Financing of NHDP

Total cost of NHDP has been estimated to be Rs. 54,000 Crores or US$ 13.2 billions whose components are as below:-

Traffic on roads is growing at a rate of 7 to 10% per annum while the vehicle population growth is of the order of 12% per annum.

The Road density (km of road of land area) in India was reported at 129.00 in 2008, according to the World Bank. Road density is the ratio of the length of the country's total road network to the country's land area. The road network includes all roads in the country: motorways, highways, main or national roads, secondary or regional roads, and other urban and rural roads.This page includes a historical data chart, news and forecats for Road density (km of road per sq. km of land area) in India. India's diverse economy encompasses traditional village farming, modern agriculture, handicrafts, a wide range of modern industries, and a multitude of services. Services are the major source of economic growth, accounting for more than half of India's output with less than one third of its labor force. The economy has posted an average growth rate of more than 7% in the decade since 1997, reducing poverty by about 10 percentage points.

of over 90 players have pre-qualified for the NHAI projects indicating highly competitive scenario prevailing in the sector. Many of the projects awarded in past few months have received more than 10 bids with large variations in the top bids; also, majority of these bids were significantly higher than NHAI’s expectation. The variation in bids is likely to be because of differences in traffic estimates and traffic growth projections for various players. However, recently there has been some moderation in the practice of aggressive bidding, probably because of the prevailing macroeconomic scenario that has made raising funds difficult

Competition

Earlier only few big players have participated in the bidding due to low Margin but in last one year there is significant entry of players due to less order flow from other sectors There are total 90 Players have been qualified for the BID Entry & Exit Barriers – There are like high amount of risk is associate with Road development Industry.BOT Projects are especially create High entry and Exit Barriers due to its nature of Capital intensiveness, low margin Business and Long Gestation period. There are also risk associate with BOT Projects Funding Risk, Execution Risk, Traffic Risk Demand for Road Infrastructure Development Developing Economy – Urbanization - Increase in Tier Cites Industrialization Toll Collection Financing Road projects being awarded on PPP basis the financing requirement for private players is also increasing. Due to Long Gestation Period Bank is reluctant to offer loans for the project because of this there Asset side can strongly hamper. Therefore Central Government has taken initiatives to improve the availability of financing for the infrastructure sector by creating the infrastructure debt fund, and also by increasing the limit of FII investments in infrastructure debt funds (from Rs 1000 to 7500 Crore) In the last union budget. Take-out financing scheme in October 2010 cess on fuel

Negative Points for till Now High interest rates Reduced availability of funds Execution slowdown Increased competitive intensity Long gestation Period 15-30 Years Pressure On Margin Indebtness Developers facing difficulty in raising funds – Because weak capital market Positive - The award of new projects Picked up during the last two quarters with the National Highways Authority of India (NHAI) awarding some mega projects. BOT – Build Operate Transfer ECP - Engineering, Procurement and Construction

Sign up to vote on this title
UsefulNot useful