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PMPM 34-Oil-Gas-Infrastructure PDF
PMPM 34-Oil-Gas-Infrastructure PDF
PMPM 34-Oil-Gas-Infrastructure PDF
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Course no: PGPM 34
PROJECT MANAGEMENT II –
CONTENTS
1 INTRODUCTON 5
3 INFRASTRUCTURE SECTORS IN 9
INDIA
4 CONCLUSION 18
5 BIBLIOGRAPHY 21
Assignment question:
INTRODUCTON
Infrastructure development has a key role to play in both economic
growth and poverty reduction. Investors, policymakers and citizens alike
acutely feel the constraint of physical infrastructure on economic growth.
Many of the ingredients for rapid economic growth and poverty reduction in
India are already in place and the transformation of the lives of millions seems
within reach. Yet there is a long way to go. The challenge of finding the
money to invest in infrastructure projects without jeopardizing fiscal health has
been keeping policymakers on their toes. We will discuss the efforts made by
the government in this area. Many initiatives taken in the infrastructure
Sector, laudable as they are, are coming under the scrutiny of the public and
the investors. The commercialization of infrastructure is not progressing fast
enough to provide decent living conditions to citizens at large. Young India
struggles daily to reach school and workplace and yet remains optimistic. We
describe here, recent developments in different sub-sectors within the
infrastructure sector. Challenges are emerging with changes in technology in
the telecom sector. Development in the power and transport sectors is
slowing down due to a plethora of issues, which we study here. Within the
transport sector we map the growth trajectory of those sub-sectors that are
expanding rapidly. Within urban infrastructure we take note of the important
projects in progress and study the consequences of long-term policy failure.
HIGHWAYS
Initiatives
For a country of India`s size, an efficient road network is necessary both for
national integration as well as for socio-economic development. 65,569 km
National Highways (NH) serves across the country. 5,900 kms Four-laning
Golden Quadrilateral (GQ) connecting Delhi, Mumbai, Chennai and Kolkata is
nearing completion. The ongoing four-laning of the 7,300km North-South
East-West
(NSEW) corridor is to be completed by December 2009. Committee on
Infrastructure adopted an Action Plan for development of the National
Highways. An ambitious National Highway Development Programme
(NHDP), involving a total investment of Rs, 2, 20,000 crore up to 2012, has
been established. The main elements of the programme are as follows:
Institutional Initiatives
Size
Govt. of India spends Rs.18000 crores annually on road development
Programme for 4-laning of 14000 km of National Highways
NHDP of Govt include
- Golden Quadrilateral (GD-5846 ks of 4 lane highways)
- North-Sout & East-West Corridors 7300 kms of 4 lane
highways
Programme for 4-laning of 14000 km of National Highways
Structure
Govt. body formed National Highway Authority to implement NHDP on
Competitive bidding.
Construction Contracts are awarded to private sector
BOT contracts permit stretches of NHDP
BOT stretches on lowest basis
Policy
100%FDI is permitted
Incentives
- 100% Income Tax exemption for 10yrs
- NHAI provide grant/viability gap fund
- Model Concession Agreement formulated
RAILWAYS
Initiatives
The rapid rise in international trade and domestic cargo has placed a
great strain on the Delhi-Mumbai and Delhi Kolkata rail track.
Government has, therefore decided to build dedicated freight corridors
in the Western and Eastern high-density routes. The investment is
expected to be about Rs. 22,000 crore. Requisite surveys and project
reports are in progress a work is expected to commence within a year.
With increasing containerization of cargo, the demand for its movement
by rail has grown rapidly. So, far container movement by rail was the
monopoly of a public sector entity, CONCOR. The container movement
has been thrown open to competition and private sector entities have
been made eligible for running container trains.
Tariff rationalization and effective cost allocation mechanism are also
on the anvil. This includes a methodology for indexing the fair structure
to line haul costs. Efforts aimed to introducing commercial accounting
and information technology systems are also underway.
Technology up gradation and modernization for higher operating
efficiency.
PPP envisaged in new routes, railway stations, logistics park, cargo
aggregation an ware houses
PORTS
Initiatives
Structure
Government of India dominated maritime activity in the past. Policy
direction is now oriented to encouraging the private sector to take the
lead in port development.
Many major ports now operate largely as landlord ports.
Significant investment by BOT basis by foreign players including
Maersk (JNPT, Mumbai) and P&O ports (JNPT, Mumbai & Chennai) ,
Dubai ports international (Cochin & Vishakapatnam) and PSA
Singapore (Tuticorin)
Minor Ports are already being developed by Domestic and International
Private Investors.
Policy
100% FDI under the automatic route is permitted for Port Development
Projects.
100% Income Tax exemption is available for a period of 10 years.
A comprehensive national Meritime policy is being formulated to lay
down the vision and strategy for development of the sector till 2025.
Growth in merchandise exports projected at over 13% P.A underlines
the need for large investments and post infrastructure.
Investment need of Dollars 13.5 billion in the major ports under NMDP
to boost infrastructure at this ports in the next seven years.
The Plan proposes an additional port handling capacity of 530 MMTE
in major ports.
Investment need of Dolors 4.5 billion for improving minor ports.
AIRPORTS
Initiative
Size
India has 125 Airports: Of these 11 are designated as International
Airports.
In 2004-05 Indian airports handled 60 million passengers and 1.3
million tons of cargo.
Structure
Currently all 125 Airports are owned and operated by the Airports
Authority of India.
The Govt. aims to attract private investment in aviation infrastructure.
Air India and Indian Airlines are government own international and
domestic flat carriers respectively.
Indian private airlines – Jet – Sahara – Kingfisher – Spice Jet – Indigo
– accounts for around 60% of the domestic passenger traffic. Some
have now started International Flights.
Policy
100% FDI is permissible for existing airports: FIPB approval required
for FDI beyond 74%. 100% FDI under automatic route is permissible
for green field airports.
49% FDI is permissible in domestic airlines under the automatic route.
100% tax exemption for airport projects for 10 years.
“Open Sky” policy of the government and rapid air traffic board have
resulted in the entry of several new privately owned air lines and
increased frequency for international air lines.
Potential
Favorable democratic on rapid economic growth point to a continued
boom in domestic passenger traffic and international outbound traffic.
International in bound traffic will also grow rapidly with increasing
investment and trade activity.
The govt. is taking steps to increase participation by private industry.
POWER
Size
Generation capacity of 122 GW, 590billion units produced.
India has the fifth largest electricity generation capacity in the world
T&D network of 5.7 million circuit km – the 3rd largest in the world.
Coal- fired plants constitutes 57% of the installed generation capacity,
followed by 25% from hydel power, 10% gas based, 3% from nuclear
energy and 5% from renewable sources.
Structure
Majority of generation, Transmission and Distribution capacities are
with either public sector companies or with State Electricity Boards.
Private sector participation is increasing especially in Generation and
Distribution.
Policy
100% FDI permitted in Generation, Transmission & Distribution – he
Govt. is keen to draw private investment in the sector.
Policy framework in place: Electricity act 2003 and National Electricity
Policy 2005
Incentives: Income tax holiday for 10 years in the first 15 years of
operation; waiver of capital goods import duties on mega power
projects.
Independent regulations: CERC for Central PSUs and Inter State
issues. Each state has its own ERC.
Opportunity
Over 150000 MW of hydel power is yet to be tapped in India.
India requires an additional 100000 MW of generation capacity by
2012.
Potential
Large Demand-Supply gap: All India average energy shortfall at 7%
and peak demand shortfall of 12%.
The implementation of key reforms is likely to foster growth in all
segments.
Opportunities in Transmission network ventures – additional 60,000
circuit km of transmission network expected by 2012.
Opportunities in Distribution through by bidding for the privatization of
distribution in thirteen states that have unbundled/ corporatised their
SEBs – expected to take place over the next 2-3years.
Total investment opportunity of about $200 billion over a seven year
horizon.
CONCLUSION
India’s agenda to promote PPPs for infrastructure development aims at
enhancing the quality and quantum of infrastructure services, releasing the full
potential of public sector assets and ensuring that stakeholders receive a fair
share of benefits from the PPP. These partnerships backed by the IIFC and
the viability gap fund scheme hold the promise of faster financial closure of
infrastructure projects without overburdening the country’s public finances. An
infusion of private capital and management can ease fiscal constraints on
infrastructure investment and boost efficiency. In general, wherever private
sector is participating to finance, build and operate a wide array of
infrastructure projects, either on its own or within the framework of PPP, the
sector is recording growth. In order to manage a complex PPP programme in
the country government is leaning on project appraisal and prioritization skills
of financial institutions that are also partners in lending to infrastructure
projects. The government is keenly aware that it has to facilitate PPP actively.
The proposed IIFC and the scheme to support PPPs in infrastructure would
go a long way in construction of large infrastructure projects in the country.
Expanding telecom network capacity has brought down prices and made the
internet more widely available, fuelling a new round of online innovation. In
metropolitan cities spectrum availability has become an issue before 3G
services can be rolled out. Just as with the growth of mobiles, broadband use
explodes only when it becomes affordable to large sections of people. This
requires both the connectivity and the internet access devices (such as PCs)
to be affordable and programmes which are useful to users which are hitherto
either not available or accessible at prohibitive cost.
Power is indispensable as an infrastructure input for the growth of an
economy and acceleration in the growth of the power sector greatly depends
upon the financial and commercial viability of the sector. The implementation
of APDRP in the last two years shows reduction in aggregate technical and
commercial losses of the SEBs and a step towards commercial viability of the
power sector. The Planning Commission’s evaluation of the power sector,
however, suggests that the sector is still saddled with several shortcomings,
and remains an area of serious concern. The assessment points out that
although power sector reforms in the country have been underway for over a
Course title: Project Management II -Oil & Gas Infrastructure
18 of21
Course no: PGPM 34
decade, with a few milestones reached in crucial areas, the sector remains
locked in a situation that is fundamentally unsustainable. The enforcement of
Electricity Act 2003 marked a renaissance in the power sector of the country
with its progressive package of policy initiatives, the positive results from it are
yet to manifest in the full. But, large investments are being committed to
develop generation and transmission capacity as power become a tradable
commodity across the states and generators are free to sell power directly to
high paying customers.
To achieve an 8 per cent growth in GDP, the transport sector, mainly
comprising of road, rail and shipping sectors needs to display a 9 per cent
growth. There is acute awareness that lack of transport capacity could be the
stumbling block in realizing the growth potential. Further development of
national highways appears to have slowed down though impetus is being
given to ensure that the national highways network continues to expand its
capacity. The government is keen to link the national highways network and
the rail network with ports. Indian Railways, however, is largely dependent on
budgetary support for capacity expansion. A review of recent investment
decisions would indicate that while road and ports have made quite a few
positive moves in the recent past, the Railways’ action plan is somewhat
hazy.
The port sector is also expanding and there is competition to develop large
container port capacity. A massive national maritime development programme
is set to be launched to rejuvenate the port sector and strengthen it in the face
of increasing traffic. The project will be based on public–private partnership
and will have an estimated investment of more than Rs 60,000 crore. India is
on the verge of an aviation revolution. Only 50,000 people travel by air each
day—a fraction of the number uses the rail network. Existing airport
infrastructure is being augmented and new airports are at various stages of
development to be able to service national and international travelers. New
developments in the civil aviation sector have included many budget airlines
and low-cost, no-frills airlines, which have commenced to offer services in a
big way.
The development of urban infrastructure has been fairly stop-gap in the last
few decades. Barring a few large projects in a handful of cities, paucity of
Course title: Project Management II -Oil & Gas Infrastructure
19 of21
Course no: PGPM 34
BIBLIOGRAPHY:
Mid-Term Appraisal of the Tenth Five Year Plan (2002– 2007),
Planning Commission, New Delhi.
Report on infrastructure sector performance ( 2005 - 2006 ), ministry of
statistics and programme implementation
Indian Infrastructure Report
Planning Commission (2002). Foreign investment, Report of the
Steering Group on Foreign Direct Investment, August, Government of
India, New Delhi.
www.iitk.ac.in/3inetwork/html/reports
www.indiainfrastructure.com
www.renewingindia.org