Government of India Ministry of Road Transport & Highways No, RW/NH-3701 1/02/20) 0/PPP(Vol.Ii) To ShriN. R. Das, Chief General Manager (Finance) , (PPP Zone) t Parivahan Bhawan f,Sansed Marg ‘New Debhi-110 001 National Highways Authority of India, G- 5&6, Sector-10, Dwarka, ‘New Delhi - 110075 Sub: projects. Sir, ‘A meeting was heid on 08.11.2011 under the Chairmar review the standard parameters issued by NHAI for financial analysis of BOT (Toll) am Standard Parameters for financial analysis of BOT (Annuity) projects. Minutes of the meeting is enclosed herewith for ready reference 2 below: meters _ Flexible pavement | Rigid pavement —~ | ‘Periodical Renewal Cost for base year | Rs 35 lacs/km_ Nil. | 2011-22 for Jane Highway : aoe Routine Maintenance Cost for base year | Rs 3.5 lacs/km/annum | Rs 4.0 lacs/km/annum 20L1-12 for 4-lane Highway. __ E - Contingency Provision @ of Civil Work Cosi} Financing Cost for Debt — I Civil cost up 16 Rs $00 crore Civil cost > Rs 500 crore to Rs 1000 crore ‘cost > Rs 1000 crore | Traffic Discounts “Traffic that will not use highway | Exempted Vehicles _ 3, It is requested that NHAI may consider the above revise standard parameters “T1196 of the Debt Amount District Registered Vehicles Shall be work out on the basis of actual survey _| 2% of the Debt Amount 1.5% of the Debt Amount Carljeepivan @ 10% and other vehicles @ 5% Stretches already under toll operation, no leakage shall be considered. Car/jeepivan @ 3% and other vehicles @ Nil apply them to all projects which are yet to be circulated to PPPAC/SFC. Dated: November 16, 2011 (Folly and BOT (Annuity) nship of AS&FA to discuss and id BOT 2, A summary of suggested standard parameters for financial analysis are as indicated and Yours faithfully, Aes oe K. 5o! Executive Engineer (PPP) Copy to: (@) Chairman, NHAT (ii) Shri JN. Singh, Member (Finance), NHAI; (iii) (iv) Shri B. N. Singh, Member (Projects), NHAL »Shri V. L. Patankar, Member (Technical), NHAL.No. RW/NH-37011/02/2010/PPP (VotE) OFFICE MEMORANDUM Sub: Standard Parameters for finaucial analysis of BOT (Toll) and BOT (Annuity) projects. 1 am directed to enclose herewith minutes of the meeting, held under the Chairmanship of ASFA on 08.11.2011 at 11:30 AM to discuss and review the ‘Standards Parameters jgsued by NHAI for financial analysis of BOT (Toll) and BOT (Annuity) projects. This for record and further necessary action in the matter. \jpose (v-K. SOSH) Executive Engineer (PPP) ‘To (Shri. R. Das, CGM (Finance), NHAT ‘Shri M. P. Sharma, CGM (Technical), NHAT- Copy for information to: (i) Chairman, NHAI; Gi) Shri A. R. Goyal, Director (Finance), MoRT&H; Gi) Shri Atul Kumar, SE (NHDP-IV), MoRT&H, (iv) Ms Prem Lata Kaushik, AFA, MoRT&E; (v) PS to AS&FA; (vi) PS to JS (Highways); (vit) PA to SE (PPP).seseseces Minutes of the Meeting held ander the Chairmauship of ASE FA. ‘A. meeting was heid under the Chairmanship of AS&FA on 08.11.2015 2 1130 AM in Ministry to discuss and review the Standards Parameters issued by NHAI for financial analysis of BOT (Toll) and BOT (Annuity) projects. 2, The list of participants is at Annexure-I. 3. ‘The Chairman was apprised that NHAI has issued the standards parameters vide NHAI circular No. NHAI/11033/CGM(Finy2011 dated 29.04.2011 for financial analysis of BOT (Toll) and BOT (Annuity) projects. It was further apprised that parameters in respect of periodical renewal cost, routine maintenance cost and contingency provision were reviewed in the Ministry and with the approval of Competent Authority in the Ministy, NHAE was advised to review these provisions vide letter No. RW/NH-37011/67/201 V/PPP dated 08.09.2011. In the response NHAL has requested to arrange a meeting to reconcile the issues relating to Standards Parameters for financial analysis. The issues were discussed in details as follows: (Cost of Periodical Renewal for standard 4-tane highway: ‘The Chiiiman was apprised that earlier cost of periodical renewal was Rs 25 lacs/km [for base year 2005-06] which bas been revised by NHLAT to Rs 45 tacs/km [for revised base year 2050-11}, it was further apprised that, on an averab®, cost for periodical renewal for the year 2011-12 works out to Rs 35 Tees/iam for flexible pavement for standard 4-lane highway. The representative of NHAI also agreed to this. ‘Accordingly, it was suggested to adopt periodical renewal cost for standard 4-lane highway for base year 2011-12 as: (a) Rs 35 lacs/km for flexible pavement; (b) Nil for rigid pavement. Gi) Cost of Routine Maintenance for standard 4-inne highway: The Chairman was apprised that earlier cost of routine maintenance was Rs 3 lacs/km/ansium {for base year 2005-06] which has been revised by NHAI fo Rs7 lacs/km/annumn [for revised base year 2010-11}, It was further apprised that, on an average, cost of routine maintenance based on Maintenance ‘Norms works out to about Rs 2.74 lacs/km/annum and Rs 3.43 lacs/km/annum for’ flexible and rigid pavements respectively for standard 4-Jane highway for year 2011-12. The representative of HAL pointed out that in addition to this, expense for maintenance of ambulances/eranes ete are also required. Accordingly, it was suggested to adopt ‘routine maintenance cost for standard 4-lane highway for year 2011-12 as: (a) Rs 3.5 lacs/km/annum for flexible pavement; (b) Rs 4,0 laes/kmn/annumn for rigid pavement. . \(88) Necessity of provision for contingency @ 3%: ‘The Chairman was apprised that a provision of contingency @ 3% of cost of project is being invariably added in all projects. It was pointed out that winder BOT projects, the contingency provision is not being presently utilised as in the item rate contracts for any additional scope of work at later stage, necessity of contingency @ 3% needs to be reviewed, The representative of NHAI pointed out that provision may required on account of unforeseen expenses which may not cover in the cost estimation and normally it is reflected in the form of competitive bids. Keeping in view trend of the current competition in bidding, particularly, recent aggressive bids, it was suggested by the Chairman to reduce the provision of contingency from 3% to 1%. It was agreed by the representatives of NHAI. (iv) Rate of Interest During Construction (IDC): “The Chairman was apprised that presently, IDC is being adopted as 11.75% and HAL has proposed to review the same as 14.75% in compliance of Ministry's earlie: directions in this, regard based on the SBI PLR. The representative of NHAI pointed out that any change in interest rate would not only affect IDC but also total interest on Ioan amount. It was apprised that interest rate may not remain high continuously for jong period of loan repayment; as such standard parameter with respect to interest rale @ 11.75% may not be changed at this stage. (v) Financing Cost for Debt: ‘The Chairman was apprised that financing cost, @ 2% of debt is being adopted alt projects irrespective of project cost, needs tobe rationalised with the project cost. t was suggested to review the Financing Cost for debt as @ 2% of debt for project costing uP to Rs 500 crore [eivil work cost]; @ 1.5% of det for project costing between Rs 500 crore to Rs 1,000 crore and @ 1% of debt for projects costing more than Rs 1,000 crore- ‘The representative of NHAI agreed that Ministy’s suggestion in this regard may be adopted. (vi) Traffic Discounts: “The Chairman was apprised that while doing financial analysis it is assumed that ‘out of total tollable traffic, (i) 30% Mini-Bus/LCV/Bus and 20% 2/3-axle truck are District Registered vehicles; (i) 20% canfjeep/van and 10% other vehicles would leaked out {would not use highway]; (ii) of the remaining tollable traffic, 3% would bbe exempted from paying of user fee. It was pointed out that there is a need to review the quantum of leakage of traffic and vehicles exempted from user fee. It was also pointed out that quantum of district registered vehicles shall be worked out on the basis of actual survey. Accordingly, it was suggested to adopt following parameters for discount of traffic: (@) Quantum of traffic that will not use highways as 10% for canfeep/van and 5Y%@ for other vehicles in place of presently assumed 20% & 10% respectively - Further, stretches already under toll operation shall’ not be considered traffic leakage; \pnde—(b) Exempted vehicles as 3% for car/jeep/van ‘qnly. No discount for other vehicles; (c) For all future projects quantum of district registered vehicles shall be worked out on the basis of actual survey (vii) Re-took at the project TPC (Total Project Cost): The representative of NHAI pointed out that it has been found that the TPC arrived by the concessionaires as given in the Financing-Agreement is generally higher than that assessed by NHAI. It was calculated by NHAI that on an average the TPC of concessionaire is about 39% higher than the TPC calculated by NHAI. In some cases it is even more than, double the TPC assessed by NHAF. The Chairman pointed out that the situation is very serious. It appears {hat the concessionaires like to implement project on zero risk in terms of financing'the project and shift it to the lenders. Hé suggested that NHAI should evolve a criterion for acceptance of the TPC projected by concessionaire in their financing arrangement with the lenders. He advised to list out all such projects in which the TPC artived by the concessionaire vary beyond by 415% of TPC assessed by the NHAI along with list of concessionaires and lenders. The Chairman further advised the representative of NHAI to analyse the TPC worked out by concessionaires and to discuss further in details in the next meeting, (viii) Bridges, Bypasses and Re-alignments: < Representative of NHAI pointed out that as per the existing Fee Rules, separate tates of fee are applicable for the Bridges and other structures costing Rs 50 crore and above. Also, separate rate for bypasses costing Rs 10 erore or more’@ 1.5 times the applicable rate for normal highway section are being levied, NHAI representative enquired clarification (i) whether the cost of bridge should include the cost of approaches or not? and (ji) whether the realignments costing Rs 10 core or more shall be treated as bypasses for levying of separate rate of fee or not? The matter was discussed in details. It was suggested that as the approaches are part of the bridges, hence the cost of approaches should be added in case of standalone bridge project, However, in case of highway project requiring bridge construction, the approaches should be treated as part of road section and only the cost of structural part of the bridge including abuiments should be taken into account for levying of separate fee rate. This is largely, in view of user’s perspective to avoid levy of user fee even for small bridges having costlier earth retaining structures. Further, it was clarified that cost of all structures like ROB, bridge and underpasses which are Part of the same elevated corridor should be added while arriving the cost of structure for levying of seperate rate of fee, As regards realignments, it was suggested that all realignments should not be treated as bypass. As per the provision under the National Highways Fee (Determination of Rates and Collection) Rules, 2008, the highway section which bypasses a town or city should only be treated as bypass. 4. The meeting ended with vote of thanks to the chair, . \oAnnexure} No. RW/NH-37011/02/2010/PPP-VoLLI Ministry of Road Transport & Highways ores it of Participants 1 Ministry of Road Transport & Highways: () Shri Vijay Chhibber, AS & FA, : i) | Shri Nitin Ramesh Gokam, Joint Secretary ®; GH) Shri B.K. Sinha, Superintending Engineer (PPP), Gv) Shri A. R. Goyal, Director (Finance); () Ms Prem Lata Kaushik, AFA; (vi) Shri B.N. Sahay, EE@PP); (ii) Shri V. K. Joshi, EE (PPP) in chair; TL National Highways Authority of India: @ . ShriM. P. Sharma, CGM (Technical); @) Shri. R. Das, CGM (Finance), wot