Lalit Kumar Assistant Professor (Financial Mgt.) HIPA, Gurgaon.

y Project Description y PPP structure of the Project y Financing Information y Process Analysis y Development

y Construction y Delivery y Exit y Risk allocation framework y Key Learning and Observations

y Amritsar city is a spiritual centre for the Sikh community

which attracts large number of tourists (as high as 50,000 per day) visiting particularly the Golden Temple and Wagah (India-Pakistan) border. y Feasibility : As there were 1,800 to 2,000 bus arrivals per day and the demand of services at terminal were rising, it was necessary to modernize and develop . Without using pubic sector comparator, The Punjab Infrastructure Development Board (PIDB) decided to modernize and develop the terminal through BOT. y What it covers - The project involves demolishing of existing terminal building and developing a modern state of the Intercity Bus Terminal to cater growing demands of the city.

y This project was signed in Feb 2004 for 11 years and 5

Months on BOT basis means in 2015, it will be transferred to Government of Punjab. y The Rohan Rajdeep Infrastructure (India) Pvt. Ltd. (a partnership between Rohan Builders (India) Pvt Ltd., Rajdeep Buildcon Pvt Ltd and Rajdeep Road Developers Pvt. Ltd.) completed the project and commissioned it in October 2005. y Presently, the terminal is handling only 1700 buses a day lower than its estimated number i.e. 2000 to 3000 per day.

y Through a two stage bidding process, Department of

Transportation (DoT), Government of Punjab (GoP) awarded the contract to Rohan Rajdeep Infrastructure Ltd. for undertaking the project activities and develop a modern bus terminal on BOT basis. y The private operator established a Special Purpose Vehicle (SPV) called the Rohan Rajdeep Infrastructure (India) Pvt Ltd. for executing the project.

y The private operator was responsible to finance,

building, operations and maintenance of the Amritsar Intercity Bus Terminal complex. y Concession period : 11 years and 5 months y Project Development Fees : 35 lakhs for the project site lease and a lease rental of 50,000 per month were required to be paid by the private operator for use of the project site over the concession period.

y Revenue streams identified: The first revenue stream

was through the operations of the bus terminal in form of Adda Fees . The second was commercial rentals from shops located within the Intercity Bus Terminal complex. Other sources of revenue included the sale of advertising rights as well as parking fees.

y Estimated : 19 crores at the time of project conception. y Actual: the project cost finally worked out to 21.34

crores. y Financing through: Debt component was 12 crores while the equity component was 9.34 crores.

Inception

Project conceived by DoT, GoP and PIDB and configured through project advisor in 2002

Procurement

2 Stage Bidding Process started in November 2002. During RFQ , 16 bids were received out of which 14 prequalified to the RFP stage. At RFP stage four bids were received and on the basis of meeting evaluation criteria specified in the RFP document, Rohan Rajdeep Infrastructure Developers Pvt. Ltd was declared the successful bidder and was issued a notice of award for the concession agreement in September 2003.

Development

Development was undertaken in two stages, the first was the Conditions Precedent period of 90 days and thereafter the Construction period of 18 months.

Delivery

Concession Agreement signed in February 2004 and still being operated by private operator.

y As per Conditions Precedent: Within 90 days of

signing concession agreement y The concessioning authority was required to (i) authorise the private operator to collect adda fees from buses using the Terminal (ii) making it mandatory for all intercity buses to halt and pay adda fees (iii) Facilitate the transfer of land at the project site from the Amritsar Municipal Corporation and (iv) Temporary shifting of the existing bus terminal to a different location.

y The private operator on his part was required to (i)

Obtain all necessary clearances and approvals, (ii) pay the project development fee of 35 lakhs to the concessioning authority, and (iii) Ensure financial closure of the project and submit proof of the same. y After completing the above 90 days conditions precedent, construction period of 18 months will be considered.

y The project was to be developed based on the standards

specified in the concession agreement including preparation, maintenance, and approvals of the project design. y The private operator was able to complete the work within 17 months including construction and carrying out necessary tests required to be carried out. Accordingly, the private operator was given the right to advertise license allotments for the passenger amenities in the Intercity Bus Terminal.

y The Amritsar Intercity Bus Terminal construction was

completed and commissioned in October 2005. y It includes long distance and local bus routes, parking provision for 54 cars, 102 rickshaws/autos and 1838 two-wheelers / cycles and 300 passenger seating berths, convenience stores, refreshment stalls etc. y Subsequent to receiving the completion certificate, the O&M period for the project commenced.

y At the end of the concession period all immovable and

movable property relating to the project will be transferred to the concessioning authority and the authority will issue a certificate as proof of transfer of all rights, titles and interests in the Amritsar Intercity Bus Terminal assets and facilities.

Risk Type

Sensitivity

Risk Period

Primary Risk Bearer

Comments

A) Pre-Operative Risks Delay in Land Acquisition Low 0-90 days from signing of concession agreement Concessioning Authority Project development involved transfer of land from the Municipal Corporation of Amritsar to GoP. Hence delay in land acquisition was not a major risk for this project. Financing Risk High 0-90 days from signing of concession agreement Private Operator The private operator was required to ensure financial closure of the project within 90 days of project acceptance . Inability to ensure financial closure would have resulted in a default on the part of the private operator .

Risk Type

Sensitivity

Risk Period

Primary Risk Bearer

Comments

A) Pre-Operative Risks Delay in obtaining Approvals/Permits Medium 0- 90 days from signing of the concession agreement Private Operator The concessioning authority was to provide all necessary support to the private operator in obtaining the clearances and approvals. However the responsibility of obtaining the same was with the private operator. B) Construction Phase Risk Design Risk High 0-18 months from compliance date (Date of fulfilment of conditions precedent) Private Operator The private operator was required to submit detailed construction design for review along with design warranties for the project.

Risk Type

Sensitivity

Risk Period

Primary Risk Bearer

Comments

B) Construction Phase Risk Construction Risk Medium 0-18 months from compliance date Private Operator The private operator was required to furnish a performance security and to facilitate periodic inspection alongwith submission of monthly progress reports. C) Operations Phase Risk Revenue Risk Low Throughout Private Operator A notification was issued that all intercity buses would be required to halt, drop and pick up passengers from the Bus Terminal. However, private operator has to ensure the use of the terminal as scheduled.

Risk Type

Sensitivity

Risk Period

Primary Risk Bearer

Comments

C) Operations Phase Risk Policy Risk Low Throughout contract term Concessioning Authority In case of any changes/modification in laws the concessioning authority would take necessary action to ensure that there is no change to the private operators legal, commercial and financial position as a result of such change. Performance Risk High Throughout Concession Period Private Operator The private operator was required to maintain standards during the construction as well as O&M period as per the detailed specifications in the concession agreement.

Risk Type

Sensitivity

Risk Period

Primary Risk Comments Bearer

C) Operations Phase Risk Operations & Maintenance Risk Medium Throughout Concession Period Private Operator The private operator was required to create an O&M manual, detailing the regular and preventive maintenance which would be undertaken. In case of non-compliance , the concessioning authority had the right to invoke the performance security and impose a penalty for non compliance.

D) Other Risks Handover risk Medium 6 months from termination date Private Operator The concessioning authority had the right to appoint a consulting engineer to assess the condition of the project facilities so that if required shortfalls can be remedied by the private operator prior to handover of assets.

The VfM assessment on qualitative basis points out the following facts: 1. Assured revenues to the GoP through lease payments : the concessioning authority receiving a lease rental of 50,000 per month from the private operator during the concession period apart from the 35 lakhs received in starting of the project. 2. Development of a modern Intercity Bus Terminal with O&M being efficiently handled by the private operator: In addition to upgrade on basic passenger services like provision of adequate seating, designated bus bays, electronic displays and car and bike parking areas, this terminal also provided for eateries and convenience shopping area for passengers.

3.

No cash outlay for the concessioning authority during the construction as well as O&M period : The GoP had no cash exposure in the project during both construction and O&M period. Demonstration effect : After success of this project, a number of other bus terminals in Punjab as well other cities in India are being bid out in a similar fashion.

4.

The project remained successful due to: 1. Facilitation provided by Government to ensure efficient execution: Government ensured the efficient leasing of land to the private operator , getting necessary approvals for project development, and providing support during the construction stage as well as the O&M stage of the project. This was a critical element in the timely execution of the project.

Favourable policy environment to ensure revenue stream : The Government issued notifications and ensured favourable environment for the project activities. 3. Flexible project structuring was undertaken to facilitate funding of the project: Collection of adda fees was similar to toll collections on road projects, the lenders were provided enough security through access to the revenue streams of the project and were provided substitution rights in case of a default by the private operator.
2.

The project remained successful due to: 4. Detailed and clear definition of project design and scope : It is critical for success of a project and also helps in proper monitoring. In this project, necessary standards were maintained by the private operator for both project development and delivery; and Government support in project activities also set the success stone in the whole project.