Strategy for Highways Sector - India

Costain is an international engineering and construction group with a reputation for technical excellence founded on more than 140 years of experience.

Contents: 1. 2. 3. 4. 5. 6. 7. Introduction: Costain Highways Sector Strategy: Solution: Business expansion in India Client: National Highways Authority of India (NHAI): Business Strategy and Action Plan: Proposed Action Plan: Appendices: 7.1 7.2 7.3 7.4 7.5 Appendix 1: Types of Projects in NHAI Appendix 2: Details of projects under NHDP (phase II, III ) Appendix 3: Sample list of contractors Appendix 4: IRCON INTERNATIONAL 1 1 3 5 10 13 14 14 19 32 34

Appendix 5: Rail sector opportunity: Dedicated Freight Corridors: 39

1. Introduction:
Costain highways sector vision is to become the No 1 Provider of Highways Solution Services to Blue Chip customers. The financial objective is to maintain double digit growth in annual turnover and Profit. At present, Costain is largely a UK based business with almost no presence internationally. In the short-term, due to the forthcoming Olympics in London this growth may be achieved despite the fears of economic recession. However, in the medium to long-term, a sustained double digit growth may be difficult to achieve without resorting to new markets and new services. Expanding Costains business into India can help achieve this objective. This report assesses the current Highways sector strategy for Costain, assesses the market potential for Highways sector in India, suggests different strategies for launching business in India, and assesses future potential for business growth in other allied sectors and other markets.

2. Costain Highways Sector Strategy:

Vision:To be the No 1 Provider of Highway Solution Services to Blue Chip Customers

Mission:

Health and safety: Ensure the health and well being of our staff and those affected by our activities

Environment: Minimise our direct impact on the environment and continue to raise awareness, internally, with our supply chain and our key external stakeholders, of the importance of protecting and where possible enhance the environment.

Our People: Create a shared culture and work ethic driven by strong leadership, sustained through career progression and enhanced through talent identification and management, personal development, recognition and reward. Page 1

Community: Enhance the reputation of the company and its clients, partners and suppliers through active stakeholder engagement and the delivery of legacy projects, which offer long term benefits to the community and meet societys needs.

Marketplace: Improve our supplier and subcontractor selection and management enabling us to continually deliver improved efficiencies and added value for sustained business performance. Work to achieve success and so provide our stakeholders with the high quality outcomes they expect.

Objectives: y y y y y Zero Accidents Delighted Customers Minimum impact on the environment Maximum contribution to the communities in which we work Maintain Double Digit growth in annual Turnover & Profit

Current problem:

Challenge is to maintain sustained growth and profitability.

y y

Highly competitive UK Highway sector Investment opportunities in Capital Projects likely to reduce particularly after London Olympics.

y y

Maintenance projects give lower profit margins TUPE regulations create people issues and drain resources in terms of management time.

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3. Solution: Business expansion in India

Roads are the dominant mode of transportation in India, carrying 90% of the countrys passenger traffic and 65% of its freight. The density of Indias highway network is 0.66 km of highway per square kilometre of land. (Source: http://web.worldbank.org accessed on 23/7/2008). India has accorded very high priority to investments in Transport Infrastructure. In October 2006, the Indian Prime Minister had indicated that India needs investments in infrastructure to the tune of US$320 billion in the next 5-10 years. Out of this, at least US$ 50 60 billion is required to improve road infrastructure in next 5 years (Source: India Investment Commission 2006).

Roads sector in India: The road network aggregating to 3.3 million KM consists of National Highways, State Highways, major and other district roads and village/rural roads.

Table 1: National Highways/Expressways State Highways Major and other roads Rural Roads 66590 Km 128600 Km 470000 Km 2650000 Km
(Source: India Development Report 2008)

National Highways: The National Highways is made up of

Single lane (3.75m width) Double/ Intermediate Lane (3.5 m width per lane) Four/Six/Eight Lane (3.5 m width per lane)

32% 56%

12%

(Source: India Development Report 2008)

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The Central Government is responsible for development and maintenance of the National Highways and it carries out the work using 3 main agencies: 1. National Highways Authority of India (NHAI) 2. State Public Works Departments (PWDs) 3. Border Roads Organisation (BRO) Government Strategy for Highways:

Launching National Highway Development Program with its seven phase program ending in 2015 Operationalising the National Highways Authority to act as infrastructure procurer and not just provider

Amending the National Highways Act to expedite land acquisition, permit private financing and allow tolling.

Public-Private Partnerships:

Several initiatives have been taken by the government to encourage private sector participation in the NHDP, which includes:

 Provision of capital subsidy up to 40% of the project cost to make projects commercially viable.  100% tax exemption for 5 years and 30% Tax relief for 5 years.  Provision of encumbrance free site for work, i.e. the Government shall meet all expenses relating to land and other pre-construction activities  Foreign Direct Investment up to 100% in road sector  Duty free imports of high-capacity equipment for construction projects  Higher concession period (up to 30 years)  Right to collect and retain toll

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4. Client: National Highways Authority of India (NHAI):

The type of projects NHAI1 undertakes is given in appendix 1. From the details in appendix 1, it can be seen there are 3 types of projects are that NHAI are may be of significance to Costain.

y y y

Build operate and Transfer (BOT) Multilateral agencies aided Project (World Bank, ADB etc) NHAI funded project

International Competitive bidding is carried out for projects funded by Multilateral funding agencies and for larger projects for which sufficient nos. of domestic consultants/contractors/consortium is not available.

NHAI awards consultancy services projects for y y y y IT Services Feasibility studies and project preparation Construction supervision Highways sector studies, etc

The details of the steps in selection of Consultants are shown in appendix 1. National Highways Development Project: NHAI is mandated to implement the National Highways Development Project (NHDP), the largest highway project ever undertaken in India. This project is being executed in 7 phases to be completed by 2015.

NHDP Phase I& II: The Phase I & Phase II of NHDP comprises of (i) Golden Quadrilateral (GQ), i.e. National Highways connecting four metropolitan cities --Delhi, Mumbai, Chennai & Kolkata having an aggregate length of 5,846 km., (ii) North-South & East-West Corridor (NS-EW) which comprises 4-laning of 7,300

NHAI is responsible for the development, maintenance and management of National Highways

entrusted to it and for matters connected or incidental thereto. The Authority was operationalised in Feb, 1995.

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km of National Highways connecting North-South corridor from Srinagar to Kanyakumari with Cochin-Salem spur and East-West corridor from Silchar to Porbandar, (iii) 380 Km length of National Highways are proposed to be upgraded to 4-lane standards for providing connectivity to 10 major ports of the country to NHDP, (iv) Up gradation of 831 km of other important National Highways. The total estimated cost of the NHDP Phase I & II having a total length of 14,357 km is about Rs.64,639 crore (US$161 billion) NHDP Phase-III: NHDP Phase-III involves 4-laning of 12,109 km of NH having High-density corridor connecting State capitals, important tourist places, economically important areas etc. on PPP basis. The Government has approved implementation of 4,815 km under NHDP Phase-III A. The proposal for implementation of the balance length of about 7,294 km under NHDP Phase-IIIB has been approved recently. NHDP Phase-IV: Phase IV of NHDP comprising 2-laning with paved shoulders of 20,000 kms of National Highway.

NHDP Phase-V: Phase V of NHDP comprising six laning of 6,500 km of existing 4 lane highways on Design Build Finance & Operate (DBFO) basis was approved on 5.10.2006. This includes 5,700 km of GQ and other selected stretches. Consultancy works for a length of 1,225 km has already been awarded for feasibility study and bids for 180 km length are under evaluation. Civil works for a length of 148 km was awarded on BOT Concessions and for balance follow up actions are being taken to award the contracts on BOT basis.

NHDP Phase-VI: Government has recently approved the proposal for development of 1000 kms of access controlled four /six lane divided carriageway expressways under NHDP phase-VI on BOT basis at the cost of Rs. 16,680 crore (US $4170 million)

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Status of NHDP:

NATIONAL HIGHWAY DEVELOPEMENT PROJECT(NHDP) National Highways Development Project is being implemented in 4 phases I, II ,IIIA & V at present. The present phases under Phase I, II & IIIA envisages improving more than 25,785 km of arterial routes of NH Network to international standards. NHDP Phase I & II are likely to be completed by December 2008 whereas NHDP Phase IIIA is scheduled for completion by December 2009. In addition to above, 6 laning of 148 km has been awarded 6 laning is proposed under NHDP Phase V. The project-wise details NHDP Phase I, II, IIIA & V NHDP & Other NHAI Projects (Status :30th June, 2008) NHDP
GQ Total Length (Km.) Already 4-Laned (Km.) Under Implementation (Km.) Contracts Under Implementation (No.) Balance length for award (Km.) NS - EW Ph. I & II NHDP Phase III NHDP Phase V Port Connectivity

Others

Total by NHAI

NHDP

Total

5,846

7,300

12109

6,500

31755

380

962

33097

5,689

2620

498

8,807

179

573

9559

157

3701

1577

1030

6465

195

369

7029

18

143

25

188

15

211

821

10,034

5470

16,325

20

16,351

Page 7

Page 8

Offered Projects:

The NHDP Phase I programme is operational from December 2000 and most of the projects are already being implemented. Currently, there are large number of projects being offered for NHDP phase II, Phase IIIA, Phase IIIB, and Phase V. The detailed list of these projects is in appendix 2. It is clear that opportunities are endless in the foreseeable future.

Contracts competition: Already large numbers of firms are operating within the NHDP. A sample list of the contractors who have already undertaken various projects is given in appendix 3. Most of the global firms have formed JV with Indian firms for carrying out construction projects. The NHDP project has attracted large number of international construction firms/consultants, and they have been operating successfully in India.

Future Outlook: The Government has formulated an ambitious plan for investment of Rs.2, 35, 430 Crore (US$ 58.9 billion) for up gradation of National Highways under various phases of NHDP in a phased manner in the years to come. The details of this plan are as under:-

Phase

Project

Likely cost in Rs (in crore)

Likely cost in US$ (million) (1US$= 40 Rs)

NHDP phase I & II NHDP phase III NHDP Phase IV NHDP Phase V NHDP Phase VI NHDP Phase VI

GQ and ES/NS corridor 4 laning 2 laning 6 laning Expressways Flyovers, ring road

52434

13108.5

80826 27800 41210 16680 16680

20206.5 6950 10302.5 4170 4170

(Source: India Development Report 2008)

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Based on the lines of Central Governments NHAI, various State Governments have also created their own agencies to carry out Road construction works. Among the prominent agencies are: 1. Maharashtra Road Development Corporation Ltd: The details are provided in the official website http://www.msrdc.org/tender.aspx. 2. Andhra Pradesh Road Development Corporation: The details are provided in the official website http://www.aprdc.in/ 3. Karnataka Road Development Corporation Ltd: The details are provided in the official website http://www.krdcl.co.in/index.html

Thus, the Road sector in India is a very attractive market. Although there are several global players operating in the market, the total investment and number of projects being offered is so large that there is enough room for more players. The biggest client is the National Highways Authority of India, but there are many State level agencies that have very ambitious plans for investments. Costain plc may like to explore business growth opportunities in India in the Highway sector.

5. Business Strategy and Action Plan:

Business strategy for Highway sector: Costains present Highway sector The Highways sector in India is a very attractive market and offers business growth potential for Costain plc because:

1. Indias Highway sector is growing at a phenomenal rate 2. Very high demand for Services in the form of consultancy like Planning, feasibility studies, Design, cost appraisal, project management, construction supervision etc. 3. Opening up of business opportunities in other sectors like Rail, Airports, Property, Retail etc, which are potentially high growth areas in India. India can become a base for business expansion in the nearby growth Page 10

markets like UAE and Qatar because bulk of the labour force in the Middle-east is from India. 4. In-sourcing of the human capital from Indian business to take care of Highways maintenance sector in UK, so that Costain can focus their resources on the more lucrative Capital works projects. A large number of firms from UK, USA, Australia, China, Japan, Korea etc are active players in Indias Highway sector and so the risk of entering in India has got drastically reduced. In fact, Costain plc may have lost out on opportunities in the last 7-8 years. However, it is believed that even today there is enough potential for business expansion in India.

Entering India Highway sector market will mean that there will have to be an upfront investment and a commitment of long-term business expansion plan in India.

Market Entry strategy for Costain: There are 3 ways for market entry:

1. Organic growth: India has allowed 100% FDI in the Road sector. Costain can incorporate their subsidiary in India, build systems and procedures afresh, recruit locally (from a rich pool of technical workforce available), and start their operations. This will be cautious move but may be time consuming. Given that Costain has already lost out on valuable time, and the fact that many foreign firms are already operating successfully in India, the avenue of organic growth may not be most desirable.

2. Acquisition: Costain may offer to acquire an Indian firm of sufficient scale and size, which is active in the Highways sector. Many firms would be willing to be acquired by a UK based large firm like Costain. The local knowledge and experience of the acquired firm can be retained while the systems and

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procedures may be reconfigured and rationalised. Costain can in reasonable time operate in the Indian market, with its brand and values intact.

3. Strategic Alliance: A joint venture can be formed with a strategic partner in India, like many other foreign firms have done before. One such firm that may be interested is IRCON INTERNATIONAL2. The profile of this firm is in appendix 4. IRCON has previously worked with ATKINS in UK and the Middle- east, and is highly reputed within India. This is the recommended strategy because with a strategic partnership with IRCON, the low value maintenance works in UK as well as India can be managed by IRCON, and COSTAIN can focus on high value capital projects in UK and Capital projects and consultancy projects in India. This business model can be expanded in all other markets where IRCON already has a presence.

IRCON International is a public sector enterprise carrying out turnkey solutions in the Infrastructure

markets in India as well as Malaysia, Middle east , Central Asia and Africa.

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6. Proposed Action Plan:

1. Create a Business Strategy plan for Highway sector in India, and launch the business expansion in India at the earliest. 2. In the first phase, consultancy services practice to be developed for India, using the in-house talent already available within Costain. 3. In the second phase, focus will be on the global tenders which will be awarded based on international competitive bidding. 4. After a prominent presence in the Indian highways sector is gained, new sectors can be explored for business expansion. For example, a $10 billion project in India called the Dedicated Freight Corridor has been launched. Details are in appendix 5. 5. Business opportunities in nearby markets like UAE and Qatar, to be tapped by using India as the base.

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7. Appendices:

7.1 Appendix 1: Types of Projects in NHAI

Types of Projects NHAI undertakes 1. Build Operate and Transfer (BOT): In order to promote involvement of private sector in construction and maintenance of National Highways, projects are offered on BOT basis. Concession period, which can range up to thirty years, road is transferred back to NHAI by the Concessionaire. Projects of Delhi - Gurgaon Section (Access Controlled 8/6 Lane) and Nellore - Tada etc. are being executed on BOT basis.

2. Externally Aided Projects: NHAI is the implementing agency for executing projects for which loan assistance is available from Multilateral Development Agencies like ADB and World Bank or JIBC. In case of these projects, majority of the funds are transferred by Ministry of Road Transport & Highways to NHAI through budgetary route and NHAI receives agency charges for executing these projects. 3. NHAI funded Projects: NHAI receives funds for augmenting its capital base from the Government through annual budgets or by Market borrowing. Bidding process : General procedure for selection is a two-stage bidding comprising of:

Stage 1: Pre-qualification - on basis of technical and financial expertise of the firm and its track records on similar projects.

Stage 2: Commercial bids from pre-qualified bidders. There is a time lag between stage 1 and 2. Wide publicity is given to NHAI tenders so as to attract attention of leading Contractors / consultants. Notice inviting tenders is posted on this web site and published in leading newspapers.

Final selection : If a project is funded by Multilateral funding agency like World Bank, ADB, selection is with consultation / concurrence of the funding organisation. For other types of projects selection is as per standards work procedures. Different Procurement Procedures International Competitive Bidding(ICB) Projects financed by international lending agencies & for larger projects for which sufficient nos. of domestic consultants /contractors/consortium are not available. Local (National) Competitive Bidding (LCB/NCB) Projects financed by NHAI (in general)

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Consultancy Services What are Consultancy Services?

y y y y y

IT Services Feasibility studies and project preparation Construction Supervision Highway Sector Studies Others

Procurement of Consultants is mostly on

y y y

Quality and Cost based selection Quality based selection Single Source Selection (sometime)

What Constitutes a Consultancy - Technical Proposal (TP) & Financial Proposal (FP)? Technical Proposal

y y y y

Background information ,experience in similar works Approach & methodology, work programme Manning schedule ,bio-data of key-personnel Comments on TOR & Associated arrangements if any

Financial Proposal

y y y y

Lump Sum, Cost plus fee basis ,out-of-pocket expenses ,man month rates Traveling & transport, Office accommodation, Stationery Computer & Equipment charges, supply of equipment Support Staff

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Steps in Quality & Cost Based Selection of Consultants Preparation of Terms of Reference (TOR)

Preparation of Short List

o o y y y y

Open Advertisement On & of entire pre-qualification document Long List from : Lending Agencies & Available with NHAI

Issue of Letter of Invitation and TOR and Draft Agreement Receipt of Technical Proposal (TP) & Financial Proposal(FP) Evaluation By Committee of TP Opening of FP of Consultants who qualify in TP

o o y y y

In the Presence of Representatives of Consultants Marks obtained in TP are informed prior to opening of FP

Combined Evaluation of TP & FP Negotiations on technical issues with highest ranked consultant Work Award

How and When Quality & Single Source Selection of Consultants

Quality Based Selection : Adopted by ADB & JIBC

After Evaluation of Technical Proposal , the financial proposal of Highest ranked consultant is negotiated, by a committee

o y

After Successful negotiation, work is awarded

Single Source Selection : In Urgent Cases Only

o o o

Where Work An Extension of Existing study ,by same firm... Where rapid Selection is Essential Where the firm has excellent experience in the particular field

Steps in Civil Works Contract Procurement

Invitation to Contractors to Pre-Qualify

o o o o o

Pre-Qualification of Contractors Issue of Tender (BID) documents to pre-qualified contractors Receipt of tenders &opening of tenders in the presence of tenderers Evaluation of Tenders Award of Contract

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Details of Civil Works Contract Procurement

Pre-Qualification of Contractors

o o o

Press Notification & Entire PQ Document on www.nhai.org Submission of PQ Applications Evaluation Parameters

Financial

 o
Technical

Average annual turnover, bid capacity, liquid assets

 o

Personnel Organization ,plant and equipment

Experience in Similar Works Track Record

 o

Satisfactory timely completion &litigation

Evaluation of Tenders

 o

Bid Security ,Completeness and signed ,correction of computational errors.

Technical Security

Substantial Responsiveness

A tender which confirms to all the terms, conditions and specifications of the tender documents , without material deviation

Only Substantially bids are compared Award of work to the lowest evaluated bidder

What generally Constitutes a BID document?

Volume I

o y

Instructions to Bidders ,conditions of contract ,special conditions

Volume II

o y

Technical Specifications

Volume III

o y

Form of BID, bill of quantities,schedules,model forms

Volume IV

Drawings

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key parameters of procurement of civil works under International Competitive Bidding

Currency Conversion

All Amount are converted into single currency at the exchange rate on the date of BID opening

Price Preference

- Price preference for domestic bidders.

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7.2 Appendix 2: Details of projects under NHDP (phase II, III )

PROSPECTS FOR INVESTMENT STATEWISE PROJECTS

UNDER NHDP PHASE II ESTIMATED PROJECT COST S.NO STRETCH NH LENGTH(Km.) RS. (CRORES ) USD (MILLION)

STATE: Assam

1.

Udarband to Harangajo

54

31

202.12

43.9

STATE: Jammu Kashmir

1.

Banihal- Batole-Udhampur

1A

122

1035.00

230.00

2.

Srinagar- Khanbal-Banihal

1A

32

129.00

28.60

3.

Two tunnels on Udhampur-Banihal-Srinagar Section

1A

19

5000.00

1111.10

4.

Udhampur Jammu (0-66)

1A

86

1011.00

224.60

STATE: Kerala

1.

Walayar-Vadakkancherry

47

55

600.00

132.00

2.

Vadakkancherry -Thrissur

47

29

515.00

114.00

STATE: Maharashtra

1.

Nagpur Bypass

21.26

183.48

40.77

2.

MP/MH Border to Manasar

37.40

157.90

35.09

3.

Manasar to Nagpur I/C Kamptee Kanoon

36.46

227.00

50.44

STATE: Punjab

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1.

Jallandhar -Amritsar

20

190.00

42.20

STATE: Tamil Nadu

1.

Salem-Coimbatore Kerala Border Section

47

82

540.00

120.00

STATE: Uttar Pradesh

1.

Agra Bypass Km176-800 of NH-2 to Km 13.03.0 of NH-3

2,3

32.800

345.00

75.99

PROSPECTS FOR INVESTMENT STATEWISE PROJECTS

UNDER NHDP Phase III-A ESTIMATED PROJECT COST S.NO STRETCH NH LENGTH(Km.) RS. (CRORES ) USD (MILLION)

STATE: Andhra Pradesh

1.

Vijaywada-Machhlipatnam

65

423.80

92.13

2.

Hyderabad-Vijaywada

176

1141

248.04

3.

Tirupati - Tiruthani - Chennai

205

138

899.76

195.6

STATE: Bihar

1.

Patna-Muzaffarpur

19 & 77

60

391.20

85.04

2.

Patna-Bakhtiarpur

30

53

345.56

75.12

STATE: Delhi

1.

Delhi-Meerut

58

46

299.92

65.20

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2.

Delhi -Hissar (Delhi Portion)

10

20

130.4

28.34

STATE: Gujarat

1.

Surat-Hazira Port

29

189.08

41.10

2.

Kandla-Mundra Port

8A

73

475.96

103.47

STATE: Haryana

1.

Rohtak-Hissar

10

80

521.60

113.39

2.

Panipat-Rohtak

71A

73

475.96

103.47

3.

Rohtak-Bawal

71

97

632.44

137.49

STATE: Jharkhand

1.

Hazaribag-Ranchi

33

75

489

106.30

STATE: Karnataka

1.

Mulbagal-Kamataka/AP Border

11

71.72

15.59

2.

Bijapur-Hospet

13

194

1264.88

274.97

3.

Balgaum-Goa /KNT Border

4A

84

547.68

119.06

4.

Kundapur-Surathakal

17

71

462.92

100.63

5.

Mangalore-KNT/Kerala Border

17

18

117.36

25.51

STATE: Kerala

1.

Charthalai-Paliakad

47

50.5

329.26

71.58

2.

Pallakad- Thiruvananthapuram

47

123.5

805.22

175.05

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3.

Trivendrum -Kerala/Tamil Nadu Border

47

43

280.36

60.95

4.

Kerala/Tamil Nadu Border -Kanyakumari

47

70

456.4

99.22

STATE: Maharashtra

1.

Nagpur-Wainganga Br

60

391.20

85.04

2.

Pimpalgaon-Nasik-Gonde

60

391.20

85.04

3.

MP/Maharashtra Border-Dhule

97

632.44

137.49

STATE: Orissa

1.

Chandikhole-Duburi

200

39

254.28

55.28

2.

Panikoili-Roxy

215

249

1623.48

352.93

3.

Duburi-Talcher

200

98

638.96

138.90

4.

Roxy-Rajamunda

215

20

130.40

28.35

STATE: Punjab

1.

Amritsar-Wagha Border

35

228.20

49.61

2.

Chandigarh-Kurali

21

30

195.60

42.52

3.

Parwanoo-Shimla (Punjab, Haryana and HP)

22

110

717.20

155.91

STATE: Rajasthan

1.

Reengus Sikar

11

41

267.32

58.11

2.

Tonk -Kota -Deoli

12

64

417.28

90.71

3.

Deoli Jhalawar

12

178

1160.56

252.30

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STATE: Tamil Nadu

2.

Nagapatnam -Thanjavur

67

74

482.48

104.89

5.

Krishnagiri -Tindivaram

66

170

1108.4

240.96

6.

Trichy -Puddukotai -Ramanathapuram

210

200

1304

283.48

STATE: Uttaranchal

1.

Muzaffernagar -Haridwar

58 & 72

77

502.04

109.14

2.

Haridwar -Dehradun

72

69

449.88

97.80

STATE:West Bengal

1.

Barasat Bangaon

35

60

391.2

85.04

Total

3346

21679

4712.82

PROSPECTS FOR INVESTMENT STATEWISE PROJECTS

UNDER NHDP PHASE V ESTIMATED PROJECT COST S.NO STRETCH NH LENGTH(Km.) RS. (CRORES ) USD (MILLION)

STATE: Andhra Pradesh

1.

Chilkaluripet-Vijayawada-Elluru-Rajamundri

270

1712

417.17

2.

Tada-Neliore Bypass

130

824

201.02

3.

Vishakapatnam-Ankapalli- Rajamundri

200

1268

309.27

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4.

Srikakulam-Vishakhapattnam Ankapalli

100

634

154.63

5.

Neliore-Chilkaluripet

184

1167

284.53

6.

Icchapuram-Srikakulam

140

888

216.49

STATE: Bihar

1.

Aurangabad-Barwa Adda

70

444

108.24

1.

Vanarasi-Aurangabad

140

888

216.49

STATE: Gujarat

2.

Ahmedabad-Vadodara Expressway

NE-1

95

602

146.90

1.

Samaikhiali-Gandhidham

8A

56

355

86.60

3.

Surat Dahisar(Gujarat portion)

120

761

185.56

3.

Udaipur - Ahmedabad

140

888

216.49

STATE: Jharkhand

1.

Barwa Adda - Panagarh

100

634

154.63

1.

Aurangabad- Barwa Adda

150

951

231.95

STATE: Haryana

1.

Gurgaon-Kotputli-Jaipur(Haryana portion)

126

799

194.84

2.

Panipat-Jalandhar

116

735

179.38

2.

Delhi Ahmebad

140

888

216.95

STATE: Karnataka

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1.

Bangalore-Tumkur

65

412

100.51

2.

Hubli-Chitradurga

200

1268

309.27

3.

ChitradurgaBypass-TumkurBypass

145

919

242.22

4.

Bangalore-Krishnagiri

55

349

85.05

5.

Belgaum-Hubli

110

697

170.10

5.

Kagal - Belgaum

77

488

119.07

STATE: Madhya Pradesh

1.

Indore-Dewas

55

349

85.05

STATE: Maharashtra

1.

Satara-Kagal-Belgaum

133

843

205.66

2.

Pune Satara

145

919

224.22

3.

Surat Dahisar (Maharashtra portion)

125

793

193.29

STATE: Orissa

1.

Chandikhol-Paradeep

5A

77

488

119.07

2.

Chandikhol-Jagatpur- Bhubaneswar

70

444

108.24

3.

Balasore Chandikhol

140

888

216.49

4.

Bhubneshwar-lchchaDuram

185

1173

286.07

STATE: Punjab

1.

Ludhiana-Chandigarh

95 & 21

82

520

126.80

Page 25

1.

Panipat - Jalandhar

184

1167

284.53

STATE:Rajasthan

1.

Kishangarh Udaipur

79A 79 & 76

315

1997

487.10

2.

Gurgaon-Kotputli-Jaipur (Rajasthan portion)

104

659

160.82

3.

Udaipur-Ahmedabad

95

602

146.90

STATE: Tamil Nadu

1.

Chennai-Tada

50

317

77.32

2.

Krishnagiri-Poonamalee

7&4

240

1522

371.12

2.

Bangalore -Krishnagiri

40

254

61.85

STATE: Uttar Pradesh

1.

Agra-Etawah Bypass

125

793

193.29

2.

Etawah -Allahabad

310

1965

479.37

3.

Allahabad Bypass-Varanasi

160

1014

247.41

4.

Varanasi-Aurangabad

50

317

77.32

5.

Hapur-Moradabad

24

110

697

170.10

6.

Delhi-Hapur

24

60

380

92.78

7.

Delhi-Agra

130

824

201.02

8.

Agra-Gwalior

85

539

131.44

STATE:West Bengal

Page 26

1.

Dhankuni-Baleshwar

4&6

240

1522

371.12

2.

BarwaAdda-Panagarh

20

127

30.93

3.

Panagarh-Dhankuni

135

856

208.76

Total

6304

39967

9748

PROSPECTS FOR INVESTMENT STATEWISE PROJECTS

UNDER NHDP Phase PHASE III B ESTIMATED PROJECT COST S.NO STRETCH NH LENGTH(Km.) RS. (CRORES ) USD (MILLION)

STATE: Andhra Pradesh

1.

Cuddapah-Mydukur-Kumool

18

192

1251.84

272.14

2.

Hyderabad-Yadgiri

202

30

195.6

42.52

STATE: Arunachal Pradesh

1.

Itanagar-Arunachal Pradesh/Assam Border

52A

22

143.44

31.18

STATE: Assam

1.

Doboka-Assam/Nagaland Border-Dimapur

36

124

808.48

175.76

2.

Baihata Chariali-Banderdewa

52

314

2047.28

445.06

3.

Badardewa-Assarn/Arunachal Pradesh Border

52A

58.68

12.76

4.

Assam/Meghalaya Border to Assam/Tripura Border

44

116

756.32

164.42

5.

Silchar-Assarn/Mizoram Border

54

50

326

70.87

Page 27

STATE: Bihar

1.

Muzaffarpur-Sonbasra

77

89

580.28

126.15

2.

Motihari-Raxaul

28A

67

436.84

94.97

3.

Bakhtiarpur-Begusarai-Khagarai-Purnea

31

255

1662.6

361.43

4.

Gopalganj-Chapra-Hajipur

19 & 85

153

997.56

216.86

5.

Forbesganj-Jogwani

57 A

13

84.76

18.43

6.

Mokama-Munger

80

70

456.4

99.22

7.

Patna-Buxar

84

130

847.6

184.26

STATE: Chhatisgarh

1.

Kumud-Dhamtari

43

23

149.96

32.60

2.

Raipur-Simga

200

28

182.56

39.69

STATE: Goa

1.

Panaji-Goa/KNT Border

4A

69

449.88

97.80

2.

Maharashtra/Goa border- Panaji Goa/KNT Border

17

139

906.28

197.02

STATE: Gujarat

1.

Jetpur-Somnath

8D

127

828.04

180.01

2.

Gujara/Maharashtra Border-Surat

84

547.68

119.06

3.

Gujara/MP Border-Ahmedabad

59

210

1369.2

297.65

STATE: J & K

Page 28

1.

Srinagar -Baramula -Uri

1A

101

658.52

143.16

STATE:Kerala

1.

KNT/Kerala border-Khozikode-Eddapally

17

451

2940.52

639.24

STATE: Maharashtra

1.

Kalamboli-Mumbra (6 Laning)

20

130.4

28.35

2.

Talegaon-Amravati

58

378.16

82.21

3.

Pune-Sholapur

170

1108.4

240.96

4.

Panvel-indapur

17

84

547.68

119.06

STATE: Madhya Pradesh

1.

Bhopal-Rajmarg crossing -Jabalpur

12

297

1936.44

420.97

2.

Bhopal-Sanchi

86 (Ext.)

40

260.8

56.70

3.

Indore-Jhabua-Gujara/MP Border

59

169

1101.88

239.54

4.

Obaiduliaganj-Bheembetka

69

13

84.76

18.43

5.

Jhansi-Khajuraho

75

100

652

141.74

STATE:Manipur

1.

Nagaland/Manipur Border-imphal

39

140

912.8

160.17

STATE:Mizoram

1.

Assam/Mizoram Border-Aizawl

54

113

736.76

198.43

STATE:Meghalya

Page 29

1.

Shillong (excluding Shillong Bypass)-Assam/Meghalaya Border

44

136

886.72

192.77

STATE:Nagaland

1.

Kohima-Nagaland/Manipur Border

39

28

182.56

39.69

STATE: Orissa

1.

Sambalpur-Baragarh-Chattisgarh/Orissa Border

84

547.68

119.06

2.

Bhubaneshwar-Puri

203

59

384.68

83.63

STATE: Punjab

1.

Amritsar-Pathankot

15

101

658.52

143.16

STATE: Rajasthan

1.

Kishangarh-Ajmer-Beawar

82

534.64

116.23

2.

Jaipur-Reengus

11

54

352.08

76.54

3.

Jaipur- Tonk

12

86

560.72

121.90

4.

Beawar-Pali-Pindwara

14

246

1603.92

348.68

STATE: Uttar Pradesh

1.

Muradabad-Bareilly

24

112

730.24

158.75

2.

Bareilly-Sitapur

24

153

997.56

216.86

3.

Ghaziabad-Aligarh

91

106

691.12

150.24

STATE: Tirpura

Page 30

1.

Tripura/Assam Border to Agartala

44

195

1271.4

276.39

STATE:Tamil Nadu

1.

Dindigul-Perigulam-Theni

45 (Ext.)

73

475.96

103.47

2.

Madurai-Ramnathpuram-Rameshwaram -Dhanuskodi

49

186

1212.72

263.63

3.

Coimbatore-Mettupalayam

67 (Ext.)

45

293.4

63.78

4.

Theni-Kumili

220

57

371.64

80.79

8593.64 Total 6063 39530.76

--

>

Page 31

7.3 Appendix 3: Sample list of contractors

List of Contractors & Nationality of National Highways Developement Project - Phase III 30th June 2008 NH No Length (Km)

S.no

Stretch

Contractor & Nationality

Status

NHDP Phase IIIA

1 Nagpur - kondhali 6 40 Atlanta - SREI Consortium (JV)-Indian Under Implementation Under Implementation Under Implementation Under Implementation Under Implementation Under Implementation Under Implementation Under Implementation Under Implementation Under Implementation Under Implementation Under Implementation Under Implementation Under Implementation Under Implementation Under Implementation Under Implementation Under Implementation

Khalghat - MP/Maharashtra Border

82.8

Navyuga Engineering Co. Ltd.-Indian

Meerut-Muzaffarnagar End of Durg Bypass - Chattisgarh / Maharashtra Border Amritsar - Wagha border

58

79

Nagarjuna Construction Co. Ltd. - MAYTAS Consortium-Indian

82.685

Ashoka - IDFC Consortium-Indian Rohan Builders Pvt. Ltd. - Rajdeep Buildcon Pvt. Ltd. - IDFC Ltd. Consortium-Indian Maytas - NCC Consortium-Indian

36.22

Pondicherry - Tindivanam

66

38.61

Trichy - Karur

67

79.7

Reliance Energy Limited-Indian Oriental Structural Engineers Pvt. Ltd.- Delhi Brass ConsortiumIndian GMR Energy Ltd. & GMR Infrastruture Ltd. Consortium-Indian

Kondhali - Telegaon

6 21, 22 1

50

Ambala - Zirakpur

36

10

Jalandhar - Amritsar

49

IVRCL Infrastructure Projects Ltd.-Indian Oriental Structural Engineers Pvt. Ltd.- Delhi Brass ConsortiumIndian Jaiprakash Associates-Indian

11

Indore-Khalghat

80

12

Zirakpur - Parwanoo

22

28.69

13

Dhule - Pimpalgaon

118

IRCON-SOMA Consortium-Indian

14

Gonde-Vadape (Thane)

100

Gammon India Ltd. - Sadbhav - Billimoria Consortium-Indian

15

Kurali - Kiratpur

21

42.9

BSCPL - C & C Consortium-Indian

16

Mahua-Jaipur Elevated Highway from Silk board junction to electronic city junction Neelamangala Junction on NH 4 with NH 48 to Devihalli

11

108

IJM Corporation Berhad-Malaysian

17

9.98

SOMA - NCC - MAYTAS Consortium-Indian

18

48

81

Lanco Devihalli Highways Pvt. Ltd.-Indian

Page 32

19

Salem-Ulundrupet (BOT-1/TN-06)

68

136.357

Reliance Energy Limited-Indian Apollo(UK) - JLI(UK) - DSC(Indian) - LOR(UK) Consortium-UK Indian JV Madhucon Projects Ltd. - SREI - Madhucon granites Ltd (JV)Indian Lanco Hoskote Highway Pvt. Ltd.-Indian Apollo(UK) - JLI(UK) - DSC(Indian) - LOR(UK) Consortium-UK Indian JV Navyuga Engineering Co. Ltd.-Indian

Under Implementation Under Implementation Under Implementation Under Implementation Under Implementation Under Implementation Under Implementation Under Implementation Under Implementation Under Implementation Under Implementation Under Implementation Under Implementation

20

Aurang - Raipur

45

21

Madurai-Arupukottai-Tuticorin

45B

128.157

22

Banglore-Hoskote-Mudbagal Section

79.724

23

Sitapur - Lucknow

24

75

24

Banglore - Neelamangala

19.5

25

Bharatpur-Mahua

11

57

Madhucon Projects Ltd. - SREI-Indian Oriental Structural Engineers Pvt. Ltd.- Delhi Brass ConsortiumIndian KCT - ERA consortium-Indian

26

Agra - Bharatpur

11

45

27

Delhi/Haryana Border to Rohtak Chattisgarh / Maharashtra Border - Wainganga Bridge Six Laning of Bangalore-Hosur Section of NH-7

10

63.49

28

80.055

Ashoka - IDFC Consortium-Indian

29

14.38

GVR Construction Pvt. Ltd. Chennai-Indian

30

Thanjarur - Trichy

67

56

Madhucon Projects Ltd.-Indian

31

Trichy - Dindigul

45

88.273

Reliance Energy Limited-Indian

Page 33

7.4 Appendix 4: IRCON INTERNATIONAL

Road / Highway / Air Port

1. Fields of Expertise For over last 18 years IRCON is engaged in execution of Highways and Roads of International Standards both in India and Abroad, funded by accredited organizations like World Bank, ADB (Asian Development Bank), ADB (African Development Bank), JBIC (Japan Bank for International Co activities in this field are summarized hereunder: operation), Arab Fund for Economic & Social Development, Kuwait Fund, KFW (Kreditanstall fuer Wideraufbau) etc. The brief details of IRCON s

Construction of flexible pavement to International Standards

y Construction of rigid pavements to International Standards y Complete Mechanization of Highway Construction (Both rigid and Flexible) y Usage of latest and World class technology in Highway Construction. y Deployment of highly experienced man power y Strict adherence to quality being ISO 9001:2000 Organization.

y Delivering the Projects as per schedule to the complete satisfaction of Customer

2. Technological excellence in areas of activities y Usage of fully batch type automatic Hot Mix Plant for ensuring quality of bituminous production y Usage of fully automatic high capacity concrete batching plant for ensuring quality of concrete production. y Construction of bituminous pavement by using full width (9 meter) , Sensor Paver y Construction of concrete pavement by using full width (9 M) paver for Dry Lean Concrete and full width slip form paver for pavement quality concrete. y Usage of high capacity, cone crusher for quality control of aggregates.

Page 34

Usage of WMM sensor paver at base course level for achieving workmanship and riding quality of finished

road. y Application of innovative and appropriate methods for execution of Projects under extreme topographical

and climatic condition.

3. Salient Features of completed Projects Abroad A. Bangladesh y Construction of Sylhet Town Bye pass Road from Sylhet town to Haripur, at a cost of Rs. 240 Million . y Rehabilitation of Dhaka Sylhet Road Bangladesh contract no 1-B at a cost of Rs 685 million.

y Improvement of 11 intersections at Dhaka, Bangladesh, contract package No (W) C3, during 2002 to 2003 at a cost of Rs. 131 Million. y Reconstruction of Sylihet Bangladesh during 1999 Tamable Jaflong road improvement project contract 1, Sylihet to Haripur,

2001 at a cost of Bangladeshi Taka 410 Million

y Second road Rehabilitation and maintenance Project between Nawabganj and Sona Masjid, Contract No. W4, during 1996- 1998 at a cost of Rs 324 Million y Second Road Rehabilitation and maintenance Project between Navaraon and Satkhira, Contract No. P-2, 1996 at a cost of Rs. 243 Million Pabna on National Highway No. 6, Contract No.

during 1994

y Road Rehabilitation and Maintenance Project on Nagarbari 2/3C, during 1993 y 1995 at a cost of Rs. 218 Million

Road Improvement Project

Contract No.3, between Comilla and Feni on Nationally Important Dhaka1994 at a cost of Rs. 600 Million

Chittagong Highway ( 35 Kms ) during 1989 y

Road Improvement Project, Contract No.1 between Daud Kandi and Chandina ( 28 Kms ) on Nationally Chittagong Highway during 1989 1994 at a cost of Rs. 631 Million.

Important Dhaka B. Nepal y

Road Rehabilitation and maintenance on Tribhuwan Rajpath, Thankot

Naubise section during 1995-1998

at a cost of Rs. 138 Million y Reconstruction of the East- West Highway Belbari to Chawharwa ( 140 Kms) during 1989 1994 at a cost

of Rs. 302 Million. C. Indonesia y Toll Road Project for IV.4 Package (in JV with SMJ, Indonesia) during 2004-05 at a cost of Rs. 123 Million. India y Re - Construction of Bay No. 11 & 12 (Re - Designated as Bay No. 44) and Part of Taxi Track at NSCBI Rs. 50 million.

Airport, Kolkata

Page 35

y Four Laning of Khaga Allahabad Road on NH 2 (43 Kms) Contract No.TNHP 3, in the State of Uttar Pradesh at a cost of Rs. 1720 Million y Godhra Shamlaji Road Project ( 121 Kms ) Contract No. GSHP-7 in the State of Gujarat at a cost of Rs.

1530 Million y Noida y Greater Noida Expressway during 1999 to 2003, at a cost of Rs 2024 Million.

Construction of Outer Ring Road Between Magadi Road to Tumkur Road , in Bangalore during 2001-2002 ,

at a cost of Rs 233 Million. y Bituminous Works on E.M. Bye pass from P.C. connector and R.B connector for CMDA Calcutta during the

year 2001 at a cost of Rs 47 Million. y Widening and Strengthening of Warrangal 1998 y 2000 at a cost of Rs. 900 Million. Tadipatri Road ( 65 Kms ) in State of Andhra Pradesh during Raiputnam Road ( 115 Kms) in State of Andhra Pradesh during

Widening and Strengthening of Cuddapah 2000 at a cost of Rs. 543 Million

1998

y Construction of Jaipur Byepass ( 14 Kms connecting NH 2000 at a cost of Rs. 641 Million y Strengthening and Widening of Vadodara at a cost of Rs. 532 Million y

11 and NH- 8 in State of Rajasthan during 1998

Halol Road Project ( 18 Kms ) in State of Gujrat in 1999

2000

Construction of Outer Ring Road Varthur to Sarjapur in Bangalore during 1998-2000, at a cost of Rs 248

Million. y Construction of package-III of Kona Expressway of C.M.D.A , during 1997-1998 , at a cost of Rs 55 Million

in Kolkatta region. y Construction of 2 Lane 11 Km long Cement Concrete Road for UPSIDC at Kasua , Greater Noida and Loni, Gaziabad in state of Uttar Pradesh in 1997 y 1999 at a cost of Rs. 108 Million Kottai, Chennai in the State of Tamil

Construction of Internal Roads for Industrial Complex at Irrungatta 1999 at a cost of Rs. 125 Million

Nadu during 1997

y Bhubaneshwar Runway Projects during 1996 to 1999 at the cost of Rs 763 Million. y Extension of Runway and Apron with rigid pavement and provision of additional taxi track at Indore airport

in the State of Madya Pradesh during 1995- 1998 at a cost of Rs. 75 Million. y Improvement and Strengthening of Varanasi Shaktinagar Road Projects ( 184 Kms ) in state of Uttar

Pradesh during 1993- 1999 at a cost of Rs.1730 Million y Strengthening and Widening to 4 Lane of NH-2, between Delhi and Mathura ( 111 Kms ) in States of 1998, at a cost of Rs. 1637 Million. 1992

Haryana and Uttar Pradesh Pradesh in 1991

y Strengthening of existing two lane carriage way near Nasik in the State of Maharashtra during 1989 at a cost of Rs. 100 Million.

y Strengthening and Widening of Four Lane of NH 1 between Khanna and Sirhind ( 24 Kms ) in Punjab during 1987 1993 at a cost of Rs. 129 Million.

Page 36

4. Salient Features of On-Going Projects Abroad A. Ethiopia y Construction of Dera - Mechara Road Upgrading - Cont. 1: Dera - Manga - ICB No.: 02 / 2003.at a cost Rs. 1450 Million. B. Nepal y Belbari - Chauharawa Pavement Strengthening Project at a cost Rs. 610 Million. India y 4 - Laning of Siliguri - Islampur (including bypass) section of NH - 31 in West Bengal - Package : EW - II (WB - 7) - Rs. 2110.72 Million. y Six laning of KM 66.000 to KM 86.000 of Panchi Gujran Panipat section of NH-1 in the State of Haryana Package : N S - 89 /Har. 1216.40 Million. y Extension of Secondary Runway at NSCBI Airport, Kolkata for Airports Authority of India 98.10 Million. y Development of adequate port road connectivity to New Mangalore port. Contract Package : KR (New

Mangalore)- Rs. 1682 Million. y Development of State Highways in districts of Darbhanga, Madhubani, Vaishali, Muzaffarpur and Samastipur under RSVY(Rashtriya Sam Vikas Yojana)- Agreement entered into on 27.04.05 between IRCON and Govt. of Bihar ( Road Construction Deptt.), Govt. of India ( M/o Shipping, Road Transport and Highway). y Rehabilitation and upgrading of Km 170.00 to Km 220.00 of NH - 25 to 4 - lane configuration in the state of Uttar Pradesh: East -West Corridor - Package - EW - II-5 - Rs. 3030 million. y UPSRP 01 , Upgradation of Katra to Bilhaur via Jalalbad-Bilgram (173 km) Contract No 24/PD/SRP-II/2002-

2003 Dt 24-3-2003 at a cost of Rs 1501 Million. y UPSRP 04 , Upgradation of Bhognipur Ghatmpur-Chaudhagra Road

( 83Kms) Contract No 25/PD/SRP-II/2002-2003 Dt 24-03-2003 at a cost Rs 700 Million y Construction / Commissioning & Maintenance of Rural Roads in the State of Bihar under the Pradhan

Mantri Gram Sadak Yojana(PMGSY). y Tamil Nadu Road Sector Project- TNSP02 - Upgradation of Roads from Nagapattinam to Kattumavadi &

New Bypass at Nagapattinam, Tituthuraipundi and Muttupet (In JV with SMJ Indonesia) at a cost of Rs. 198.77 Crores. y Improvement, Operation & Maintenance of 4 laning of Pimpalgaon - Dhule section of NH 3 on BOT basis.

(In JV with M/s. Soma Enterprise) at a cost of Rs. 1200 Million (IRCON's share).

5. Our Valued Clients (at present) Domestic

Page 37

National Highway Authority of India Roads & Building Department ,Government of Gujrat UPPWD , Nirman Bhavan , Lucknow -226001 Government of UP PWD (R&B) Govt. of Andhra Pradesh Noida & Greater Noida Industrial Development Authority Kolkata Metropolitan Development Authority U.P. State Industrial Development Corporation Bangalore Development Authority Gujarat Toll Road Limited Air Port Authority of India Ministry of Rural Development, Govt. of India & Govt. of Bihar PWD (R&B) Chandigarh State Industrial Promotion Corporation of Tamilnadu Tamilnadu Road Sector Project Highway Dept. - Govt. of Tamilnadu Ministry of Home Affairs, Govt. of India Port Trust of India International Ministry of communication of Roads & Highway Department (RHD) Department of Roads, Ministry of Works & Transport, His Majesty Govt. of Nepal PT JASA MARGA (Persero) (Indonesian Highway Corporation) Ethiopian Road Authority, Govt. of Ethiopia ,Bangladesh

Page 38

7.5 Appendix 5: Rail sector opportunity: Dedicated Freight Corridors: (Source: Railway Gazette International website accessed on 26th July 2008)

26 Jun 2008 | Raghu Dayal

Following the approval of a funding agreement with Japanese banks,

INDIA: the first

contracts for construction of the countrys two high-capacity dedicated freight corridors are due to be awarded by October, reports Raghu Dayal

There is no doubt about the urgency of substantial capacity enhancement on the Indian Railways network, as the rapid growth in both freight and passenger traffic over recent years is forecast to continue. So the announcement on April 8 that tenders are being invited for construction work on one of the country's two Dedicated Freight Corridors is a welcome development. In his budget speech on February 26 (RG 4.08 p245), Railways Minister Lalu Prasad promised that work on the Eastern and Western DFCs would get underway during the 2008-09 financial year. The special purpose vehicle established to lead the projects Dedicated Freight Corridor Corp of India Ltd - has now invited expressions of interest for the 300 km segment of the Eastern DFC between Bhaupur (near Kanpur) and Mandrak (near Aligarh). A design-and-build contract valued at around Rs30bn is expected to be awarded in September or October. This section of line is needed to relieve a major bottleneck on the existing network, and will be funded directly by IR from its own resources. Two years ago the government approved in principle the construction of the first two corridors totalling almost 2800 km (RG 10.06 p686). Dfccil was officially incorporated Page 39

in October 2006, and the 2007-08 railway budget provided Rs133bn towards the estimated Rs282bn cost, but not much tangible work has materialised so far. However, a lot has been happening behind the scenes. A preliminary engineering and traffic study by Rail India Technical & Economic Services has now been followed up by a more detailed feasibility study by the Japan International Co-operation Agency, determining the full technical specifications, agreeing the route alignments and cost projections, and looking at sources of funding. Boosting rail's competitiveness Although the volume of rail traffic is continuing to increase, driven by India's strong economic growth, IR's market share of both passenger and freight is actually falling. According to figures issued by the Ministry of Shipping, Road Transport & Highways, total freight movement in the country amounted to more than 1100 billion tonne-km in 2006-07 Of this, the roads handled around 60%, the railways 33%, coastal shipping 685% and inland waterways just 015%. Back in 1950-51, IR had no less than 89% of the freight market. Citing the overall socio-economic interest, including energy consumption and environmental conservation, the government recognises that rail capacity needs to be enhanced and more customer-focused services introduced to counter competition from other modes. The 1483 km Western DFC will link JN Port near Mumbai with Dadri in the Delhi area, and the Eastern corridor will run for 1279 km from Ludhiana to Sonnagar. These are intended to relieve two of IR's busiest main lines. The Golden Quadrilateral routes linking the four important metropolitan areas of Delhi, Mumbai, Chennai and Kolkata represent just 16% of IR's network but carry more than 50% of the total freight and passenger traffic. Much of the country's economic growth is also concentrated in this region. Described as IR's 'most ambitious project ever', the dedicated freight corridors are expected to trigger a much-needed improvement of technical standards across the network and lead to more cost-effective operation. This will see axleloads raised from between 20 and 22 tonnes to 30 tonnes on the main routes, and at least 25 tonnes on feeder lines connecting with the new corridors. Taller and wider wagons will improve Page 40

payloads. IR is looking for much higher productivity of its assets, leading in turn to a reduced unit cost of transport. The DFCs are also expected to act as a catalyst for economic growth and encourage value-added services such as the creation of logistics parks and industrial hubs along their routes. These logistics parks will enable rail to compete more effectively with road for break-bulk domestic container business, provide storage and distribution for trainload commodities, and expand its carriage of automobile movements. There may also be scope to develop piggyback business. Containers in the west Traffic on the western corridor is forecast at 38 million tonnes in 2013, rising to 106 million in 2023 and 157 million by 2033 (Table II). Corresponding figures for the eastern corridor are 69 million tonnes in 2013, 145 million in 2023 and 155 million by 2033. To a considerable extent, traffic growth on the western corridor will be driven by rising international container traffic through the ports; this is expected to increase by an average 86% year on year to 43 million TEUs by 2031. If rail takes a 35% share, the western DFC could be handling 10 million TEUs a year. The best way to handle container traffic is a source of disagreement between Rites and JICA. At an average of 90 TEUs per train, annual traffic of 10 million TEUs would require 300 trains each way per day. The consultants agree that the answer is to adopt double-stack. Rites favours conventional flat wagons and diesel locos, whereas JICA cites experience in China and elsewhere of using well-wagons to accommodate doublestack on electrified lines. This would require a catenary height of 6870 mm above rail, compared to 4800 mm for single-stack and 7470 mm for double-stack on flat wagons. Flat wagons could double the capacity per train, whereas well wagons would limit the increase to around 50%. Nevertheless, JICA estimates the electric option would generate a better internal rate of return, at 204% compared to 135% using diesel haulage. Transport costs per TEU would be around Rs15 per TEU-km for either option, against Rs18 for single-stacked boxes. The JICA report cites economic, environmental and energy issues in support of electrifying both the eastern and western corridors, pointing out that environmental clearance will be one of the essential requirements in Page 41

any project appraisal by international lending agencies such as the World Bank, Asian Development Bank and Japan Bank for International Co-operation. Signifying its tacit acceptance of an electric option, IR has asked the Research, Development & Standards Organisation to carry out trials with double-stack container trains under the wires. Trials are currently underway on the Jakhapura - Daitari section of the East Coast Railway, where trains carrying two containers on flat wagons are being tested on this heavy haul mineral line. Specifications agreed Technical specifications for the new lines have largely been firmed up. Both routes are being designed for a maximum speed of 100 km/h and a 30 tonne axleload. They will be laid with UIC 60 kg/m rail and 90 kg/m UTS head-hardened rail on the curves. Minimum main line radius will be 700 m. The rails will be carried on precast concrete sleepers, laid at 1660 per km on the main line and 1540 per km on loop lines and sidings. Turnouts will have cast manganese crossings and concrete bearers. Main line and junction turnouts will have a 1 in 12 angle to permit diverging speeds of 60 km/h, but the loop turnouts will be 1 in 85 with a diverging speed of 45 km/h. DFC tracks would be laid at 55 m spacing, and at least 6 m from the nearest conventional track. Whereas Rites favours building the lines for 1500 m long trains, JICA believes that 750 m loops at intervals of 30 to 40 km would provide sufficient capacity for the foreseeable future. Shorter loops would also reduce the land take, and increase line capacity, it says. Going against current trends towards full grade separation, JICA rejects Rites' call for the construction of road overbridges throughout, arguing that level crossings with automatic detection systems, would suffice in urban areas where bridge construction could be difficult and would cause hardship for non-motorised road traffic. With 745 road crossings planned for the western corridor and 580 for the eastern, this is a potentially significant issue. JICA recommends that freight trains should run to a firm timetable to ensure a high quality of service, particularly for intermodal business. Removing the requirement for an assistant driver in favour of single-manning of locomotives will cut costs, as will the elimination of brake vans through the use of end-of-train detectors. JICA also favours Page 42

an advanced train control system including CTC and balises for train detection. A fleet of six-axle electric locos rated at 9000 hp is envisaged for the container trains and eightaxle locos of 12000 hp for the bulk freight trains. Looking at operational and managerial aspects of the project, JICA recommends that the DFCs should have a lean management organisation segregated from IR's existing structure; this would contribute to reduced operations and maintenance costs. Proposed staffing levels are in fact higher than those applying in Japan, but still less than half the number of people that IR currently employs for the same tasks (Table IV). The Japanese study team also looked at the socio-economic impact in each of the 37 districts along the two routes, calculating that 112 households and 237 squatters would have to be resettled for every 100 route-km. This raises questions about compensation, resettlement costs and job opportunities. The issue of squatter encroachments is particularly severe on the western corridor between Vadodara and the Mumbai area, with 1200 houses to be cleared in the 80 km between Dadri and Rewari alone. The 92 km route through the Mumbai suburbs from Vasai Road to J N Port has a further 560 dwellings. Nearer to Vadodara, up to 660 ha of farmland must be acquired to create the corridor through the fertile coastal belt. Squatters are also a big issue in the area around Delhi's main container terminal at Tughlakabad. This is less of a problem on the eastern corridor except where bypass lines are planned around Tundla and Aligarh. Costs and financing Compensation for land acquisition is one of several elements that are driving up the cost of the project. In its preliminary study, Rites estimated the cost of building the western corridor at Rs166bn and the eastern at Rs116bn. However, JICA now puts the total for both routes at Rs559bn. This includes Rs269bn for construction, Rs100bn for electric locomotives and Rs61bn for land acquisition, as well as financing and management costs, inflation and contingencies. JICA has recommended implementing the project in three phases, and financing it from a number of sources: internal generation by IR (at 65% interest), a low-interest loan from JBIC (04%), other international financial institutions (6%) and commercial Page 43

borrowing (12%). For the proposed funding split, the debt service coverage ratio would be around 19, enabling Dfccil to earn a return on equity of around 11%. In its review of likely funding sources, JICA compared the DFCs with recent railway construction projects in China. CR built up a Railway Development Fund by levying a toll of 0028 yuan/tonne-km on all traffic, and also issued government bonds, although the lion's share of domestic debt has been raised through the National Development Bank. Local and municipal railways in China have been able to attract private and local government equity. Funding of 262bn yuan for the railway to Tibet included a 75% contribution from central government and 25% from the Railway Development Fund. Conversely, the Beijing - Shanghai high speed line will only have a 4bn yuan equity contribution from the government. Similar sums are to be raised by issuing stock in overseas markets and the sale of foreign bonds. The National Development Bank is contributing 15bn yuan, another 12bn will come from as donor loans, and 35bn yuan as international loan from commercial banks. IR currently favours funding the DFCs from its own equity, supplemented by borrowings as necessary. It has already committed its one-third equity contribution to enable work to start on the eastern corridor. There is a strong likelihood of World Bank providing funds for the this route, as well. By contrast, JBIC has shown particular interest in the Western corridor, and will probably provide funding for the initial section of this line between Rewari and Vadodara.

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