Innovative Infrastructure Financing

a presentation by

The Urbanising World

The 20th Century began with a population of 2 billion which increased to 6 billion population by the end of the century. The Century also witnessed the biggest exodus of human population from Rural to Urban areas The global urbanisation level increased from 10% to 50% during the century; The world has turned urban with more than half the population living in urban areas

Extra-ordinary Urban Growth in Less Developed Countries

600 Million people added to the worlds urban population between 1990-2000 Close to 3 million people are added in Asia alone every month, i.e. equivalent to one new City a month Of the 21 mega cities (popln. 10 million+) in the world today, 17 are estimated to be in developing countries

Population in and developing (lesser developed) countries to be 88% of total population by 2050
10000 9000 8000 7000 6000 5000 4000 3000 2000 1000 0 2000
Source:

World Population Trends

(in millions) 9300 6883 6100

ON ULATI POP ORLD W

8200 (88%)

5667(82%) 4900(80%)

DEVELOPING COUNTRIES 2010 2020 2030 2040 2050

UN Population Division; WORLD POPULATION PROSPECTS Population Reference Bureau: WORLD POPULATION DATA SHEET

Urbanisation Scenario in India Decadal Growth Rate of Population (1991-2001) Urban: 31.13% Rural 17.97% Urban
1500 1200 900 600 330 M 300 50 M (16%) 0 1947 361 62(17%) 1951 1961 1971 1981

Total

Urban
1 March, 2001, 1027 M 11 May, 2000, 1000 M

1350 M

459 M 366.3 (34%) 285.35 (31.13%) 217.61 (27.78%) (25.71%)

1991

2001

2011

2021

India: Urbanisation Scenario Metropolitan Cities/Agglomerations

80 60 40 20 0 1951 5 9 1971 35 23 (37.8 % ) (33.0 % ) 2001 2011 2021 (Projected) )
No. of Cities/Agglomerations with more than 1 Million Population

53

70

1991

No.of Class-I Cities(> 1 Lakh) % of Urban Population

300 (1991) 65%

India : Million plus Cities and Urban Agglomerations - 2001

Category 10 Million+ (3) City Greater Mumbai, Kolkata, Delhi

5 10 Million Chennai, Bangalore, Hyderabad (3) 3- 5 Million (2) 2 3 Million (5) 1 2 Million (22) Ahmedabad, Pune Surat, Kanpur, Jaipur, Lucknow, Nagpur

35

Patna, Indore, Vadodara, Bhopal, Coimbatore, Ludhiana, Kochi, Visakhapatnam, agglomerations million plus cities/ urban Agra, Varanasi, Madurai, Meerut, Nashik, Jabalpur,

Urban Infrastructure Scenario in India National Perspective

Urban Population Coverage (%) Protected Water Supply
Sewerage & Sanitation Latrine
Refuse Collection/ Disposal

84 16 Availability Deficiency 46 69 72 75 54 31 28 25

Electrification
1991 Census

Urban Infrastructure Scenario in India

According to estimates of the Rakesh Mohan Committee total requirement for urban infrastructure development covering backlog, new investments and O&M costs for the next ten years is Rs. 2,50,000 Crores (US$ 57 Billion) The ninth Plan proposal identifies only around Rs. 12000 Crores. With anticipated growth in Tenth plan providing additional funds of Rs.13,000 Crores, the total expected plan outlay comes to Rs. 25,000 Crores (US$ 5.7 Billion). Funds for UI development fall short by more than 10 times the requirement

The Vicious Circle

Low Level of Low Level of Infrastructure Infrastructure

Low Low Investments Investments

Low Service Low Service Level Level

Low Equilibrium Cycle

Low Low Maintenance Maintenance

Low Low Collection/ Collection/ Recovery Recovery Low Capacity Low Capacity to Pay to Pay
VS/ KS

 Characteristics of infrastructure projects:

natural monopolies in-elastic demand

Challenges facing Infrastructure

- non-exclusive nature - huge investment required for capital & maintenance

Traditionally Infrastructure provision seen as role of government Schemes conceived as unitary service - no experience in unbundling Although Financing options are rapidly changing due to financial, technological and organisational innovations at project and policy levels- no clear guidelines for Private sector Participation Cities and Citizens get the infrastructure they desire and deserve.

Major Concerns in Urban Infrastructure Sector

Inadequate coverage and service level Poor quality of service to consumers Institutional deliquencies and high administrative overheads Insufficient financial and managerial resources with Urban Local Bodies / parastatals High non-revenue component due to wastage, pilferage, unaccounted-for losses and free riders Inefficient operation and maintenance Poor monitoring and cost recovery Unsustainable resource management practices High investment needs and project costs Lower priority accorded to certain urban services

Financing of Infrastructure Schemes Budgets of

Central Government State Governments Local Governments Raising loans from LIC/HUDCO and other Financial Institutions Loans from International Funding Agencies like OECF(JBIC), World Bank, ADB, KfW, USAID, etc. Grant funds from Donor Agencies like DANIDA, DFID, CIDA, National Trust/ Missions
Every One Crore rupees spent in infrastructural provision now, Every One Crore rupees spent in infrastructural provision now, saves Ten Crore on cost escalation and saves Ten Crore on cost escalation and public health care due to deficient services later! public health care due to deficient services later!

Role of Financing Agencies as Facilitators of Change

Principles of user-pay, abuser pay or polluter pay to be used while determining the service charges to assess the practical aspect of pricing. Willingness to Pay OR Willingness to Charge For improving the sustainability of UI projects HUDCO emphasises Principle of full cost recovery Transparent, Targeted and Measurable subsidy, if needed Cost savings through energy efficiency, reduction of leakages, manpower rationalisation etc. Full autonomy to local bodies to determine tariffs Tariff fixation taking care of annual incremental cost, O&M cost, debt dues, depreciation charges etc. Compulsory 100% metering Operation of escrow account

Issues Involved in Infrastructure Financing: Financial Institutions Perspective ISSUES:

Asset liability mismatch due to short term borrowing vs. longterm funding. Large volume of resources for capital intensive projects Locking up of funds in specific large projects. High risk involved in greenfield ventures Non-uniformity in appraisal, guidelines and documentation requirements Lack of tangible security and partial or nil recourse basis of funding projects. Norms restricting exposure to individual agencies. RISKS: Political risks & Implementation risks. Risks of default by borrowing agency Risks of prepayment in falling interest rate scenario Foreign Exchange Risks and currency fluctuations In this context, alternatives in service delivery and innovations in resource mobilisation being explored by Financial Institutions HUDCO, IDFC, ICICI, IL&FS and LIC

Some Innovative User pay Instruments

Infrastructure Type Water Supply Innovative user pay Instruments Advance registration charges, Connection charges, Enhancement of water tariff, Water benefit tax/water tax, Betterment charges, Development charges, Utilization from other sources such as octroi, property tax, sale of plots etc. and Charges from water Kiosks Connection Charges, Sewerage Cess Tax, Conservancy Tax, Sale of Renewable waste, Sale of Sludge and Sale of Nutrient rich wastewater. Collection Charges, Cess, Sale of Renewable waste, and Fines for dumping waste. Toll Tax, Land as a Resource and Advertising

Sewerage

Solid waste

Roads/Fly-overs/ Bridges Airports/Rly. Stations/ - Surcharge on tickets,using land as a resource, Bus Terminals Toll Tax, User, Charges for transportation terminals and advertising rights.

Commercialisation to Privatisation:
Illustrative List of Potential Unbundling Packages WATER SUPPLY
Water resource management & Development of source Treatment of water and bulk supply - Water Purchase Agreement Distribution / Operation and Maintenance (O&M) Billing / Collection

SANITATION
Sewerage network (collection system) Pumping Stations(Installation and O&M) Disposal system - Through taxes (on the basis of water consumed)

Commercialisation to Privatisation:
Illustrative List of Potential Unbundling Packages SOLID WASTE MANAGEMENT
Collection Separation and treatment Distribution of by-products (scrap material, manure, fuel pellets & bio-gas)

URBAN TRANSPORT
Development of urban mass transit systems Operation and maintenance of urban mass transit systems Development and maintenance of terminals Operation of bus and intermediate public transport (IPT) systems Construction and maintenance of toll bridges Construction and maintenance of parking facilities

Increased emphasis on Private Sector Participation in Urban Infrastructure The imperative need for Private Sector Participation for:
EXTENDED RESOURCES STATE-OF-THE-ART TECHNOLOGIES EFFICIENT PROJECT MANAGEMENT / MAINTENANCE

Route to Private Sector Participation

The concept of Public-Private -Partnership is generally seen as one of these models:
Build-Operate-Transfer (BOT) Build-Operate-Own-Transfer (BOOT) Build-Operate-Lease-Transfer (BOLT) Rehabilitate-Operate-Transfer (ROT) Design-Build-Finance-Operate-Transfer (DBFOT)

In INDIA full blown Private Sector Participation models have not been put into place, so far

Options for Private Sector Participation (PSP)

However, the various options available, in order of increasing Private Participation in Water Supply & Sanitation Projects being taken up are: Service Contracts Management Contracts Lease Concession

With experience and later on, through

BOT/BOOT etc. Divestiture

Private Sector Participation in Water Utilities - Manila Experience

Successful involvement of Private Sector in Power Generation and Distribution; Largest effort in privatisation of Water utilities. Metropolitan Water Works and Sewerage System (MWSS) had covered only 67% population with intermittent water supply and 8 % with sewerage system in 1994. 56 per cent of 3000 mld supply was non-revenue water MWSS privatised in 1997 and split into two. Manila divided into two Zones - East and West. Two Consortia led by - BENPRES for West and AYALA for east -selected to run water works on 25 year franchise; Both Groups offered rates lower than the prevalent rate (8.78 pesos)

Private Sector Participation in Water Utilities - Buenos Aires Experience

National Public Company OSN was in charge of water & sewerage. Unaccounted-for water was about 45% of production Objective of PSP: To reduce Government burden and minimise the price for service delivery Privatised in 1993 - Through Concession, thus effectively keeping the fixed assets under Public Ownership Single private firm to operate on 30 years concession period to be revived by re-bidding later Responsible to operate and maintain fixed assets and expand coverage and guarantee water quality Pricing to incorporate subsidy already existing, first price review after 5 years

Improvements in Water and Sanitation Services after Awarding the Concession in Buenos Aires
Indicator Production capacity (millions cum/ day) Population served(M) Water Sewerage Employees per 1,000 connections Response time for repairs (hours) Meters in service
Before the Concession (1992) December 1995 Percentage change (%)

3.4 6.0 4.9 7,450 180 30,000

4.3 6.5 5.3 4,250 48 170,000

27 8.8 6.4 -43 -73 460

Reasons for success :

Private Sector Participation in Water Utilities - Buenos Aires Experience

Comprehensive and transparent bidding process - Two Envelope System Independent Regulatory Agency established by Government to monitor concessionaire, enforce the terms of contracts and regulatory specifications and levy fines where necessary Contract had provision for adjustment and re-negotiation during enforcement of concessional period (after 2 years the initial reduction of tariff partly withdrawn in view of more capital investment on system improvement, than originally estimated) Re-negotiation : transparent and stakeholders involved Tariff policy had a fixed portion to cover cost of infrastructure and a variable part proportional to consumption

Indian Experience in Privatisation of Water Supply & Sanitation

Tiruppur Water Supply and Sewerage Project Implemented through a SPV New Tiruppur Area Development Corporation (NTADC) promoted by

Estimated Project cost - Rs. 900 Crores at 1998 prices (Rs. 1000 crore at present).
O&M contract to consortium of
Mahindra & Mahindra+United Utilities International, North West Water +Bechtel

Infrastructure Leasing & Financing Services(IL&FS) Tiruppur Exporters Association (TEA) TamilNadu Corporation for Industrial Infrastructure Development (TACID)

Attained financial closure with 10% stake by LIC & GIC.

Indian Experience in Privatisation of Water Supply & Sanitation

Pune Water Supply and Sewerage Project Developed by Pune Municipal Corporation at a estimated project cost of Rs. 750 crores ($ 187.5 M) later revised to Rs. 392 Crores with HUDCO assistance
Private Sector Participation envisaged in Construction, Operation and Maintenance, Tariff collection Financial Participation in addition to HUDCO expected from IL&FS, ICICI, HDFC, IDFC and Bank of Maharashtra Request for proposal sought Tie-ups: Anglian Water + Trafalgar House & Shirkes Binnie Black + Veatch & Thames Water + L&T Krugger + Generale Des eaux & Shanska Int. Preussag + Tata Projects Hyundai + Sundram Chemicals Hanjin + Krupp and Zoom Development Group Political Risk - work re-tendered at RfP level

Indian Experience in Privatisation of Water Supply & Sanitation Bangalore Water Supply Project
BOOT arrangement for sourcing 500 mld water.
Establishment of two Tertiary Water Treatment Plants (of total 60 mld capacity) with HUDCO assistance Private Sector (Industries) to undertake laying of feeder mains envisages provision of 500 mld of water to the city on a BOT basis with estimated project cost is Rs. 800 Crores (US$ 173 M).

Indian Experience in Privatisation of Water Supply & Sanitation

Chennai Metro Water
Out of 119 Sewerage Pumping Stations, Operation & Maintenance of 70 by private sector Sourcing of water in 7 wells through private sector Construction of 300 mld Water Treatment Plant by - M/s Hindustan Dorr Oliver Ltd. And O&M by M/s Richardson Cruddas New Chembarampakkam WTP of 530 mld capacity (over and above the existing 600 mld capacity)
Bid documents for BOT by TCS HUDCO funding availed

Indian Experience in Privatisation of Water Supply & Sanitation

Private Sector Participation on the anvil in water supply & Sanitation Nagpur - Dewas Kolhapur - Cochin Vishakhapatnam - Dharwad Goa - Alandur Karnataka Urban Water Supply and Drainage Board (KUWS&DB) for Management Contract in Distribution and O&M

Towns Selected for the initiative are

- Mysore - Hubli Dharwad - Mangalore - Gulbarga

 ENBEE Infrastructure Ltd. on BOO basis in Nagpur M/s Excel Industries Bio-degradation of solid waste in Vijayawada, Calcutta, Mumbai, Bhopal, Bangalore, Gwalior, Cochin & Calicut M/s CELCO in Hyderabad Common hospital waste treatment plant by GJ Multiclave in Hyderabad Compost plant by IVR Enviro at Tiruppur

Privatisation experience in India in Solid Waste Management

 Pali Bye-pass, Rajasthan - TCI Infrastructure Ltd Coimbatore Bye-pass (L & T) Karur Bridge on BOT basis by East Coast Constns & Infrastructure Pvt. Ltd. Kemptee-Kalamana Toll Road in Nagpur Karur Bridge on BOT basis Faridabad Byepass

Privatisation experience in Transportation

NOIDA Toll Bridge Company Cochin International Airport in Joint Sector by CIAL Bangalore Airport Ports Pipavav, Positra, Adani, Kakinada, Ennore, Cochin, Mumbai

 Who are the parties to the contract ? What are the objects and scope of the BOT arrangement? What is the duration that might lead to early termination? What are the obligations of the BOT operator ? What are the obligations of the guarantor ? What are the key regulatory provisions ? How will the key risks be managed ? How will performance be measured and monitored ? How will the assets be transferred to the BOT operator? What are the consents required ? Who will be responsible for environmental liabilities ? How will disputes be resolved ?

Important issues in a BOT arrangement

Countdown Steps for Structuring Private Sector Participation

Process Structuring and Stages - countdown 09 Expression of Intent by Public Agencies 08 Firming up the Project Contours (Consultants) 07 Short-listing of Private Parties 06 Project Description Report 05 Pre-qualification of existing bidders 04 Issue of Request for Proposal (RFP) 03 Evaluation of Bids 02 Negotiations 01 Award of the Contract (Financial Closure) 00 Commencement of Work

 Legal and Regulatory Framework

Simplification of Legislation

Evolving Appropriate Organisational/Institutional Mechanisms

Techno -Legal Regime (Australian Utilities Commission, U.K. initiatives-OFTEL, OFWATS) over-arching legislation in the line of Federal Law of Philippines (BOT, BOO,etc) State/City Level Regulatory Bodies in India CERC / SERC in Power Sector TRAI (set to become CCI) in Telecom / ICE sector NHAI in highways sector Need for similar regulators in Urban Infrastructure

Urban Infrastructure Regulatory Authority

Utility & Shareholders

Users

Political Authorities

Regulate prices Promote operating efficiency Specify and monitor service standards Control externalities Maintain public good functions Ensure asset serviceability Ensure development of essential infrastructure Prevent manipulation of land values Prevent unfair trade practices Promote efficient use Ensure responsiveness to final customer needs

The Regulatory Mechanism

Model BOT Laws

Gujarat Infrastructure Development Act 1999
First State to formulate a separate act Draws from the experiences in Philippines

Authorises the Govt./agencies to enter into concession agreements Provides a list of various forms of assistance to be provided to the developer including exemption of taxes etc. Competitive bidding mandatory for ensuring transparency The concession agreement to prescribe the user fee to be charged by the developer Need for replication in other States

Infrastructure Authority
Infrastructure Authority formed under Infrastructure Development Enabling Act (IDEA), Andhra Pradesh Envisaged Roles for Infrastructure Authority:
Conceptualisation of projects - Processing of the projects Mobilising public opinion - Advisory role to the government Co-ordination - Monitoring / approval of bidding Implementation of P-P-P-P - Prioritisation of projects Preparation of schedule. - Approval of TOR for consultancy Budgeting / financial allocation - Expedite clearances and permits Tariff fixing, user/abuser charges and cost recovery Model contract principles Supervision over implementation and project management

Proposes a Swiss Challenge Approach for evaluating the single bid for projects brought by proprietary agencies

Security Mechanism for UI Projects Non-availability of Conventional securities (government guarantees, corporate / bank guarantees) Letters of comfort not a legal security option Collateral Securities and Equipment Leases used in certain infrastructure Mortgages not viable securities in most UI projects Need for partial or non-recourse financing and legislative changes for treatment as Secured Loans in the Book of Accounts Negative lien could be considered only as a transient security instrument Escrow accounts of receivables enhances transparency of the cash-flows ensures sufficient balance for immediate repayments.

Legal Issues in Urban Infrastructure Financing

Innovative Escrow Account for Transportation

Escrow

upgradation of infrastructure upgradation of infrastructure

Rs. 1000 / bus / day (US$ 20.8) deposited in escrow account out of the anticipated daily revenue of Rs. 5760 per bus (US$ 120)

fleet augmentation fleet augmentation

computerisation computerisation

Innovative Resource Avenues in UI Financing

Financing Options Matrix

S.No Characteristics of Infrastructure Projects Capital intensive 1 Issue(s) Options/ Alternatives

Scarcity of Resources

Multilateral financing Consortium/Syndication Federal Govt. Guarantee with financial support

Long Gestation period

Asset Liability Take out financing Mismatch Long Term Borrowing Securitisation of receivables

Working Capital Overlapping of Flexible financing delinking requirements based project construction stage from on Project Phasing implementn post-construction phase schedules Cash flow financing Inadequate returns and uncertainty on returns High cost of funds, Defaults/NPA risk Tax Incentives Priority Sector Lending Sub-ordinate debt finance Firm tariff policy Escrow Accounts Power Purchase Agreements Sinking funds

Financing Options Matrix

S.N o 5

Long Term borrowing

Characteristics of Infrastructure Projects

Issue(s)

Options/ Alternatives

Interest rate & Interest Rate Swap Currency Forward Rate Agreements fluctuations Floating Interest Rates

Multiple debt servicing High debt equity Sub-ordinate debt financing obligations ratio Equity infusion from strategic partners Lack of tangible assets Realization of and collateral/security loan amount on liquidation or default Varied expertise and advanced technology Pioneering nature / Feasibility risk Lack of appraisal & operational skills Risk of en masse deployment Letters of comfort Pari passu charge on Escrow Account Bank Guarantees

Joint Ventures Special Purpose Vehicles Venture Capital Funds Project Initialisation Funds

Consortium financing / Group lending

For capital intensive projects and greenfield ventures beyond lending capacity of single financial institution Pooling of resources for funding the project. Ensures sharing of the risks involved. Needs rationalisation and standardisation of appraisal procedures, lending guidelines and legal documentation of the constituent financial institutions Need for pari passu charge on the escrow account as security to the partner institutions. Desirable to provide a single window facility based on tripartite or joint agreements with the borrowing agency.

Takeout Financing
Transfer of Loan Accounts Fees / Commitment Charges

Primary Lender

Partner Institution

Outstanding Loan Amt. (Principal + Interest)

5 years

10 years

TENURE OF LOAN (15 years)

Liabilities of primary lender on project absolved at the end of a specified period Partner institution transfers pertinent loan accounts to its own books, in lieu of an agreed fee or commitment charge. Both parties bear the project risks after the take-out based on a non-recourse structure. pari passu charge on the escrow account as security option.

Innovative Financing Mechanisms

Sub-ordinate (Mezzanine) Debt Financing: Internal restrictions on equity participation by financial institutions, Lower equity and hence limited debt-equity ratio of new State level bodies for infrastructure projects restrict them from market borrowing on a large scale. Funding could be considered as deemed equity for a specific period granting the bodies better financial leverage Cashflow financing: institutional funding to be tailor-made to suit the financial requirements at various stages of the project calling for cash-flow financing.

Securitisation of Receivables
Loan Lending Institution

Borrower

Repayments Outstanding Loan Portfolio SPV SPV Fees Pass Through Certificates

Investors

Periodic Cash Flows

Securitisation of receivables
Conversion of future cash receivables into financial or debt instruments tradable in capital market Role of SPV as intermediary:
assumes the entire credit risk on the securitised receivables of selected outstanding loan portfolio Insulates the lender from bankruptcy & insolvency risks repackages the receivables into pass-through certificates of manageable lots for onward trading in the secondary market. Principal and interest components of the repayments are passed on to the security owner. Continuous cash flow on Securitised instruments over the life of the loan and principal depletes over time. reduces the locking up of funds in a few projects. facilitates reduction in borrowings ensures better asset-liability management. provides efficient exit option for the financial institutions to transfer the risks of default and prepayment

Merits to Investor:

Advantages to Lending Institution:

Municipal Bonds
In United States, account for nearly 70% of the capital financing for infrastructure. General Obligation Bonds (GO) Revenue Bonds Ahmedabad Municipal Corporation GO bond issue of Rs. 100 Crores
Bangalore, Vijayawada and Ludhiana have already raised money through municipal bonds; Mumbai & Pune have obtained credit ratings; Kanpur Development Authority latest entrant Problems faced: Since bonds can be raised over night within a short period and their utilisation may require 2-3 years, quite often, States/agencies tend to fall into the debt trap On account of the dire financial position, Credit Rating of agencies need to be enhanced to enable raising funds at lower costs.

Facilitating Urban Local Bodies in Resource Mobilisation

Governments new strategy on the anvil for ULBs : Credit Line
Making available requisite loan facilities for Urban Local Bodies and other agencies

Bond Bank
Varying capacity levels of ULBs in obtaining high credit rating, lower borrowing costs, optimal resource utilisation & asset management Need for financial intermediary to pool the projects of the various agencies and float a common bond on the merit of the projects setting apart a reserve fund. Bond bank could be at the national level as a special purpose vehicle or as a subsidiary of the financial institutions.

Challenge Fund
For facilitating the States and Urban local bodies implementing the reform agenda

Project Initialisation Fund/ Project Initiative Fund / Project Development Fund

PIF/PDF for creation of well structured projects
Technically viable Financially feasible and bankable Environmentally sustainable
HUDCO would fund 100% of the formulation cost upto a maximum of Rs. 5 Crores per project and Rs. 50 crores per year.

HUDCO already assited

Feasibility study for alternate alignment of National Highway connecting Jammu and Srinagar with support of Rs. 2.3 Crores Preparation of detailed design and Bid documents etc. for the Sports Stadia at Hyderabad for the 7th National Games to be held in 2002. Financial assistance of Rs. 2.5 Crores provided to the Sports Authority of AP

Emerging State Level Initiatives for

State Level Urban Development Funds like TNUDF & MUDF in Tamilnadu Maharashtra, for facilitating private sector participation bringing in commercial orientation, improving financial management , assisting ULBs accessing capital markets. State level urban development Finance Corporations formed APUFIDCO - TUFIDCO KUDFC - KUIDFC Gujarat Municipal Finance Board Tax intercept concept introduced in Madhya Pradesh State for urban development loan servicing fund for local bodies.

Financing Urban Infrastructure

FDI in Infrastructure
Foreign Direct Investment(FDI) could be permitted through:
Financial Collaborations Joint Ventures / Technical Collaborations Capital Markets via Global Depository Receipts (GDRs / Euro issues) Private Placements or Preferential Allotments

In India, FDI upto 100% permitted in airports (beyond 74% with approval) and Mass Rapid Transit Systems. FDI upto 100 % permitted in Integrated township development including housing, commercial premises, hotels, resorts City and regional urban infrastructure facilities Manufacture of building materials Development of Land with allied infrastructure as part of integrated township development Enabling guidelines required to prevent capital flight (lock in period) and regulate repatriation of profits in FDI

Special Economic Zones

Proposal to set up Special Economic Zones (SEZ) in various parts of country as duty-free zones for industrial, service and trade operations to attract foreign investment and facilitate expeditious development. Proposal for a new SEZ at major Ports The policy envisages the treatment of SEZs as priority areas in provision of infrastructure, convergence in statutory clearances, exemption from duties and levies as well as liberal regulations. SEZs as industrial townships would need priority for integrated provision of infrastructure facilities.

 Development of

Imperatives for Sustainability in Infrastructure Financing

Legal & Regulatory Institutional Mechanism Fiscal & Financial Framework Need for an Integrated Management of Urban Infrastructure & Intersectoral Co-ordination. Creation of a new Breed of Urban Managers sensitised and responsible for taking on the challenges in urban infrastructure HUDCOs efforts for capacity building in decentalised training. Curriculum upgradation to provide not only technical inputs (Civil Engg.+ Transportation Engg. + Hydraulic engineering + Public Health Engineering ); but also Financial Engineering.

security mechanisms Enabling Public-Private-Peoples-Partnerships (PPPP) and Government-Citizen Partnerships General consensus on common national issues Role of the media

Towards Sustainability in Infrastructure Development Development of innovative financing and

creating awareness and disseminating best practices highlighting the deficiencies and pertinent issues mobilising unified public opinion attracting infrastructural investments protecting vulnerable interest groups / environment

Towards equitable and balanced Infrastructure development and economic growth.

Vicious Circle to Virtuous Cycle

High Level of High Level of Infrastructure Infrastructure

Higher Higher Investments Investments

High Service High Service Level Level

High Equilibrium Cycle

Higher level Higher level Maintenance Maintenance

High High Collection/ Collection/ Recovery Recovery Higher Higher Willingness Willingness to Pay to Pay

VS/ KS

Thank You for your kind attention