CONCESSION TERMS CHANGING IN INDIA. BIDS LOOKING FOR PRIVATE INTEREST.

The goal of this post is to keep you informed with the last news that have taken place in India in the last week. Much happened in India and on this blog I´ll always try to keep you close to what happens there:

SINGLE BID PROJECTS ALLOWED

Firstly the road transport and highways ministry announced that is working on a Cabinet proposal that will permit single bid projects to go through. The highways authority recently invited bids for 34 highway projects but it received responses for only 16 stretches. Of these 16 projects, six projects attracted only one bid each.

The existing norm which doesn’t allow awarding the project on BOT (toll) if only one firm submits its bid for the project. The road project is, however, awarded to single bidder on BOT (annuity). The current model concession agreement (MCA) mandates that there should be a minimum of four/five bidders at the request for proposal or price bid stage on BOT (toll).

CONCESSION PERIOD

The government has decided to give up to 30 years to road builders to recover their investment in an effort to make highway construction economically viable during tough economic conditions. It has also decided to release the Full viability gap funding of 40 per cent during the construction period.

MUMBAI METRO PROJECT
Though seven bidders had qualified for the second phase of the Mumbai Metro last year, none of them submitted financial bids for the project. The Government will now have to restart the bidding process, resulting in a delay of another four months. Bidders in the final round include consortia of :

• 
  
• L&T Infrastructure Development Projects, GE India Infrastructure and CAF;
• Infratech, Mitsubishi and Tata Power;
• GVK, Yeoh Tiong Lay of Malaysia, and Bombardier Transportation (USA);
• Reliance Industries, Siemens, and Gammon India;
• Essar, Alstom, and Lanco;
• Infrastructure Leasing and Financial Services, IL&FS Transportation Networks and Punj Lloyd;
• Anil Ambani-led Reliance Energy, Reliance Communication and SNC Lavalin.
• 
  

Recession has been said to be the reason for the non-bidding.

INTERVIEW: IRB Infrastructure
It is also of special interest the interview with a head manager of IRB Infrastructure, he talks about the interest rate of funding for the Surat-Dahisar project. They have tied up the debt at Benchmark Prime Lending Rate (BPLR), at an interest rate of around 12.5%. As he says it is a very expensive rate and by no means that rate is affordable for infrastructure spending in the long run.

INTERVIEW: GAMMON INFRASTRUCTURE
And at last but not least, another interview with Parvez Umrigar of Gammon Infrastructure Projects. He talks about the Mumbai-Nashik Expressway and other topics.

From all this news we can deduce something, the recession is hitting the Indian concession market but the government is trying to adapt to the circumstances. There is private interest, there is public need and there is no will to lose money. If changes keep taking place to readapt bids to the current economic crisis, infrastructure projects will be funded.

If you are interested in India´s PPP inustry, you can also read this post:

India will have a powerful PPP industry

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