project needs to be implemented in professional manner & transparent to avoid
delays, Cost overruns and user resistance the proper procurement service should be
arranged.
Q-4. Explain different private sector participation models.
 As seen earlier PSP model is required for project financing, as government has very
limited sources. There a different methods carried out as a PSP model which are
discussed as under:-
 BT(Built & Transfer):-
 The concessional undertakes financing and construction of infrastructure facility. The
concessioning authority would remember to total project investment as per agreed
schedule. It is used in critical facilities that must be operated by the concessioning
authority directly for security and strategic reasons.
 BOLT(Build Own Lease Transfer):-
 The Concessionaire is authorised to finance, construct, own, operate and maintain
infrastructural facility for a specified period of concession. He can also levy user
charges to recover investment, operating cost and reasonable rate of return. The
concessionaire leases the facility to the concessionaire leases the facility to the
concessioning authority.
 BOT (Built Operate & Transfer):-
 The concessionaire undertakes the financing, construction, operation and maintenance
of infrastructure facility. He is allowed to levy user charges for a fixed term during
which he has to operate the facility remains with the concessioning authority.
 Annuity Model:-
 The Concessionaire is spending on the entire upfront & construction and maintenance
cost, they recover the entire investment & cost of return through annuity paid by the
concessioning authority every year.
 BOO (Build-Own-and-Operate):-

Mr. J.D.RAOL & Ms Pooja Z Podar,

Department of Civil Engineering, L.D.R.P Institute of Technology & Research, Gandhinagar (Page 8of 9)
 M.E. (Civil Infrastructure Engineering) Semester-I
Private Sector Participation Infrastructure Planning and Management
 The concessionaire is authorised to finance, construct, own, operate & maintain the
project, they own the aspects of the facility and may choose to assign its operations
and maintenance to an operator. The transfer of the structure to concessioning
authority is not envisaged, but they may terminate its obligations after a specified time
period.
 BOOT (Build-own-operate-transfer):-
 The concessionaire is authorised to finance, construct, maintain, operate an
infrastructure facility, the facility is to rest in the concessionaire for the specified
period. The Concessionaire is liable to transfer the facility to concessioning authority
upon expiry of concession period.
 There are some more models for the PSP concepts, which are having different
structures for conditions between concessionaire & concessioning authorities.
They are listed as below:
 BOOST (Build-own-operate-share-transfer) Revenue are share by both parties.
 BTS(Build-transfer-operate) The concessionaire construct the facility on turnkey basis
 DB(Design build) Turnkey access to private sectors expertise through design
 SOT (supply-operate-and-transfer):- concessionaire supplies the equipment& machine
for project also.
 CAO (Construct add and operate):-
 DOT (Develop-operate-and-transfer )
 ROT (Rehabilitate-operate-and-own):-Existing facility is handed over to the
concessionaire to refurnish operate & maintain.
 ROO (Rehabilitate-operate & own)
 O&M (Operations and maintenance):-
 There are number of models available for preparing a PSP plan. These include different
functions to be carried out by concessionaire on behalf of concessioning authority
according to conductions laid down in the particular mode.

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Mr. J.D.RAOL & Ms Pooja Z Podar,

Department of Civil Engineering, L.D.R.P Institute of Technology & Research, Gandhinagar (Page 9of 9)