India plans to tender multi-billion rail and road PPPs

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India plans to tender multi-billion rail and road PPPs

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Indian Railway Stations Development Corporation (IRSDC) has announced that the redevelopment of Habibganj railway station, located in Madya Pradesh, will be complete by 31 December 2018 - a significant milestone in the authority's first public-private partnership. The redevelopment is being carried out by Bansal Group, who signed a contract for the project with IRSDC in July 2016.

The project is the flagship of IRSDC and the Ministry of Railways' INR1 trillion (US$15.1 billion) station redevelopment plan. It belongs to the first phase of the plan, along with 50 other stations. It is thought that the Ministry intends to finance the plan, which requires INR40 billion (US$602.7 million) investment, through contracting private sector entities through build-operate-transfer (BOT) agreements.

Pre-bid meetings have already been held for three stations: Anand Vihar (estimated cost: INR2 billion (US$30.1 million)), Bijwasan (INR3.5 billion (US$52.7 million)) and Chandigarh (INR1.3 billion (US$19.6 million)).

At the same time, the National Highways Authority of India (NHAI) is planning to tender 25 toll-operate-transfer (TOT) projects following the success of the country's first TOT tender earlier this year.

Macquarie Asia Infrastructure Fund II won the contract to toll, operate and transfer nine national highways, following an oversubscribed tender which resulted in US$1.6 billion cash for NHAI.

The authority now intends to auction 25 more highways, which collectively span 1,640km and require US$3 billion investment, to private parties in three tranches. The tenders for the first two tranches will be launched next month, and the third in June or July. 

The first tranche will include highway stretches in Odisha and West Bengal; the second will cover Rajasthan, Gujarat, Tamil Nadu and Telangana and the third tranche projects will be from Uttar Pradesh, Bihar and Jharkhand.

These announcements follow a recent Economic Survey, which found that India will need about US$4.5 trillion in the next 25 years for infrastructure development, of which public funds will only be able to cover about US$3.9 trillion. The Indian government is thus looking to the private sector to fill this funding gap.

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