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Thursday, 22 Feb 2018
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BRNL to bid for mid to large BOT Projects


1. Your take on success of PPP model in infrastructure projects in India

India has a massive infrastructure investment requirement to the tune of USD 4.54 trillion by 2040 and infrastructure creation of such a gigantic scale does require a wide range of resources, expertise and skills together with funding either from public and private sources. Considering the limited scope to maneuver publics spending of such a massive scale and size, the Public-Private Partnership (PPP) must be nurtured and developed, both for attracting investment in infrastructure and leverage on the asset management skillset of the private sector.

PPP models have so far delivered mixed results in India. The initial success of PPP from 2004 onwards created such euphoria among the policymakers, that we virtually started looking at it as one stop solution to all our infrastructure woes.  However, the recent slump in the sector due to contract disputes, land acquisition problems and lack of independent dispute resolution mechanism, exposed the urgent need for a workable and efficient procurement protocol for improved practices in future PPP projects.

We must realize that the key focus of PPP is on life-cycle approach for project development, which involves asset creation as well as its maintenance over the entire asset life cycle.  We therefore need to first reinstate the spirit of partnership among the Public Authority and Private entities to make PPP more effective. A good starting point for this would be setting up of an impartial and quicker dispute redressal mechanism which would ensure speedier settlement of claims through a time-bound, efficient and effective arbitration process.

There is also an urgent need to create a favorable ecosystem for serious infrastructure developer to act as the bridge between the public asset and public Authority and leverage on their asset management skillset to bring together an efficient Construction partner as well as strong institutional investors.

Additionally, the project award mechanism also needs to be realigned to judiciously mix PPP and EPC projects based on the individual merits of the projects. The infra opportunity in India is so vast and wide that we can easily accommodate players from every sphere of activities to capitalize on their individual skillsets without forcing them to realign their business model. We do believe that a system works best when all the constituents work to the best of their abilities. We may no longer need to tweak project delivery mode from EPC to BOT (Toll) to BOT (HAM), once we agree to realign ourselves with the objective of the infrastructure creation, streamline the execution mechanism and create the framework for individual stakeholders to perform as per the competencies.

The success of public-private participation (PPP) in infrastructure projects would therefore depend largely on in-depth understanding of the above key sectoral issues and greater focus on streamlining execution mechanism rather than continuous policy rejig.

2. Bharat Road Network’s growth targets? Any diversification plans?

Bharat Road Network is a pure play BOT Company focused on development, implementation, operation and maintenance of roads/highways projects. As an infrastructure developer operating on the asset aggregation platform, our business growth strategy is strongly driven by portfolio expansion and improving operational efficiency for value accretion.

We do see ourselves uniquely positioned to expand our business through organic growth opportunities in the PPP model in the roads and highway sector in India. As PPP model is aimed at leveraging on the private capital for infrastructure development and making the best use of the asset management skillset of the infrastructure companies, we see ourselves as an enabler for PPP projects while acting as a bridge between the Public Asset and Project Authority. We intend to leverage on our asset management skillset to attract the most competitive Construction partner as well as large infra focused institutional investors for project implementation and project financing.

Leveraging on our domain knowledge and a decade long experience in the infrastructure space, we do intend to strengthen our presence by bidding for mid to large BOT Projects in Toll as well as under Hybrid Annuity Model. Besides capitalising on primary market opportunities, we are also aiming to strengthening our position in road infrastructure development business through increased activity in the secondary market when assets are available in the market at attractive valuation. 

We are also committed towards driving efficiency through more advanced and fully proven technologies to minimize human error resulting from manual intervention and also moving towards more environment friendly transportation solutions that are sustainable both from energy consumption and an environment perspective.

3. Your current order book position?

As mentioned earlier, we are a road BOT Company and our main business operations are clearly divided into three categories, i.e. project development and implementation; operation and maintenance of tolling operations and providing advisory and project management services to our projects.  At present, most of the projects in our portfolio are already operational and one more is expected to be fully operational within next few months. Currently, we have a project portfolio consisting of six (6) BOT Projects, of 5 Projects are operational and one (1) is a Project under Construction.

Besides, as mentioned earlier we are continuously evaluating opportunities for portfolio expansion through organic and inorganic growth opportunities. Currently, we are assessing commercial viability for bidding for HAM projects and are also looking at some cash generating assets for acquisition. 

4. Government intends to complete 9,000 km of NH by end of FY-19? Comments?

Over the past few years, we have been seeing a lot of proactive measures being taken up for reviving the infrastructure sector and thankfully Roads and Highways sector has so far been  the biggest beneficiary of Government’s thrust on infrastructure. The developers, investors and lenders are therefore gradually looking back at the sector with a lot of interest. As per MoRTH report on their year end review, 2016-17 witnessed a decent growth of 36% over the past year in project construction as 8,231 km of roads were constructed in 2016-17 against 6,061 km in 2015-16. The project awarding activity also increased by 58% to 15,948 km in 2016-17 against 10,098 km last year. Considering the positive sentiments among investor community and recent spurt in project awarding, we are quite hopeful that Government will be fairly successful in meeting the targets it has set out for itself for this year. However, we do hope Government would continue to streamline the execution mechanism to expedite the progress of the sector.

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