Infrastructure financing: 13 PSUs allowed to raise Rs 48000 Cr through tax-free bonds in 2013
By TIOL News Service
NEW DELHI, DEC 22, 2013: EVEN though many mega infrastructure projects were stalled during the year, and one of the Ministers responsible for the delays finally putting in her papers yesterday, several significant measures were taken during 2013.
Particularly for financing of infra projects, the following measures were taken:
++ Tax Free Bonds : The Government has allowed the issue of ‘Tax Free Bonds' to mobilize much needed long-term funds for the infrastructure development. These funds will go a long way to address the needs of infrastructure deficit, especially in sectors such as roads, ports, airports and power, which are essential for economic growth in any country. Pursuant to the Budget Speech for 2013-14, thirteen PSUs have been authorised to issue Tax Free Bonds amounting to Rs. 48,000 crore , in Aug, 2013, for Financial Year 2013-14.
++ Infrastructure Debt Funds : One major problem faced by banks while disbursing loans to infrastructure projects is the asset liability mismatch inherent with these projects. Therefore many such projects are denied financing by banks. IDFs through innovative means of credit enhancement is expected to provide long-term low-cost debt for infrastructure projects The cost and tariff of Infrastructure services are likely to go down as a result of low cost long term debt provided by IDFs. Further, buy-out guarantee from Project Authority will enable IDF-NBFC to maintain zero NPAs. The taking over of existing bank debts by IDFs will release an equivalent volume for fresh lending by banks to infrastructure projects.
IDFs are an innovative attempt for addressing the issue of sourcing long term debt from foreign investors for infrastructure projects. The Government has taken various steps to promote these IDFs with a view to make available the financing needs of the infrastructure in the economy.
The Cabinet Committee on Infrastructure (CCI) has approved the Model Tripartite Agreement (MTA) for Infrastructure Debt Funds (IDFs) in November 2012. Similar MTA for the Port Sector is under consideration and is likely to be approved soon. The Model Tripartite Agreements will facilitate early Operationalisation of the IDFs. In addition, the Cabinet Committee on Economic Affairs, on 24.9.2013, has also approved Cabinet Note on “ Operationalisation of Infrastructure Debt Funds (IDFs)-Removal of Certain Impediments. The said Cabinet decision seeks to remove certain impediments being faced by IDFs operational currently. This is likely to boost investment climate and IDFs are likely to announce investment in a very short period.
++ Cabinet Committee on Investment : Based upon the concept proposed by the DEA, the Government has set up the Cabinet Committee on Investments (CCI) on 2 nd January 2013 with the Prime Minister as the Chairman to expedite decisions on approvals/clearances for implementation of projects. This is likely to improve the investment environment by bringing transparency, efficiency and accountability in accordance of various approvals and sanctions.
The CCI will monitor and review the implementation of major projects to ensure accelerated and time-bound grant of various licenses, permissions and approvals. CCI has initiated action for d debottlenecking of stalled projects in the sectors such as Power, Petroleum & Natural Gas, Mines, Coal, Commerce & Industry- Commerce, Shipping and Commerce & Industry- DIPP. It is estimated to have bottlenecked about 200 projects. It has been informed that PMG has resolved 93 projects with total estimated cost of Rs. 353725.95 crore .
++ Investor's Conclaves / Road Shows: To propagate initiatives of Government of India to promote infrastructure financing amongst the off-shore investor community, several events were organized in major centres i.e. London, Japan, Canada, USA, UAE etc. which were attended by Finance Minster and senior officials of DEA. These events besides raising awareness amongst the off-shore investor community also gave an opportunity to flag issues which hamper flow of foreign investment.
Financial Restructuring of State Owned Discoms :
Scheme for Financial Restructuring of State Owned Discoms to promote financial turnaround and long term viability of the State Discoms has been launched. This Scheme seeks to restructure the debt of State Discoms through a Transitional Finance Mechanism (TFM) supported by the Government of India.
Industrial Corridors
a. Delhi Mumbai Industrial Corridor (DMIC): Aims at developing an industrial Corridor on either side of the 1483 Km long Western Dedicated Rail Freight Corridor between Dadri (UP) and JNPT ( Navi Mumbai). It covers six states – UP, Haryana, MP, Rajasthan, Gujarat and Maharashtra. Four projects have been included in the Rolling Plan of DMIC Projects in 2013.
b. Chennai- Bengaluru Industrial Corridor: Terms of Reference for preparation of the comprehensive regional perspective plan under preparation. The feasibility study for the Dedicated Freight Corridor (DFC) between Chennai- Bengaluru has been awarded to RITES.
c. Amritsar Delhi Kolkata (ADK) Industrial Corridor: structured around the Eastern Dedicated Freight Corridor (EDFC) as the backbone and also the Highway system that exists on this route. The ADKIC will cover Punjab, Haryana, Uttar Pradesh, Uttarakhand , Bihar, Jharkhand and West Bengal.
d. Bengaluru -Mumbai Economic Corridor (BMEC): Being planned in cooperation with United Kingdom. B oth the countries have agreed to co-finance the feasibility study for the Project. The comments/views of the UK authorities on the draft have been received and are being processed in DIPP. Joint Secretary, DIPP will be the focal point on Indian side for the project. The Delhi Mumbai Industrial Corridor Development Corporation (DMICDC) would be the nodal agency from the Indian side. The UK side has also confirmed the Nodal agency and officer. The draft modalities as well as cost sharing arrangements for conducting the feasibility study are under discussions.
(i) Regulatory Institutions are being instituted in the following sectors:
a) Civil Aviation Authority
b) Rail Tariff Authority
c) Coal Regulatory Authority
d) Road Sector
++ Others : Numerous representations from various Organizations/ Ministries/ Departments were received for inclusion of new sub-sectors in the Harmonised Master List of Infrastructure Sub-sectors. All these representations were processed, 3 meetings of Institutional Mechanism were held and three new sub-sectors namely Ports, Slurry Pipelines and Telecommunication & Telecom Services have been included in the Harmonised Master List. A Harmonised Master List of Infrastructure Sub-sectors was notified in March, 2012.
Public Private Partnership
a. 261 PPPAC projects approved with the total Project Cost of Rs 270540.45 crore .
b. 149 projects approved by EI, with a Total Project Cost of Rs 79564.95 crore . Total VGF approved = Rs 15745.28 crore
c. 30 projects approved by EC with Total Project Cost of Rs 54733.00 crore . Total VGF approved= Rs 10922.60 crore
d. 52 projects approved for IIPDF with Total Project Development Expenses (PDE) Rs 5432.00 lakh .
e. Approx. 62 SFC Projects with Total Project Cost Rs 11857.83 crore .
