Structure of Presentation
1. Madhya Pradesh – Economic Indicators
2. PPP Framework of Madhya Pradesh Govt.
3. About Madhya Pradesh Road Development Corporation
 Evolution of MPRDC
 MPRDC project portfolio
4. Financial Models for Project Financing
5. Innovative PPP Projects
 Innovative PPP Projects undertaken by MPRDC
 Value for Money – Significance
 Innovative PPP projects undertaken by other departments
6. Swiss Challenge Policy
7. Venture Capital Fund
Madhya Pradesh – Economic
Indicators
Madhya Pradesh – ‘The heart of India’
India – An emerging economy…
Gwalior
400KM
500 KM
Bhopal
200 KM
Delhi
Indore
Madhya
Pradesh
Kolkata
300KM
Jabalpur
GSDP- INR 2488 billion for FY14
Mumbai
Pune
Second largest state in India
- 308,252 sq. Km.
Bangalore
Chennai
Major Cities
Road connectivity
between major &
distance in kilometers
Current Population – 75 million
GSDP is at constant prices, base year FY05
Consistently strong Financial fundamentals
18% average growth rate in Tax Revenues during
FY09-FY14
6 times the growth in Capital Expenditure during
Consistently
FY 04- FY 14
revenue
Expected reduction on Interest payment burden
from
22% in FY04 to 7% in FY14
surplus since
2004-05
22% expected outstanding debt* in FY14
(limit under FRBM Act- 34%)
*(as % of GSDP)
PPP Framework of GoMP
PPP Framework of MP Government
 Cabinet Committee on PPP under Chairmanship of
Hon’ble Chief Minister
 State Level empowered Committee on PPP under
Chairmanship of Chief Secretary
 PPP Cell in Directorate of Institutional Finance
 VGF as well as non VGF models followed for various
sectors.
 DBFOT Model of PPP and MCA are adopted
 Two stage bidding RFQ and RFP
 MP Infrastructure Investment Fund Board
 Estabished for support of unviable infra projects
 VGF contributon of GoMP released through
MPIIFB
About MPRDC & Its Evolution
Transition to New Regime
Background
New Regime
1. MP was known for bad roads
2. Improper design based on traditional
approach.
3. Budget driven construction methodology in
place of demand driven.
4. Poor fund flow for projects – low budget
outlay.
5. Result - Poor Connectivity, low industrial
investment, sluggish business growth
1. Government-embarked on program to
revamp road sector.
2. M.P. Bridge Corporation Ltd.
3. Revived in December 2000 and
4. Given mandate to upgrade highways on PPP
5. Considering poor traffic, grant was made
bidding parameter.
6. Madhya Pradesh Infrastructure Investment
Fund Board (MPIIFB) created to arrange funds
for grant.
7. Rs. 500 Crore outlined for the purpose.
8. Approx. 2000 km. Road length identified to be
developed in phases.
About Madhya Pradesh Roads Development
Corporation
 Incorporated as wholly owned State Govt. Company under
Companies Act 1956, in July 2004.
 State Highway Authority under the State Highway Act
2004.
 Mandated to develop, regulate and maintain highways with
focus on PPP.
 The Chief Minister of MP is the Chairman, Minister of
Public Works Department & the Chief Secretary are the
Vice Chairmen, the Secretaries of the PWD, Finance ,
Forest, Urban Affairs and Mining Dept. are members on
the Board.
 MD, MPRDC is also a Director.
Shift in Strategy
 Takeover of entire state highway network
including maintenance.
 To overcome the limitations of existing PPP
model new financial models introduced.
 All remaining state highways were taken for
development in different stages.
 Important Major District Roads also taken up to
complete the network under PPP.
 Performance based maintenance introduced
through OMT.
 MOU signed with MORTH for reconstruction of
National Highways.
MPRDC Project Portfolio
Road Portfolio MPRDC
Category
Total Length
(In Kms)
MPRDC
(In Kms)
National Highways
4709
1443
State Highways
10297
10297
Major District Roads
19574
5032
TOTAL
34580
16772
Project Portfolio
MODEL
BOT (TOLL)
BOT
(TOLL+ANNUITY)
BOT (ANNUITY)
ADB FUNDED
PROJECTS
REGULAR
CONTRACT/ EPC
OTHERS
GRAND TOTAL
NH
SH
MDR
OTHERS
6744
11227
96.73
ROB/RUBs
Border Check posts
Singrauli Airport
OMT
-
2005
970.16
-
-
101.04
2321.11
Medical Colleges ARS
-
-
4707
(ADB-I,II,III)
3000
(ADB-IV)
3484
1821
-
-
3000 (JICA
ODA Loan)
10228
19861
9388
TOTAL
- 1330
- 1094
- 250
- 90
20832
2975
760
12.50
3195
-
7707
-
5305
Building Works
4590
- 1053
4053
44067
In INR Crores
OUR PROJECT COST SHARE
EPC, 17065,
39%
BOT (ANNUITY),
3194.65, 7%
BOT (TOLL),
20832, 47%
BOT
(TOLL+ANNUIT
Y), 2975.16, 7%
EXTERNALLY AIDED PROJECTS
Loan No.
Length(In km)
Project Cost
(US $)
Status
1959-IND
MPSRDP
1602.59
190 Million
Completed
2330-IND
MPSRSP-II
1701.52
400 Million
Completed
2736-IND
MPSRP-III
1080.37
375 Million
Nearing
completion
ADB-IV
1500 of MDR
500 Million
Loan Activated
J.I.C.A ODA
Loan
1500 of MDR
500 Million
Proposed
Financial Models for PPP
PPP- Financing Models
Invite private investment by providing grant/ annuity to/ premium by the
concessionaire on competitive bidding
BOT (Toll)
BOT (Toll + Annuity)
Build- Operate Transfer
Public Private
Partnership Models
BOT (Annuity)
OMT
Deemed Shadow Fee Model
PPP- Financing Models
Engineering Procurement & Construction
External Funding Agencies
(Asian Development Bank)
Engineering Procurement &
Construction
State Budget
Initiatives of MPRDC – BOT MODEL
 Pioneer in the field of road sector development
through Public Private Partnership in India
 Adopted DBFOT Model of Tendering based on Model
Concession Agreement of Planning Commission of GOI.
B
 First agency in the country to get VGF from
GoI.
 Under VGF scheme of GOI

o
40 % of project cost is sanctioned to make
projects viable.

20% is given by GoI.

20% is given by the State Government.
 GoI has sanctioned INR 684.2 Crores as VGF for
24 BOT projects of MPRDC.
 In several Projects MPRDC receives Premium.
 VGF/Premium is the bidding criteria.
 Distance based user fee (Toll)
T
Initiatives of MPRDC BOT (Toll + Annuity) Model
 Hybrid Model of BOT (Toll) & BOT(Annuity).
B
 Formulated to increase Viability of the projects
which are not viable on pure toll.
 Toll as a sweetener.
o
 Concession Period is kept 15 years including 2
years of construction.
 Six Monthly Annuity is quoted by the bidders.
T
 Annuity is the bidding criteria.
 Annuity is the deferred payment over a period
of 13 years as per payment schedule defined in
Concession Agreement.
 Incentive for early completion as a bonus along
with first annuity.
 Penalty for delay as a reduction of annuity.
+ Annuity
Initiatives of MPRDC - BOT (Annuity) Model
 Formulated to implement the projects
which are not viable on pure toll or Toll+ Annuity
Models.
 Concession Period is kept 15 years
including of 2 years of construction.
 Six Monthly Annuity is quoted by the
bidders.
 Annuity is the bidding criteria.
 Annuity is the deferred payment over
a period of 13 years as per payment
schedule defined in Concession Agreement.
 Incentive for early completion as a bonus
along with first annuity.
 Penalty for delay as a reduction of annuity.
BOT(OMT) Model

Roads build under Asian Development Bank
assistance and state budget taken for
maintenance and tolling under this mode

Concession Period – Project specific,
normally 9-12 years

O
OPERATE
M
Concessionaire to undertake management,
operation & maintenance of Highways

Augmentation of facility to be done

Construction, monitoring and inspection by
Independent Engineer.

Tolling only on commercial vehicles.

Passenger vehicles exempt including buses.
T
MAINTAIN
Deemed Shadow Fee Model

Deemed shadow Toll is given in lieu of
exempted vehicles.

Acts as sweetener to increase the viability
of project with maximum permissible VGF
of 40%.

It is given in addition to maximum VGF of
40% with maximum limit of 10%.

This will be contributed by State
Government.

Proposal of deemed shadow fee model is
pending with DEA GOI.
OPERATE
MAINTAIN
Innovative PPP Projects
Innovative Projects under PPP
Projects Under Implementation
Projects Under Development
• Border Check Post
• Accident Response System
• Railway Over/Under Bridge
• Medical Colleges
• Singrauli Airport
Innovative PPP Projects – Border Check Post
Border Check Post
 Up-gradation and integration of 24 Border Check
Posts in MP covering all State border crossings
 An integrated, real time system for Transport,
Commercial Tax, Forest, Mandi & Mining
departments
 Purpose of the project
To increase the revenue of State Government.
To control overloading & damage to state roads.
To reduce leakage & corruption.
To use technology for reduction in transaction
time and ensuring complete transparency.
 Check posts to serve as facilitation centres
AUTOMATION SYSTEM
CENTRAL
ALL TRANSACTIONS,
CONTROL FACILITY VEHICLE PICTURES
SURVEILLANCE CAMERA
DIMENSIONS MEASUREMENT EQUIPEMENTS
License Plate
Reader Camera
Barrier &
Traffic Lights
Control
RFID
Reader
Lane
Traffic
Controller
Lane Computer
WEIGHING
CONTROLLER
Automatic Vehicle
Classification System
WEIGHBRIDGE
CCF GWALIOR BUILDING
Border Check-post e-Data Capture Components
Automatic Vehicle Classifier
Automatic Number Plate Reader
30
Electronic Weigh Bridge
30Light
Automatic Boom Barrier and Traffic
Innovative PPP Projects – Under Development
Railway Over/Under Bridge
 Development of ROB’s with more than 1 lakh T.U.V traffic in the state on PPP.
 Total 34 ROB’s in two parts are being taken up costing INR 1349.74 Crores .
 First Phase includes 16 ROB’s/14 LHS’s cleared by DEA with grant of 40%. Bids
invited but no Bids received.
 Second phase 18 ROB’s/ 9 LHS’s is submitted to DEA.
 Railway will provide 50% share upfront & Balance 50% will be met through Toll
collection plus viability gap funding by state government.
 Railway will provide 50% share upfront & Balance 50% will be met through Toll
collection plus viability gap funding by state government.
Innovative PPP Projects – Under Development
BUILDING CONSTRUCTION & MAINTENANCE OF MEDICAL COLLEGES
ON BOT (ANNUITY)
 Location of Project: Vidisha, Ratlam & Shahdol
• Construction period – 2 years
• Concession Period – 10 years from the date of completion
• 40% project cost to be paid during construction in 5 installments on the basis of
project milestones
• Remaining cost to be paid after completion in six monthly Annuities during 10 years
• First annuity to be paid six months after COD Interest @ bank rate plus 2% with
annuity payments during O&M period
• O&M expenses to be paid with annuity at the fix rate of 1% of project cost during first
three years, 2% during 4-6 years and 3% during remaining years.
Innovative PPP Projects – Under Development
Accident Response System
• Implementation of ARS system on PPP mode .
• Technical Assistance through ADB for capacity building in road safety.
• Accident Response System & Traffic Management Centre including operation &
maintenance for 5 years with estimated cost of Rs.12.50 Crore is being set up.
• ARS includes centralized call center, GIS based automatic vehicle tracking system
(AVTS), Computer aided dispatch system, Traffic Management Centre.
• Trial run started from 24th Dec 2014. State wide number 1099 and Citizen portal
available for assistance.
Our Strengths - MPRDC
 Transparency in bidding process.
 Lender’s faith in MPRDC ensuring Financial Closure of
BOT Projects.
 Strict Quality Control Guidelines.
 Adequate Budget provision for Annuity & VGF payments
by the State Government.
 Onboard Panel of Experts for Superior delivery
 Political commitment & support.
 Land Acquisition and Environmental Clearances are
planned and executed well in advance.
 Chief General Manager at Head Office & Divisional
Manager coordinate with District Administration.
Ensuring Quality - MPRDC
 3-tier system of checking: PMC of Concessionaire >
Independent Quality Control Engineer > Officers of
MPRDC
 Quarry approval after thorough testing.
 Field & lab testing is mandatory as per the norms of
MORTH.
 Use of Graders for maintaining the camber at sub
grade/GSB level.
 Crushed GSB
 Layer -1 (drainage) Coarse graded.
 Layer -2 Close graded.
 WMM in place of WBM with pavers.
 Use of Sensor Paver in place of mechanical paver for
BT works.
 Use of RMC plant in place of normal concrete mixers.
State Highway Fund
 State Highway fund established under an Act for investment in highways & infrastructure
projects.
 Executive Committee under the Chairmanship of Chief Secretary to administer the fund.
Sources of Fund
Application of Fund
All payments of Premium
For Maintenance and Repair of
Highways
Proceeds towards encashment of
Performance Security or Bid
Security
For Meeting any Development
Cost of Highway or Infrastructure
Project
All returns on investments made
out of the Fund
For Project Preparation, Pre
Tender Activities, Cost towards
Utility Shifting, Land Acquisition
Value For Money – Significance in MPRDC
Value for Money: Applications at MPRDC
 During VFM analysis of MDRs, 22% Annuity
for BOT (Annuity) Projects was envisaged.
 After bidding, the projects awarded on
Annuity of 18.30% under BOT(Annuity)
projects & 12.88% as on average under
BOT (Toll+Annuity) projects.
Parameter
EPC
BOT-Annuity
NPV calculated
2838.8
2495.65
Value for Money
( NPV of EPC –NPV of Annuity)
343.16
Figure in INR Crores
Value For Money Analysis
Project Details
Total Project Cost
:
Total Length of the Projects :
Average Annuity (actual) :
Parameters
INR 2964.83 Crores
1520.03 Km
18.30% of Project Cost
EPC
BOT -Annuity
Construction Cost
INR 3705.88 Crores
(Escalation by 25%)
INR 2964.83 Crores
(Including 25% of TPC for
financing cost, contingency &
other charges)
Construction Period
2& ½ Years
1 & ½ yrs
O & M Exp
Routine Maintenance 0.004M$/km/p.a.
-
Periodic Maintenance 0.02M$//km/p.a..
-
Electricity & Patrolling 0.002M$/km/p.a.
-
Value For Money Analysis
Parameters
EPC
BOT -Annuity
Interest
9.00%
13%
Debt: Equity Ratio
100
70:30
Funds Requirement
Immediately
6 months after COD
Discount Rate for NPV Calculation
15%
15%
Loan Repayment Period( in years)
10
10
Quality of Roads
Average
Excellent
Efficiency of private sector
Not availed
Availed
Technology
Traditionally applied
Latest available
Setting up of full infrastructure & staff
Required
Not required
Innovative PPP Projects in Other Sectors
Innovative Projects under PPP
Projects Under Implementation
Projects Under Development
• Logistic Hub at Pawar Kheda
• Construction of Steel Silos for Storage of
agricultural commodities
• Power Transmission
• Urban Transport – City Bus Service
• Solid waste management
• Rural Water Supply
• Air Taxi
Innovative PPP Projects - Under Implementation
Facilities Planned
Setting up Composite Logistics Hub at
Pawar kheda, Madhya Pradesh
 Integrating the value chain from Procurement to
•
Rail Terminal
•
Warehousing
•
Container Freight Station
•
Cold Storage
•
Grain & Horticulture
Logistics under one umbrella
 Implementing Agency- Agricultural Marketing
Board
 Land - 115 acres land
 Concession Period -33 years, extendable by 15
years
 PPP Mode- DBFOT
 Project Cost – INR 136.84 Crores
 Bidding parameter- Highest Upfront Premium
Procurement
•
Agro & Horticulture Services
•
Market Information Systems
•
Trading & Collective
Marketing
•
Negotiable Warehouse
Receipts
Innovative PPP Projects - Under Implementation
Considerations For Determining PIA for logistic hub

Cargo originating and consumption clusters

Consolidation and distribution centers

Location of competing facilities

Potential of attracting transshipment cargo
Key Findings




Major cargo consumption centre in Madhya Pradesh are
outside 200 kms of project site except Bhopal
Originating clusters within PIA include locations like
Mandideep, Budhni, Itarsi, Piparia etc. All are within 100
km from proposed Logistics Hub
All consumption centers outside 100 Km radius have
presence of competing facilities
Service demand and supply gap within these facilities
Conclusions

PIA area considered restricted to radius of 100 km, though
for certain commodities PIA might extent beyond
considered radius
PROJECT TRANSACTION STRUCTURE
Develops Common Infrastructure & Basic Facilities
Agency 1
MPWLC
Land Sublease &
Development Agreement
of 32 years
Private Player
Agency 2
Upfront Payment
The Project was
successfully closed with
Kesar Terminals Ltd.
offering approx 14 crore
premium to GoMP.
Engages individual Agencies
Upfront premium
or Development
Charges to
private player
Agency N
Individual Agencies
further develop,
operate & maintain
various components
of project
Innovative PPP Projects - Under Implementation
Setting up of Steel Silo’s at ten locations
 50,000 Metric Tonnes capacity of
Steel Silo at
each site.
 GOI to support the Project through Viability Gap
Funding (VGF) up to 20% of Total Project Cost.
 Government of Madhya Pradesh to support the
Project through:
o State portion of VGF up to 20% of Total Project
Cost to support O&M if required.
o Providing 7 acres of land.
o Guaranteed Storage Charges to be paid to the
private developer for first 10 years (in
Concession Period of 30 years) at 100%
utilization of the proposed project capacity.
 Average cost of each Project facility is around INR
38.56 Crores
Innovative PPP Projects - Under Implementation
Power Transmission – On DBFOT
 Construction of 400 KV (DCDS) Transmission Line
between Satpura and Astha
 Evacuation of Power from 2 x 250 MW extension unit at
Satpura Thermal Power Station)
 Grant: Rs. 60.75 Cr. (Rs. 56.54 Cr as Equity Support from
VGF and Rs 4.21 Cr as O&M Support)
 Completion period: 15 months
 Revenue Stream:
Monthly Fee (“Unitary Charge")
20% of actual wheeling charges (additional revenue) for
transmission for other parties, on spare capacity
availability (80% of additional revenue for Authority)
75% Revenue from Advertisement on poles
 Unitary Charge for 1st year: INR. 3.15 crore / month
Innovative PPP Projects – Under Implementation
Urban Transport – City Bus Service Indore
 Objective: To create a specialized and effective
agency to monitor and provide intra-city public
transport system
 Self-financing and revenue generating model for
bus stops.
 Fully computerized ‘Ticket Vending system’ &
Vehicle Tracking System
 Concession Period: 5 years
 Estimated Cost: Rs. 59.75 crore
 Financing: 60% : AICTSL & 40% : Operator
 Revenue Stream: Per bus monthly income:
 50% : Fare
 30% : Advertisement
 20% : Passes
 Status: Project under operation. 111 buses
operational on 15 routes
Innovative PPP Projects
Regional Integrated Solid Waste Management Project on DBFOT
 Implementing SWM in smaller ULBs is neither operationally nor financially viable.
 Door to door collection, transportation, segregation, scientific treatment and
disposal of waste
 The processing technology will be decided by the private operator.
 Revenue for concessionaire for Tipping fee from ULBs and Sale of by-products or
any useful components of Waste.
 Full guarantee by GoMP for tipping fee payment to Private Operator
 User Fee: 60 Rs for APL and 30 Rs for BPL in Municipal corporations and Councils;
Rs 40 for APL and Rs 20 for BPL in Nagar Parishads
 Large ULB has been chosen as a lead member and smaller ULBs within a distance
of 50-80 kms as consortium members.
 The landfill site shall be at the headquarters of the lead member
Innovative PPP Projects – Under Development
Multi Village Rural Water Supply Schemes
(MVRWSS) in Madhya Pradesh on DBFOT
Sourcing from Intake well up to house
service connection
Operation & Maintenance for 20 years
concession period.
 State Govt. to state predetermined water
charges.
 Capital grant of 40% to be provided to
meet viability gap.
 Bidding parameter: V.G.F.
 Water charges for Bulk Supply to be paid
by GoMP
Innovative PPP Projects – Under Development
Air Taxi Services
 India’s first dedicated state level air
connectivity between Bhopal, Indore,
Gwalior and Jabalpur.
 3-4 seats underwritten on sectors within MP
operations at pre-determined rates.
 Tariff other than underwritten seats to be
fixed by operator
 100% re-imbursement of VAT on ATF
uplifted in the State.
Innovative PPP Projects – Under Development
Air Taxi Policy: Salient Features











Subsidy per flying hour shall be applicable
Minimum 100 flying hours flying per month to be eligible for subsidy
Subsidy shall also be available in case of interstate operations (max 40%).
Subsidy shall not be available if the aircraft connects two cities of another state.
Minimum of 4 cities to be connected with in Madhya Pradesh
VAT reimbursements shall be made on the ATF uplifted from within the state for approved flight
schedule
The government shall reimburse the ambulance and fire brigade charges.
Security shall be provided free of charge for airports owned and controlled by the state
government
The maximum amount of subsidy per month shall not to exceed Rs.1 Cr no subsidy would be
paid in case of zero load flights (to & fro)
MOU period will be of 3 years and extendable up to 2 years
Atleast 2 aircraft of minimum 9 seating capacity to be operated. In case, if the operations are
started with one aircraft initially, then, the second aircraft should be inducted with in period of 2
months.
Swiss Challenge Policy
Swiss Challenge Policy

Under open and transparent
process of Swiss Challenge, long-term
financial solution will be provided by
inviting expertise and capital from private
and public sectors.

The sectors and projects not covered by
existing PPP framework will also be
augmented through this.

Initiative can also be taken to identify and
implement projects for providing social
and basic facilities.

The right of first refusal will be given
to the proposer
Innovative PPP Projects Under Swiss Challenge
Rural BPO
 Establishing 15 Rural BPOs across M.P to create jobs in IT/ITES sector by provision of
training for skill development.
 Project Commitment: INR 130.62 Crores required from Investor with government to
underwrite business for 18 month
Restructuring of Industrial Water Supply in Dewas
 With total mandate to deliver 23MLD, currently project is delivering 3-5 MLD
 Project Restructured under Swiss challenge scheme to be implemented under PPP
 Total Project Cost of INR 485.16 Crores and 80% of debt due of previous project.
 Benefits of Swiss Challenge
 Concessionaire (existing or new) shall not be paid for any Debt Due and the existing Debt will be
serviced by him from the same revenue stream.
 In Swiss challenge mode, the maximum water charges payable shall be obtained through the open
bid and the existing Concessionaire will be asked to match the bid.
 Consumers continue to get water supply at the same rate as per the current Agreement
Venture Capital in Madhya Pradesh
Venture Capital Fund of GoMP
•
GoMP
is creating a INR 101.14 Crores
Venture Capital Fund (VCF) for MSME sector.
•
The fund aims to help new and talented
entrepreneurs, who cannot set up innovation-based
new enterprises due to lack of adequate share
capital
•
GoMP will contribute INR 20.22 Crores as
promoter and balance amount of INR 80.86
Crores would be raised from financial
market.
•
Inviting to contribute to the Fund as Investors
(Limited Partners)
•
Domestic investors - Insurance Companies,
Banks, Corporates etc.
•
Overseas Investors – VC Funds, Private
Equity, Sovereign Funds, Pensions Funds,
Financial Institutes, DFIs etc.
Structure of Asset Management Company
Government of Madhya
Pradesh
Maximum 49%
(Share Capital)
Financial Institutions,
Banks, International
Financial Agencies &
Corporates etc.
Minimum 51%
(Share Capital)
Asset Management
Company
(Share Capital)
•
GoMP shareholding will be capped at 49% in the company.
•
The minimum shareholding of the Investors/Financial Institutions will be kept at 51%
•
The proposed structure will lead to enriched operational and managerial flexibility.
•
VC Investors may be offered Directorship in the AMC in proportion to investment
•
AMC managed by Expert Venture Capitalist and Professionals from the Industry
Thank you
Vivek Aggarwal IAS
Secretary to Government of Madhya Pradesh,
Chief Minister’s Office,
Managing Director, Madhya Pradesh Road Development Corporation
Commissioner, Institutional Finance, Government of Madhya Pradesh
Office: +91-755 2765217; 2441062 | Fax: +91-755 2765192; 2441101 |
email: mdmprdc@mp.nic.in ; vivagg_2005@yahoo.ccom
Website: http://mprdc.nic.in/