Recently, the India Infrastructure Company Ltd (IIFCL) has bagged sovereign guarantees for raising Rs 5,000 crore for funding big-ticket projects in the country and some MoUs were signed by IIFCL with the three public sector banks — Canara Bank, Vijaya Bank and Syndicate Bank, with an option of raising the funds either from the domestic or international markets.
This will be also done though several global venture capital funds by extending the funds to the IIFCL either direct debt or in the form of equity.
IIFCL's funding for projects would be in the form of direct participation in project loan syndications along with the banks or in the form of refinancing support to the lending institutions. This was because bank finance for infrastructure was likely to face asset liability mismatch problems in view of the long lending tenures. The MoUs with the three banks involved providing IIFCL's support in their project lending efforts. This included participation in big-ticket loan syndications. IIFCL would function on the basis of the credit appraisal and due diligence reports of the banks.
Till date, Canara Bank was lead bank in 13 projects, Syndicate Bank was the lead in four projects and Vijaya Bank was the syndicate leader in two projects. So far, IIFCL had signed 10 MoUs with banks and financial institutions. Banks such as Canara Bank and Vijaya Bank already have substantial exposures in infrastructure projects that include power, roads, telecommunication and urban projects. as for instance, Canara Bank now has an exposure of Rs 12,000 crore in the sector and it intended pushing up this figure to Rs 20,000 crore by this year end. Vijaya Bank's exposure is Rs 3,500 crore in the sector.
Some concerns like assets liability mismatches (ALM), other lending risks, risks in project financing, the risks involved interest, liquidity and credit risks etc. could be eliminated with the participation of IIFCL, as ther would be no fixed rate lending for projects. Lending would be on commercial terms, that could involve floating or periodic resets in loan covenants.
The curent statistics reveal that funding requirements for infrastructure was estimated at $360 billion or about Rs 3 lakh crore per annum. Even assuming a conservative debt equity ratio of 3:1, bank funding would have to be at least Rs 2.25 lakh crore each year. As per reports, these investments in infrastructure were necessary to sustain the high GDP growth of 9 per cent.
Hence, I feel that there is no risk associated with the funding source since as mentioned above, small capped players will play their role safely with the aid of big players like IIFCL.
Explicitly modern concession agreements speak about the significant role played by lenders in deciding the flow of funds and ensuring their right and timely utilization. Effective implementation of 'Equador Principles' in Indian Infrastructure would fetch long term benefits. Lenders ofcourse would be able to contribute to streamline the projects since they are a fundamental part of Project building. The Government has also realized these facts and would be keen to keep up with the pace of FDIs and hence should encourage more participation of International + National Financial Institutions in Indian Infrastructure Projects.
It is upto the Policy Makers and Decision Imposers to take an advantage of this current scenario before the fruits are ripped off!!!!
Monday, October 29, 2007
Sunday, October 28, 2007
Negotiations....
There is no doubt that pre-planning and indepth analysis will definitely lead to making project a success. When we deal with construction Projects, we may encounter 'N' no. of parties with their 'N' different opinions. Its very difficult to come to conclusive terms. So often disputes arises and 'negotiations' become a very deterministic tool to approach the problem / difference of opinions.
Time is the essence of any project but as long as time is utilized effectively in resolving the issues, the project success can still be guaranteed. The main theme behind negotiations lie in understanding the issue at the root level rather than simply blabbering about issues. Most of the times issues arise due to miscommunication, false information, misconceptions, incomplete data, etc. that could be exemplified by our case studies. Conoco and NGOs could have used efficient and fair negotiations with the indegenous people to come at consensus. At times, the absence of regulatory or mediatory agency could help in sorting out the matter. It can be stated from the "Game" that was demonstrated last week.
People should be really aware about their requirements and they should consult the right people in right way by means of right negotiations at the right time.
Some of the organizational behaviour qualities like attitude, leadership, teams, cross functional groups, can highly influence the 'tactics of negotiation', which if utilized in proper direction, could fetch successful results.
The successful married life of couples who understand and adjust with each other and negotiate clearly to resolve their problems, can be a paradigm for the success of negotiations on construction projects.
Time is the essence of any project but as long as time is utilized effectively in resolving the issues, the project success can still be guaranteed. The main theme behind negotiations lie in understanding the issue at the root level rather than simply blabbering about issues. Most of the times issues arise due to miscommunication, false information, misconceptions, incomplete data, etc. that could be exemplified by our case studies. Conoco and NGOs could have used efficient and fair negotiations with the indegenous people to come at consensus. At times, the absence of regulatory or mediatory agency could help in sorting out the matter. It can be stated from the "Game" that was demonstrated last week.
People should be really aware about their requirements and they should consult the right people in right way by means of right negotiations at the right time.
Some of the organizational behaviour qualities like attitude, leadership, teams, cross functional groups, can highly influence the 'tactics of negotiation', which if utilized in proper direction, could fetch successful results.
The successful married life of couples who understand and adjust with each other and negotiate clearly to resolve their problems, can be a paradigm for the success of negotiations on construction projects.
Monday, October 15, 2007
multi cultural projects
hi all,
There's an interesting article about the risks faced in a multi-cultural venture in an infratructural project. There has been a rise of multicultural project teams, widely separated by geography with team members from different cultures and backgrounds working together to achieve a common objective, in past few years. The key factors affect the success of these projects can be as follows:
There's an interesting article about the risks faced in a multi-cultural venture in an infratructural project. There has been a rise of multicultural project teams, widely separated by geography with team members from different cultures and backgrounds working together to achieve a common objective, in past few years. The key factors affect the success of these projects can be as follows:
- The lack of physical proximity is the first key factor. The geographical separation of a project team poses difficulties of communication.
- For the project manager of a multicultural project, there can be difficulties in assessing the skills and competencies of team players. Training and education standards and the relative value of qualifications can be very different in different parts of the world. Job methods vary and can be different because of specific local conditions such as working in heat, earthquake risk or local trade practices.
- Mobility can be a problem that affects competence: it can be difficult to find people who can work effectively away from their home environment.
- Another key issue affecting multicultural project teams is language. A project must have a common language to ensure a common understanding. In many situations, this means that non-native speakers are working in their second or third language with a consequential loss of effectiveness, as well as increased risk of mistakes or misunderstanding. In situations where interpreters or translators are required, this has the effect of significantly slowing down the whole communication process and is very costly. Even where team members of different nationalities speak the same language, there can be difficulties. Words in American English can have totally different meanings to English in the UK, whilst conventions and abbreviations can often be very different.
- Risk is present in all projects but becomes more pronounced in global projects where there are often new risks, particularly if the project is being built in a part of the world where security is an issue. In some countries, contract law is not well established and other local laws may not be well understood by other nationalities.
- Risks in communications and risks arising from misunderstandings and misinterpretation are much greater.
- Risks in communications and risks arising from misunderstandings and misinterpretation are much greater.
- There are differences of standards in many countries that can extend to attitudes towards health and safety. Design standards can vary and local factors such as climate, topography and infrastructure can dramatically affect a project. Local customs can also be bewildering, especially for staff living overseas where there might be different attitudes towards gifts, entertainment and hours of work.
- In many countries of the world, different ethical standards apply. This affects attitudes towards the law and, indeed, national laws can be very different in different territories. In some countries, bribery and corruption have become institutionalised and are the only means by which some local officials can earn a living.
Monday, October 8, 2007
PPPs in US infrastructure
This months issue of the Journal of Construction Engineering and Management brought out by the American Society of Civil Engineers has an interesting article on the use of Public Private Partnerships (PPP) in US infrastructure projects.
As we all know, most infrastructure in the US is quite old and is in great need of renewal and replacement. PPP is an efficient way of mobilizing resources and achieving optimal project performance. So how many of the infrastructure projects in the US are done through the PPP mode?
The authors conduct a survey and find out that only 12% of the organizations surveyed have used BOTs or PPPs to build infrastructure!! The authors then attempt to understand why the other 88% continue to use conventional modes of public finance and come up with several explanations. A common thread that runs through these explanations is a lack of capacity within public agencies and a lack of exposure to PPP's, thereby making the implementing agencies a little skeptical of the overall potential of PPPs. In addition, the US also has no laws on PPPs unlike the Model Concession Agreements in India.
The research done in this paper is not very rigorous - the method of analysis is merely a straight aggregation and averaging of survey data. However, what is interesting is that the lack of capacity (i.e. understanding, know-how of fundamentals) as regards PPP leads to an over-reliance on public procurement even in developed countries. Many of the same arguments explain why there is a lot of rhetoric on PPPs in India, but relatively few projects that are actually implemented in this fashion.
What can we do to improve the situation? Comments?
As we all know, most infrastructure in the US is quite old and is in great need of renewal and replacement. PPP is an efficient way of mobilizing resources and achieving optimal project performance. So how many of the infrastructure projects in the US are done through the PPP mode?
The authors conduct a survey and find out that only 12% of the organizations surveyed have used BOTs or PPPs to build infrastructure!! The authors then attempt to understand why the other 88% continue to use conventional modes of public finance and come up with several explanations. A common thread that runs through these explanations is a lack of capacity within public agencies and a lack of exposure to PPP's, thereby making the implementing agencies a little skeptical of the overall potential of PPPs. In addition, the US also has no laws on PPPs unlike the Model Concession Agreements in India.
The research done in this paper is not very rigorous - the method of analysis is merely a straight aggregation and averaging of survey data. However, what is interesting is that the lack of capacity (i.e. understanding, know-how of fundamentals) as regards PPP leads to an over-reliance on public procurement even in developed countries. Many of the same arguments explain why there is a lot of rhetoric on PPPs in India, but relatively few projects that are actually implemented in this fashion.
What can we do to improve the situation? Comments?
Friday, October 5, 2007
The bujagali project: what is happening?
The bujagali project is spreading its success among the locals. The locals started to eek out a living by setting up food-stalls near the site.The landlords have started to rent their lands near the site. People are going for loans to set up businesses and improve their living standards.The article below explains it! http://allafrica.com/stories/200710031232.html
another related article i found regarding the project financing were
http://allafrica.com/stories/200710021168.html
http://allafrica.com/stories/200710030062.html
This project is just taking shape! hope there is a lot in it for the Ugandans!!!
another related article i found regarding the project financing were
http://allafrica.com/stories/200710021168.html
http://allafrica.com/stories/200710030062.html
This project is just taking shape! hope there is a lot in it for the Ugandans!!!
Thursday, October 4, 2007
Setusamudram Ship Canal Project
Hello all.
If you remember, sir talked about the viability of the Setu Samudram project in terms of reducing the time of navigation in the last class. I think this makes a good case study for IPM course!
Here is my understanding of the project.
- The project does not serve the very purpose it is being done! It will reduce the travel distance by only 120 nautical miles. And usually the ships travel at 12-13 knot speed. But when it enters setu samudram waters, they have to slow down to half of the speed. This ultimately means saving of only around 1 hr 30 mins of travel time, if the same ship had gone via normal route around Sri Lanka. Now the question is, is it worth spending Rs. 2400 crores on this project just to save 1.5 hrs? and remember, no ship will pay a huge toll and use this shipping canal. The project, if realized, will be an economic disaster.
- Next worst thing is the effect on the marine ecology. The coral reef will be completely destroyed by dredging of the sea bed. These are the coral reefs that slowed down the Tsunami waves and lessened the effect of it on to the other side of Indian coast. Not only that. The water surrounding the island nation of Sri Lanka is the habitat for very rare species of whale which is on the verge of extinction. Their habitat will be severely affected by this project.
- Now onto the social impact of the project. Thousands of fishermen have to quit fishing and also the place, which is their habitat for hundreds of years. There is absolutely no rehabilitation plan so far being thought of for them. And the govt is hardly listening to their woes.
- There is also zero planning on the part of the parties involved in the dredging as to where to dump the excavated soil. The contract document says, it will be dumped in some safe place. But what is that place? where it is? how to transport the soil to that place? what are the aftermaths of dumping those thousands of tonnes of soil from sea bed on to the land? No answer what so ever.
- In terms of strategic gains, India is gaining only 1 out of 10 or even less. The Setusamudram area on to the Lanka side has a lethal sea-bourne marine unit of LTTE. The consequence of any friction with LTTE - I need not tell it!
- In fact, an issue like this shows how poorly we are managing our strategies. China has already built naval control points all around India. Pakistan has been of great support and help to China. China is building an ultra modern naval point off the Karachi shore, to control West part of India. It already has one such base in one of the Myanmar islands, and is closely watching the activities at Chandipur, the missile karma-bhoomi of India. And it is no secret many of the LTTE weapons are China made!!
- It is a nonsense argument that the project will bring economic prosperity to Tamil Nadu. It will only bring disasters!
- one China friendly 'National Newspaper of India' along with its buddy blind politicians of Tamil Nadu is supporting the project so much as if without this there wont be any progress in Tamil Nadu! how to stop this misguidance?
- where are the NGOs, Arundhati Roy and Medha Pathkar?!
- why are the govts silent on these aspects? what are the possible solutions to the socio - economic - environmental issues?
Friday, September 14, 2007
Wonder what happened to the Stockton case? The activists won, after all. A couple of months back, the Stockton City Council voted to end the Privatization Contract. Previously, two court rulings found that the deal 'violated the law'. Somehow, I'm not surprised, I had a feeling that they would pull it off eventually.
The end of the contract:
http://sfgate.com/cgi-bin/article.cgi?file=/c/a/2007/08/05/EDC2RA7OG1.DTL
The first ruling:
http://www.arena.org.nz/water38.htm
The second one:
http://www.polarisinstitute.org/usa_judge_rejects_stockton_water_privatization_project
The end of the contract:
http://sfgate.com/cgi-bin/article.cgi?file=/c/a/2007/08/05/EDC2RA7OG1.DTL
The first ruling:
http://www.arena.org.nz/water38.htm
The second one:
http://www.polarisinstitute.org/usa_judge_rejects_stockton_water_privatization_project
Saturday, September 8, 2007
"Eligible" Suicides.....
A few days back, an article got featured in "The Hindu" about the agrarian crisis in Vidarbha. The article was about Prime Minister's visit to Vidarbha last year where he announced relief packages for heavily indebted farmers. This resulted in farmers breathing a sigh of relief which unfortunately didn't stay for a long time. Suicides toll rose from 2,425 in 2005 to 2,832 in 2006.
And after 1 full year when PM arrived in Mumbai to review the situation, he was greeted with success stories. We should appreciate the Government's work as they are mentioning that only 836 suicides cases of "eligible" are being registered. If a whole family commits suicide, the suicide count would be increased by 1, no matter how many dependents were there in that family. If a farm was registered over a person's name during ancient times, and now if descendant of that person who is farming the land commits suicide would not be considered as a "genuine" suicide. In a district in Vidarbha, there were 30 suicides in July this year but not a single one was "genuine".
We cannot pinpoint the blame on one single individual or organization for the crisis. Leaving the protagonists apart, which include indebtedness, no monsoon, social evils, etc, an important role was played by lack of implementation of tons of planned/unplanned strategies.
The situation started aggravating in 2004 when the State Government cut down the prices of cotton by Rs 500 per 100 Kg which resulted in nothing but a huge increase in the no. of suicides.
I am ending this by a few suggestions which could upturn the crisis. The Govt should take some action to reduce the debt of the farmers, if can not make it zero, so that they would at least get relieved from the distressful present situation. Secondly, proper allocation of resources which includes distribution of money from relief packages, irrigation water, electricity, etc. Thirdly, proper implementable planning should be done to avoid such situations in future.
And after 1 full year when PM arrived in Mumbai to review the situation, he was greeted with success stories. We should appreciate the Government's work as they are mentioning that only 836 suicides cases of "eligible" are being registered. If a whole family commits suicide, the suicide count would be increased by 1, no matter how many dependents were there in that family. If a farm was registered over a person's name during ancient times, and now if descendant of that person who is farming the land commits suicide would not be considered as a "genuine" suicide. In a district in Vidarbha, there were 30 suicides in July this year but not a single one was "genuine".
We cannot pinpoint the blame on one single individual or organization for the crisis. Leaving the protagonists apart, which include indebtedness, no monsoon, social evils, etc, an important role was played by lack of implementation of tons of planned/unplanned strategies.
The situation started aggravating in 2004 when the State Government cut down the prices of cotton by Rs 500 per 100 Kg which resulted in nothing but a huge increase in the no. of suicides.
I am ending this by a few suggestions which could upturn the crisis. The Govt should take some action to reduce the debt of the farmers, if can not make it zero, so that they would at least get relieved from the distressful present situation. Secondly, proper allocation of resources which includes distribution of money from relief packages, irrigation water, electricity, etc. Thirdly, proper implementable planning should be done to avoid such situations in future.
Friday, September 7, 2007
Microfinance and Infrastructure
A short while back, Debopam had made a post on microfinance. In a recent issue of "Infrastructure Today", there was an interesting article on how microfinance had been used for a water supply project in Tirupathi.
There were 4 organizations involved - the government, microfinance institutions (MFIs), NGO's and the people in that area. The NGO's helped the people organize themselves into a SHG. The people then took a loan from the MFIs to build the project and the government provided skills training on construction, operation and maintenance.
Overall it was an interesting case on how microfinance could be successfully used to provide rural infrastructure. However, it can only work when the community has the resources to pay back the loan to the MFIs and therefore there should be an ability and a willingness to pay.
There were 4 organizations involved - the government, microfinance institutions (MFIs), NGO's and the people in that area. The NGO's helped the people organize themselves into a SHG. The people then took a loan from the MFIs to build the project and the government provided skills training on construction, operation and maintenance.
Overall it was an interesting case on how microfinance could be successfully used to provide rural infrastructure. However, it can only work when the community has the resources to pay back the loan to the MFIs and therefore there should be an ability and a willingness to pay.
Criticise or Privatize???
Since privatization seems to be the current hot topic, i thought i would share some of my HUMAN ideas here, in my first blog. What i mean is......no figures and analysis here, not yet...just opinions and feelings. I would then like to progress to actual analysis based on facts and figures in my future blogs. Any criticisms( especially negative) will be appreciated since i really want to understand this better.
The need for privatization was discussed at large in class. To summarize(just a few of them) had been:
1) the govt doesnt have enough funds to finance a lot of the infrastructure projects.
2)the govt has taken quite a sum as loans from financial institutions and,as such, is finding it difficult to repay the loans without taking on additional debts.
3)the already existing infrastructure requires maintenance...which in turn needs money.
No matter how we play it around, it all finally comes down to money. Its a lack of money thats making the govt think about bringing private players on to the field. In spite of the fact that it makes the govt look inefficient, the willingness of the govt to accept that such a situation does exist is credit worthy. Maybe experience, which can indeed be a bitter teacher, is what has made people wary of privatization. Most people equate privatization with economic divide. As most things,even though there is some truth in this, I personally believe that thats not entirely true.
Let me explain. We all agree that private players' motive(for the large part) is profit( money again). Now if I were to open my own establishment I would try to do 2 things(once the establishment is running smoothly):
Build a reputation and Expand my clientele.
Building a reputation is important only in the case of competition. Which is pretty obvious. Monopoly implies i dont have to work to build my clientele. They have no choice but me.
Expanding my clientele is important to me for the reason that, assuming man is a creature of habits, once he has decided on whose service he will use, my only option to make more
(of course) money is to make sure more people know of the service I am providing. This means I will try to reach the far reaches of the nation before my competitor does. Think telecom Given the competition is right, the service I provide will be cheap(if the technology is so widespread) which means that more people will be able to use telecom and because I want to reach them before my competitor the speed at which things progress will also increase. This technology would improve their business, bringing in...thats right....more money and so improve their lifestyle for the better. Given they have more money now(relatively) they can get choosy and that will make me improve my quality of service so that my clientele doesnt look for other options. In their own way both should be satisfied. This is a classic example of "you scratch my back and I scratch yours". Which, I believe, gives both the parties relief.And is not that what we wanted in the first place ...... greater good to more number of people???
Monopoly can mean 2 things
One that I have no competition, in which case, I am the only choice they have (whether my service is good or bad).The other is the time period for which I own the infrastructure in which case even if I have competition but the government has given me the ownership for a long period of time, I might just slack off. And in this case legally nothing can be done(unless the govt was intelligent enough to have an escape clause). In almost all the cases they do(cos believe it or not, the govt has intelligent people for the most part) and thats why all those legal papers have sooooo many sheets.
Ideally one would wish for no private participations. And that would mean to have an extremely efficient government. Given that the ideal situation does not exist what is the next best thing? privatization?? personally, i believe, its the best choice we have(next to only maybe PPP).
I feel its really selfish and narrow-minded if you feel that you cant handle the thought of few 'private' people making money out of doing something that would help society in some way, in any way. Do not forget its not easy and cheap controlling something as huge as infrastructure. So if some 'private' people(who are working their heads off) actually makes a little profit out of the whole thing along with making the life of some person (who was until then just a figure ..a number ...in one of the government papers) comfortable.... then please just think of their profit as their fee.
And if you dont like THAT idea....then the best thing instead of holding rallies and shouting and complaining would be to tell the govt a way( a feasible way) to get the country out of this rut.
P.S Dont forget the govt has done its homework much better than you or me since they have been around far longer than us.
The need for privatization was discussed at large in class. To summarize(just a few of them) had been:
1) the govt doesnt have enough funds to finance a lot of the infrastructure projects.
2)the govt has taken quite a sum as loans from financial institutions and,as such, is finding it difficult to repay the loans without taking on additional debts.
3)the already existing infrastructure requires maintenance...which in turn needs money.
No matter how we play it around, it all finally comes down to money. Its a lack of money thats making the govt think about bringing private players on to the field. In spite of the fact that it makes the govt look inefficient, the willingness of the govt to accept that such a situation does exist is credit worthy. Maybe experience, which can indeed be a bitter teacher, is what has made people wary of privatization. Most people equate privatization with economic divide. As most things,even though there is some truth in this, I personally believe that thats not entirely true.
Let me explain. We all agree that private players' motive(for the large part) is profit( money again). Now if I were to open my own establishment I would try to do 2 things(once the establishment is running smoothly):
Build a reputation and Expand my clientele.
Building a reputation is important only in the case of competition. Which is pretty obvious. Monopoly implies i dont have to work to build my clientele. They have no choice but me.
Expanding my clientele is important to me for the reason that, assuming man is a creature of habits, once he has decided on whose service he will use, my only option to make more
(of course) money is to make sure more people know of the service I am providing. This means I will try to reach the far reaches of the nation before my competitor does. Think telecom Given the competition is right, the service I provide will be cheap(if the technology is so widespread) which means that more people will be able to use telecom and because I want to reach them before my competitor the speed at which things progress will also increase. This technology would improve their business, bringing in...thats right....more money and so improve their lifestyle for the better. Given they have more money now(relatively) they can get choosy and that will make me improve my quality of service so that my clientele doesnt look for other options. In their own way both should be satisfied. This is a classic example of "you scratch my back and I scratch yours". Which, I believe, gives both the parties relief.And is not that what we wanted in the first place ...... greater good to more number of people???
Monopoly can mean 2 things
One that I have no competition, in which case, I am the only choice they have (whether my service is good or bad).The other is the time period for which I own the infrastructure in which case even if I have competition but the government has given me the ownership for a long period of time, I might just slack off. And in this case legally nothing can be done(unless the govt was intelligent enough to have an escape clause). In almost all the cases they do(cos believe it or not, the govt has intelligent people for the most part) and thats why all those legal papers have sooooo many sheets.
Ideally one would wish for no private participations. And that would mean to have an extremely efficient government. Given that the ideal situation does not exist what is the next best thing? privatization?? personally, i believe, its the best choice we have(next to only maybe PPP).
I feel its really selfish and narrow-minded if you feel that you cant handle the thought of few 'private' people making money out of doing something that would help society in some way, in any way. Do not forget its not easy and cheap controlling something as huge as infrastructure. So if some 'private' people(who are working their heads off) actually makes a little profit out of the whole thing along with making the life of some person (who was until then just a figure ..a number ...in one of the government papers) comfortable.... then please just think of their profit as their fee.
And if you dont like THAT idea....then the best thing instead of holding rallies and shouting and complaining would be to tell the govt a way( a feasible way) to get the country out of this rut.
P.S Dont forget the govt has done its homework much better than you or me since they have been around far longer than us.
Monday, September 3, 2007
Privatization :only solution
Hi everyone,
Following the discussion in class about pros and cons of privatization and public undertakings,I think some excerpts from an article by Naira Yakoob are worth mentioning.
Privatization means transfer of risk by the government or public sector to the private sector by giving up management control and usually ownership (at least majority shares) in an enterprise. It differs from commercialization as in this case the government retains business risk and ownership but makes changes in the way the company operates so that it runs on business principles. Privatization or de-nationalization helps to establish a capitalist economic system, competition, readily available products and services, high quality, more exports, better services, more opportunities, growth, etc. The primary objective of privatization should be to find the private owner who is most likely to improve the performance of the company. Due to the poor performances of our government-be it in the field of political governance, education, industry, etc., it becomes very important to resort to privatization of these institutions and systems. An example to support would be privatization of many companies producing consumer goods. People had to queue, sometimes for days, to get cement, rice, sugar, milk, etc. Now it’s readily available and at times maybe cheaper where competition prevails. Many of the improvements we take for granted now are the result of privatization.
In a set up or environment with a strong tradition of socialism and bureaucracy, the government's privatization program has always had its impediments. Generally, the government adopts, if it does, a very complicated privatization policy. They then use complicated procedure for selecting the owner, impose conditions on the management of the company, sell only part of the company to retain partial control or to intervene in management, restrict or prohibit foreign investment, sell the company shares to small domestic investors who have little ability to manage and so on. Special interest groups such as wealthy businessmen and ruling politicians usually pressure the government to keep the undertakings running that ought to be liquidated. Thus a large share of the State’s productive assets and work force remains locked up in inefficient and unprofitable companies. The reviving and awakening of the governmental units and institutions to the modern practices and modus operandi seems difficult or impossible. Efforts to improve the functioning of these institutions by the government may not be effective for many years. The point that even the private organizations in this State are not very well established or performing is genuine. But the blame can be placed mostly on the political governance- laws, policies, and institutions created by governments. What is needed is a change in the administration and management of the sick and bad-performing units. The reins should be handed over to the private organizations or individuals with competent and ethical management skills. A fresh approach is required- enterprise restructuring, privatization, and liquidation of non-performing and sick units or even commercialization for a start. What is important is that they should deal with competition and quality issues. The non-performing or sick companies can either be restructured or commercialized. However, at times selling organizational assets can be a better decision and hence liquidation can be resorted to. The best way to improve the performance of private business is to eliminate government barriers to competition like tariffs, licensing, legalities, and other restrictions. With the initiative to start up privatization in all government sectors, it will start a drive towards quality, competitiveness and high standards.
Following the discussion in class about pros and cons of privatization and public undertakings,I think some excerpts from an article by Naira Yakoob are worth mentioning.
Privatization means transfer of risk by the government or public sector to the private sector by giving up management control and usually ownership (at least majority shares) in an enterprise. It differs from commercialization as in this case the government retains business risk and ownership but makes changes in the way the company operates so that it runs on business principles. Privatization or de-nationalization helps to establish a capitalist economic system, competition, readily available products and services, high quality, more exports, better services, more opportunities, growth, etc. The primary objective of privatization should be to find the private owner who is most likely to improve the performance of the company. Due to the poor performances of our government-be it in the field of political governance, education, industry, etc., it becomes very important to resort to privatization of these institutions and systems. An example to support would be privatization of many companies producing consumer goods. People had to queue, sometimes for days, to get cement, rice, sugar, milk, etc. Now it’s readily available and at times maybe cheaper where competition prevails. Many of the improvements we take for granted now are the result of privatization.
In a set up or environment with a strong tradition of socialism and bureaucracy, the government's privatization program has always had its impediments. Generally, the government adopts, if it does, a very complicated privatization policy. They then use complicated procedure for selecting the owner, impose conditions on the management of the company, sell only part of the company to retain partial control or to intervene in management, restrict or prohibit foreign investment, sell the company shares to small domestic investors who have little ability to manage and so on. Special interest groups such as wealthy businessmen and ruling politicians usually pressure the government to keep the undertakings running that ought to be liquidated. Thus a large share of the State’s productive assets and work force remains locked up in inefficient and unprofitable companies. The reviving and awakening of the governmental units and institutions to the modern practices and modus operandi seems difficult or impossible. Efforts to improve the functioning of these institutions by the government may not be effective for many years. The point that even the private organizations in this State are not very well established or performing is genuine. But the blame can be placed mostly on the political governance- laws, policies, and institutions created by governments. What is needed is a change in the administration and management of the sick and bad-performing units. The reins should be handed over to the private organizations or individuals with competent and ethical management skills. A fresh approach is required- enterprise restructuring, privatization, and liquidation of non-performing and sick units or even commercialization for a start. What is important is that they should deal with competition and quality issues. The non-performing or sick companies can either be restructured or commercialized. However, at times selling organizational assets can be a better decision and hence liquidation can be resorted to. The best way to improve the performance of private business is to eliminate government barriers to competition like tariffs, licensing, legalities, and other restrictions. With the initiative to start up privatization in all government sectors, it will start a drive towards quality, competitiveness and high standards.
Tuesday, August 28, 2007
Advances in Transportation Infrastructure
There is a magazine called Infrastructure Today that contains articles and information on Indian infrastructure. Its a pretty good magazine and I urge you to pick up a copy and browse if you get a chance.
The latest issue had an article on road transportation infrastructure and brought out a couple of points that were not really discussed in class.
First, for a truck traveling large distances over a tolled national highway, it is likely that there would be 5-6 toll stations in between. Stopping at each of these stations could add an extra 30 mins - 1 hr for the trucks journey. Intelligent systems that could detect and simplify/automate this process of toll collection (by reading information off bar codes present in the truck or by being able to weigh/identify the vehicle) is an area that is currently the center of a lot of attention.
Second, one of the challenges faced by developers is that the Government takes an inordinately long time to process bid documents. Developers assets are often frozen for this period and they incur some financial loss. Streamlining the approval procedure is therefore something that is required in this context.
Saturday, August 25, 2007
Some facts regarding Special economic zones
Hi!
Lot of discussions are going on regarding SEZs. Just go through this as this might help people to clear their doubts.
http://www.rediff.com/money/2007/aug/25sez.htm
Lot of discussions are going on regarding SEZs. Just go through this as this might help people to clear their doubts.
http://www.rediff.com/money/2007/aug/25sez.htm
Friday, August 24, 2007
how microfinance can help in upliftment of rural economy -- the story of grameen
As we were discussing the concept of microfinance and how it can help in upgrading rural living standard in general, and infrastructure in particular, i thought of sharing some more details about grameen, the most famous success story in this field.
Mohammed Yunus, Nobel Laureate, started this venture in Bangladesh, one of the poorest countries of the world, back in 1974, 3 years after the country's independance, by giving a loan of 27US$ to 42 families to create small items for sale The bank began as a research project by Yunus to test his method for providing credit and banking services to the rural poor in order to reduce the rampant rural poverty in Bangladesh. It was a huge success and in 1983 it was transformed into an independent bank
Grameen is best known for its system of solidarity lending.The system is the basis for the microcredit and the self help group system now at work in over 43 countries. Although each borrower must belong to a five-member group, the group is not required to give any guarantee for a loan to its member. Repayment responsibility solely rests on the individual borrower, while the group and the centre oversee that everyone behaves in a responsible way and none gets into repayment problem. There is no form of joint liability.
Grameen's track record has also been notable, with very high payback rates—over 98 percent of 5.72 billion US$.More than half of Grameen borrowers in Bangladesh (close to 50 million) have risen out of acute poverty thanks to their loan, as measured by such standards as having all children of school age in school, all household members eating three meals a day, a sanitary toilet, a rainproof house, clean drinking water and the ability to repay a 8 US$ a week.
Another accomplishment is that among the 6.67 million borrowers, 97% are women. Thus grameen has also been effective in bringing in sort of a social reform movement.
At present Grameen has grown a family of enterprises including Grameen Trust, Grameen Fund, Grameen Communications, Grameen Shakti(Grameen Energy), Grameen Telecom, Grameen Shikkha (Grameen Education), Grameen Mothsho (Grameen Fisheries), Grameen Baybosa Bikash (Grameen Business Development), Grameen Phone, Grameen Software Limited, Grameen CyberNet Limited, Grameen Knitwear Limited, and Grameen Uddog which are all working in different sectors of rural infrastructure developement. In 2005, it went public with Grameen mutual fund one. The model is also being replicated in other countries by Grameen foundation.
for more, visit
http://www.grameen-info.org/
Mohammed Yunus, Nobel Laureate, started this venture in Bangladesh, one of the poorest countries of the world, back in 1974, 3 years after the country's independance, by giving a loan of 27US$ to 42 families to create small items for sale The bank began as a research project by Yunus to test his method for providing credit and banking services to the rural poor in order to reduce the rampant rural poverty in Bangladesh. It was a huge success and in 1983 it was transformed into an independent bank
Grameen is best known for its system of solidarity lending.The system is the basis for the microcredit and the self help group system now at work in over 43 countries. Although each borrower must belong to a five-member group, the group is not required to give any guarantee for a loan to its member. Repayment responsibility solely rests on the individual borrower, while the group and the centre oversee that everyone behaves in a responsible way and none gets into repayment problem. There is no form of joint liability.
Grameen's track record has also been notable, with very high payback rates—over 98 percent of 5.72 billion US$.More than half of Grameen borrowers in Bangladesh (close to 50 million) have risen out of acute poverty thanks to their loan, as measured by such standards as having all children of school age in school, all household members eating three meals a day, a sanitary toilet, a rainproof house, clean drinking water and the ability to repay a 8 US$ a week.
Another accomplishment is that among the 6.67 million borrowers, 97% are women. Thus grameen has also been effective in bringing in sort of a social reform movement.
At present Grameen has grown a family of enterprises including Grameen Trust, Grameen Fund, Grameen Communications, Grameen Shakti(Grameen Energy), Grameen Telecom, Grameen Shikkha (Grameen Education), Grameen Mothsho (Grameen Fisheries), Grameen Baybosa Bikash (Grameen Business Development), Grameen Phone, Grameen Software Limited, Grameen CyberNet Limited, Grameen Knitwear Limited, and Grameen Uddog which are all working in different sectors of rural infrastructure developement. In 2005, it went public with Grameen mutual fund one. The model is also being replicated in other countries by Grameen foundation.
for more, visit
http://www.grameen-info.org/
Wednesday, August 22, 2007
Japan looks to treble trade with India
In today's class professor Ashwin was discussing about the financial institutions funding infrastructure projects , of which Japanese investment in India was discussed. I have come across this article which tells about Japan investments increasing in India, almost treble and that certainly is going to pace the existing and the incomplete projects to completion. Article speaks specifically about energy sector apart from the Delhi-Mumbai Industrial Corridor .
Heres the entire article :
source : http://timesofindia.indiatimes.com/India/Japan_looks_to_treble_trade_with_India/rssarticleshow/2301509.cms
where Buddhism remains the most famous import from India, aims to treble trade with the sub-continent nation to USD 20 billion by 2010 for which it has sought early conclusion of an economic partnership pact.
Addressing MPs in Parliament, Japanese Prime Minister Shinzo Abe favoured signing of the Economic Partnership Agreement (EPA) soon to firm up relations and raise volume of bilateral trade three-fold. Trade between the two countries in 2006 was about USD 6.5 billion.
"I likewise urge the Indian side to give their support to enable the early conclusion of this high quality agreement," he said on the second day of his three day visit to the country.
He said bilateral relations are blessed with the "largest potential" for development, adding that a strong India is in the best interest of Japan and a strong Japan is in the best interest of India.
Outlining various fields in which the two countries can cooperate closely, he promised to help India in the field of energy by providing technology. But, he did not mention nuclear power.
Japan, which has been one of largest economic assistance providers to India through ODA, also wants to partner India in mega projects like the Delhi-Mumbai industrial corridor being funded by it now.
Heres the entire article :
source : http://timesofindia.indiatimes.com/India/Japan_looks_to_treble_trade_with_India/rssarticleshow/2301509.cms
where Buddhism remains the most famous import from India, aims to treble trade with the sub-continent nation to USD 20 billion by 2010 for which it has sought early conclusion of an economic partnership pact.
Addressing MPs in Parliament, Japanese Prime Minister Shinzo Abe favoured signing of the Economic Partnership Agreement (EPA) soon to firm up relations and raise volume of bilateral trade three-fold. Trade between the two countries in 2006 was about USD 6.5 billion.
"I likewise urge the Indian side to give their support to enable the early conclusion of this high quality agreement," he said on the second day of his three day visit to the country.
He said bilateral relations are blessed with the "largest potential" for development, adding that a strong India is in the best interest of Japan and a strong Japan is in the best interest of India.
Outlining various fields in which the two countries can cooperate closely, he promised to help India in the field of energy by providing technology. But, he did not mention nuclear power.
Japan, which has been one of largest economic assistance providers to India through ODA, also wants to partner India in mega projects like the Delhi-Mumbai industrial corridor being funded by it now.
Monday, August 20, 2007
a small prognosis
Well , this is ajay. This is no excerpt from any article or journal, its the discussion of the present urban scenarioor rather the urban prognosis. With the IT boom, industrialisation,clustering of educational institutions and ofcourse lucrative careers offered by the urban india are drawing the rural india to the cities and it is envisaged that nearly 40% of the urban population would live in citiesby 2017.Even right now we are encountering the problem of traffic congestion, water and sanitation problems blah blah blah..which apparently would show some adverse effects on the next generations, for example: the traffic congestion results in increase in travel time which indeed represents excessive usage of fuel which in turn results in the depletion of the resources and the similar things with the water and sanitation etc. , though the govt. is really trying to solve the problem by developing tier 2 cities etc .,most of the industries are really reluctant to adopt to the suggested habitat, may be because of the transportation facilities and its brethren. In a word we could say that government is on a wild goose chase . But i think development of SEZ's with the residential quarters for its employees is a very good step in terms of the urbanisation issue apart from the obvious economic positive outcomes.I think its time for the strategy players to play the role in facing the crisis, they some how got to show that the further influx of either industries or the population into the cities is goint to create a real mayhem either by creating the artificial local inflation or the similar steps. Before we go for these startegies , it better we do a little goal programming as such priortising the constraints, goalsand trying to optimize them.I firmly belive that if the government approaches some good consultancy before giving their permits , making policies etc we're going to see some pleasant outcomes. Infact our stock exchange has hired Meryll lynch to do their risk analysis and accounting then why not the government hire one than just making policies and giving permits to the industry holders in an obsequious manner without foreseeing all the ramifications.
Sea link project in trouble
Hi all.
The ambitious sealink project in Mumbai seems to have ran into trouble with the differences between the parties increasing day by day. The work has been completely halted and the price escalation is more than 100% with delay in the completion by two years.
Read the full story at
http://www.dnaindia.com/report.asp?newsid=1116550
The ambitious sealink project in Mumbai seems to have ran into trouble with the differences between the parties increasing day by day. The work has been completely halted and the price escalation is more than 100% with delay in the completion by two years.
Read the full story at
http://www.dnaindia.com/report.asp?newsid=1116550
Sunday, August 19, 2007
Which one to choose - A Private Builder or The State Development Authority??
Hello everyone,
This is Aditya. This articles deals with the issue that "The restrictions implemented by Supreme Court on the builders and the inefficiency of MHADA have done the damage in the redevelopment process." Have a look at this.
Portions of two buildings have crashed in less than 16 hours since Friday evening, killing five and injuring a few others. The two mishaps have served to put the spotlight back on the reasons why those living precariously in the buildings choose to go on doing so despite the obvious risk to life.
Few among the occupants and the landlords of these buildings have been interested in their redevelopment but things have worsened since April 2006. The Supreme Court effectively put a cap on the profit that builders could make out of redeveloping property by decreeing they could not be given a floorspace index of more than 4 as incentive.
“Builders before that were allowed to sell 50 per cent of the redeveloped property. This limit on their profits has come as a huge disincentive,’’ Maharashtra Housing and Area Development Authority cessed buildings resident executive engineer V G Wani said.
Not a single building in the city has been put up for redevelopment since the SC verdict.
The reasons for occupants’ and landlords’ unwillingness to redevelop property according to MHADA rules are far simpler to understand. “Redevelopment often takes years when residents have to move elsewhere, to transit camps in the suburbs, dozens of kilometres from their workplace, school or college. This disturbs a whole way of life,’’ Mumbadevi BJP MLA Raj Purohit said.
Occupants also pay a pittance as rent (compared to the prevailing market rates) to stay in the best areas of Mumbai; so they often tend to ignore the very real risk to their own life and limb.
The reason for landlords’ apathy is even more obvious; they stand to gain the least from redeveloped properties, say Mhada officials.
A few instances will put things in clearer perspective. It is almost two years since Nagpada’s Sadaf Manzil crashed, killing 11 persons and injuring 29; 17 of the injured have been disabled permanently. Residents initially thought of redeveloping their building through the Mhada but then realised that it would be a futile wait and even the second generation might not see the redevelopment. So they decided to approach a private builder.
Residents of adjoining Patel Mansion, which was in a similarly dilapidated condition, agreed to a cluster redevelopment. “We appointed Abid Rizvi and Associates to carry out the redevelopment. We got a no-objection certificate from the Mhada and permission from the BMC to carry out construction. But now the builder is hesitant because of the FSI cap of 4,’’ Sheikh Latif Gaffar, a resident, said.
The hesitation stems from the fact that the builder may not be able to recover the cost of construction.
“There are 31 residents and seven commercial shops. The builder says that with an FSI of 4 he can construct upto 11 floors. So, after rehabilitating the tenants, he will be left with around six flats and these will not fetch him what he wants,’’ Gaffar said. The residents are at present living in transit camps at Wadala, Bandra and Malad.
Congress corporator from Nagpada Amin Patel points out there are 530 cessed buildings in his ward extending from Tank Street to Shuklaji Street. One hundred and eighty have been demolished but have not been taken up for redevelopment.
CESSED BUILDINGS
Old buildings in the island city are called cessed buildings because tenants pay monthly charges (known as cess) to the Repair Board for carrying out repairs; this cess is higher than the rent.
There are 16,372 cessed buildings in the city.
Vacation notices were served on residents of 71 buildings this year.
Articly Courtesy : Times of India, 19th August 2007, Mumbai edition, Page 3
This is Aditya. This articles deals with the issue that "The restrictions implemented by Supreme Court on the builders and the inefficiency of MHADA have done the damage in the redevelopment process." Have a look at this.
Cessed and dangerous, bldgs crumble as they await redevelopment
There have been around 5,000 incidents in the last five years in which buildings or parts of buildings have crumbled in Mumbai. But only 1,000 buildings have been taken up for redevelopment till date, highlighting the authorities’ apathy and residents’ and owners’ unwillingness in pushing for redevelopment.Portions of two buildings have crashed in less than 16 hours since Friday evening, killing five and injuring a few others. The two mishaps have served to put the spotlight back on the reasons why those living precariously in the buildings choose to go on doing so despite the obvious risk to life.
Few among the occupants and the landlords of these buildings have been interested in their redevelopment but things have worsened since April 2006. The Supreme Court effectively put a cap on the profit that builders could make out of redeveloping property by decreeing they could not be given a floorspace index of more than 4 as incentive.
“Builders before that were allowed to sell 50 per cent of the redeveloped property. This limit on their profits has come as a huge disincentive,’’ Maharashtra Housing and Area Development Authority cessed buildings resident executive engineer V G Wani said.
Not a single building in the city has been put up for redevelopment since the SC verdict.
The reasons for occupants’ and landlords’ unwillingness to redevelop property according to MHADA rules are far simpler to understand. “Redevelopment often takes years when residents have to move elsewhere, to transit camps in the suburbs, dozens of kilometres from their workplace, school or college. This disturbs a whole way of life,’’ Mumbadevi BJP MLA Raj Purohit said.
Occupants also pay a pittance as rent (compared to the prevailing market rates) to stay in the best areas of Mumbai; so they often tend to ignore the very real risk to their own life and limb.
The reason for landlords’ apathy is even more obvious; they stand to gain the least from redeveloped properties, say Mhada officials.
A few instances will put things in clearer perspective. It is almost two years since Nagpada’s Sadaf Manzil crashed, killing 11 persons and injuring 29; 17 of the injured have been disabled permanently. Residents initially thought of redeveloping their building through the Mhada but then realised that it would be a futile wait and even the second generation might not see the redevelopment. So they decided to approach a private builder.
Residents of adjoining Patel Mansion, which was in a similarly dilapidated condition, agreed to a cluster redevelopment. “We appointed Abid Rizvi and Associates to carry out the redevelopment. We got a no-objection certificate from the Mhada and permission from the BMC to carry out construction. But now the builder is hesitant because of the FSI cap of 4,’’ Sheikh Latif Gaffar, a resident, said.
The hesitation stems from the fact that the builder may not be able to recover the cost of construction.
“There are 31 residents and seven commercial shops. The builder says that with an FSI of 4 he can construct upto 11 floors. So, after rehabilitating the tenants, he will be left with around six flats and these will not fetch him what he wants,’’ Gaffar said. The residents are at present living in transit camps at Wadala, Bandra and Malad.
Congress corporator from Nagpada Amin Patel points out there are 530 cessed buildings in his ward extending from Tank Street to Shuklaji Street. One hundred and eighty have been demolished but have not been taken up for redevelopment.
CESSED BUILDINGS
Old buildings in the island city are called cessed buildings because tenants pay monthly charges (known as cess) to the Repair Board for carrying out repairs; this cess is higher than the rent.
There are 16,372 cessed buildings in the city.
Vacation notices were served on residents of 71 buildings this year.
Articly Courtesy : Times of India, 19th August 2007, Mumbai edition, Page 3
Saturday, August 18, 2007
factfile about SEZ
Hi all,
Here's a link to some facts about SEZs that I think might be interesting to note.
http://sezindia.nic.in/HTMLS/Fact_sheet_on_SEZs_as_on_31-07-2007.pdf
Aditi
Here's a link to some facts about SEZs that I think might be interesting to note.
http://sezindia.nic.in/HTMLS/Fact_sheet_on_SEZs_as_on_31-07-2007.pdf
Aditi
Thursday, August 16, 2007
land acquisition procedure
Hi everybody
This is Debopam Roy. As we had discussed in class, land acquisition is often the single most important risk in private financed transportation infrastructure. To emphasis how cumbersome the process is, I thought of sharing with you all the procedure for land acquisition as per the National Highways Act. the different steps of land acquisition are described in the different sections of the act, as follows:
3A(1) Notification in official gazette
3A(3) Notification in 2 local newspapers, 1 of which will be in vernacular language
3B Obtaining power to enter land for survey
3C Hearing of objections
3D Final & binding declaration of acquisition by notification in official gazette {has to be done within 1 year of 3A(1) excluding period of court injunctions}
3E Take possession within 60 days of service of notice
3F Right to enter land and do any act
3G Determination of amount payable as compensation after giving notice in 2 newspaper, inviting claims of persons with interest and resolving disputes if any through arbitration
3H Deposit of money to person entitled
So now you know why more often than not, our infrastructure projects are behind schedule.......
This is Debopam Roy. As we had discussed in class, land acquisition is often the single most important risk in private financed transportation infrastructure. To emphasis how cumbersome the process is, I thought of sharing with you all the procedure for land acquisition as per the National Highways Act. the different steps of land acquisition are described in the different sections of the act, as follows:
3A(1) Notification in official gazette
3A(3) Notification in 2 local newspapers, 1 of which will be in vernacular language
3B Obtaining power to enter land for survey
3C Hearing of objections
3D Final & binding declaration of acquisition by notification in official gazette {has to be done within 1 year of 3A(1) excluding period of court injunctions}
3E Take possession within 60 days of service of notice
3F Right to enter land and do any act
3G Determination of amount payable as compensation after giving notice in 2 newspaper, inviting claims of persons with interest and resolving disputes if any through arbitration
3H Deposit of money to person entitled
So now you know why more often than not, our infrastructure projects are behind schedule.......
Special Economic Zones (SEZs)
I'm sure you would have enjoyed and learnt a lot from Vijay Sarma's guest lecture today. For those of you who are still thinking of SEZ's this website provides more information at the policy level. Of course you could just google SEZ's to get many more websites with pertinent information.
In particular, several of you were wondering as to what the envisaged benefits of SEZ's were. Here is what this website has to say about this:
"(a) generation of additional economic activity
(b) promotion of exports of goods and services;
(c) promotion of investment from domestic and foreign sources;
(d) creation of employment opportunities;
(e) development of infrastructure facilities;
It is expected that this will trigger a large flow of foreign and domestic investment in SEZs, in infrastructure and productive capacity, leading to generation of additional economic activity and creation of employment opportunities."
As you can see, theoretically SEZ's can potentially confer a multitude of benefits - I think Vijay raised most of these benefits in class today. However the reality can be different. Comments?
Tuesday, August 14, 2007
Reg. the infrastructure crisis
Hello, everybody,
This is Sachi Chander. I was just reading through the comments left by Thejas to my previous note and discovered two very informative links given by Thejas. Seeing how they were languishing like a lost puppy in the comments box, I felt that they ought to be hightlighted. Go through the links below.
They present in-depth information regarding the infrastructure crisis. Good find, Thejas.
http://www.cbsnews.com/stories/2005/03/09/national/main678939.shtml
http://www.msnbc.msn.com/id/7137894/
This is Sachi Chander. I was just reading through the comments left by Thejas to my previous note and discovered two very informative links given by Thejas. Seeing how they were languishing like a lost puppy in the comments box, I felt that they ought to be hightlighted. Go through the links below.
They present in-depth information regarding the infrastructure crisis. Good find, Thejas.
http://www.cbsnews.com/stories/2005/03/09/national/main678939.shtml
http://www.msnbc.msn.com/id/7137894/
“Pension fund could be used to develop infrastructure”
Hey junta! I have read this article in today's new paper. Just go trough it.
Here is the link
http://www.hindu.com/2007/08/13/stories/2007081352220500.htm
Here is the link
http://www.hindu.com/2007/08/13/stories/2007081352220500.htm
Monday, August 13, 2007
Regional airlines to boost local connectivity
Hello everybody,
This is C.S.Janardhan . Here is a very interesting policy Undertaken by the government to boost the local connectivity through airways and bring up better ways of private sector participation in airlines in the nation. The government on Thursday introduced a new category of schedule carriers — regional airlines.
These airlines would primarily provide local connectivity in the north, west, south and east/northeast by using one metro in their regions as the base for flying to other smaller towns either in the region or anywhere in
For starting a regional airline, the company would have to acquire at least three aircraft within a year and at the end of two years, it would be required to operate with a minimum of five planes.
"I see 200 aircraft operating with regional airlines in next five years. Currently about 80 places get flights regularly and another 100 more places can be added on this list," the minister said.
Now airlines can begin as regional carriers and if they increase their fleet size to three and five aircraft in one and two years, respectively, they can aspire to become national carriers on their performance. Moreover, Civil Aviation Minister Praful Patel said this will lead to states reviving unused airstrips or opening new airports in private participation to link them to the country.
Following are few links for more details related to the article….
http://www.hindu.com/2007/08/11/stories/2007081156661600.htm
UMPP need PPPAC approval
This is sriram siddhartha. Call it the Sasan effect. All future ultra mega projects may have to get Public-Private Partnership Appraisal Committee’s (PPPAC) approval before being bid out if the finance ministry has its way.
The finance ministry has conveyed its views to the power ministry that considering the good track record of PPPAC, it should also be involved in the approval process of the ultra mega power scheme, an official source said.
The proposal for involving PPPAC in the ultra mega power scheme is aimed at strengthening its vetting process. The scheme got almost derailed over the Sasan project controversy where the first winning bidder Lanco-Globeleq had to be declared invalid after the completion of the bidding process.
Both Sasan Power, the special purpose vehicle of Power Finance Corp (PFC) overseeing the project, and Ernst & Young failed to identify problems in the bid document of Lanco-Globeleq for the Sasan project till the project was awarded to the consortium. It is now felt PPPAC with experience in handling large infrastructure projects would strengthen the vigilance mechanism, preventing Sasan-like lapse.
At present, the bids are invited and scrutinised by PFC, appointed as the nodal agency to implement the scheme. After the proposed changes are implemented, PPPAC may evaluate future projects for deviation from rules and regulations before giving its nod. The body may also evaluate the projects at the inception stage when a site is identified and other linkages are given to it.
source - Economic Times
The finance ministry has conveyed its views to the power ministry that considering the good track record of PPPAC, it should also be involved in the approval process of the ultra mega power scheme, an official source said.
The proposal for involving PPPAC in the ultra mega power scheme is aimed at strengthening its vetting process. The scheme got almost derailed over the Sasan project controversy where the first winning bidder Lanco-Globeleq had to be declared invalid after the completion of the bidding process.
Both Sasan Power, the special purpose vehicle of Power Finance Corp (PFC) overseeing the project, and Ernst & Young failed to identify problems in the bid document of Lanco-Globeleq for the Sasan project till the project was awarded to the consortium. It is now felt PPPAC with experience in handling large infrastructure projects would strengthen the vigilance mechanism, preventing Sasan-like lapse.
At present, the bids are invited and scrutinised by PFC, appointed as the nodal agency to implement the scheme. After the proposed changes are implemented, PPPAC may evaluate future projects for deviation from rules and regulations before giving its nod. The body may also evaluate the projects at the inception stage when a site is identified and other linkages are given to it.
source - Economic Times
India may change power equation in Lanka
Hello everybody,
This is C.S.Janardhan , writing about a very interesting article on the indo – lankan submarine cable link. According to this article power deficit
http://economictimes.indiatimes.com/India_may_change_power_equation_in_Lanka/rssarticleshow/2269882.cms
Saturday, August 11, 2007
Reg. the infrastructure crisis
Hello, everybody,
This is Sachi "GC" Chander, writing about the collapse of the Mississippi bridge ( the M-bridge, henceforth ). We were told by Dr. Ashwin about this when he mentioned the infrastructure crisis that has gripped America. A day after the Hindu reported the incident, the newspaper carried another interesting piece that cited official sources declaring that more than 70,000 bridges are just as structurally deficient as the M-bridge. The costs of maintenance and repair are expected to reach nearly 200 billion dollars (!) . Further statistics and comments can be read here .
http://www.hindu.com/2007/08/04/stories/2007080456111600.htm
This gives an insight into the widespread nature of this crisis. However ,less than a day after the incident, preventive measures are being taken in the preliminary form of assessing and estimating the level of risk with other structures. One has to appreciate the damage assessment as well as damage control measures taken by the nation.
This is Sachi "GC" Chander, writing about the collapse of the Mississippi bridge ( the M-bridge, henceforth ). We were told by Dr. Ashwin about this when he mentioned the infrastructure crisis that has gripped America. A day after the Hindu reported the incident, the newspaper carried another interesting piece that cited official sources declaring that more than 70,000 bridges are just as structurally deficient as the M-bridge. The costs of maintenance and repair are expected to reach nearly 200 billion dollars (!) . Further statistics and comments can be read here .
http://www.hindu.com/2007/08/04/stories/2007080456111600.htm
This gives an insight into the widespread nature of this crisis. However ,less than a day after the incident, preventive measures are being taken in the preliminary form of assessing and estimating the level of risk with other structures. One has to appreciate the damage assessment as well as damage control measures taken by the nation.
Wednesday, August 8, 2007
Transmission & Distribution
As thejas had already posted the details of installed power capacity and additions, I would like to talk about transmission and distribution.
Unification of regional grids has been envisioned by engineers from long time. The idea has come to lime light only few years back i.e, Indian Government initiated activities recently. Integrated National grid shall evacuate additional 1, 00,000 MW by the year 2012 and carry 60% of the power generated in the country. The existing inter-regional power transfer capacity is 9,000 MW, which is to be further enhanced to 30,000 MW by 2012 through creation of “Transmission Super Highways”. For creation of such a grid, an investment of Rs. 71,000 Crore is envisaged. Out of this, Rs. 50,000 Crore is planned to be mobilised by POWERGRID and remaining Rs. 21000 Crore is envisaged through private sector participation.
The T & D losses have been consistently on the higher side, and are presently in the range of 18% to 62% in various states. The aggregate technical & commercial (AT&C) losses are in the range of 50% (half of the power goes waste!!). Unplanned extensions of the distribution lines, overloading of the system elements shot back in terms of huge losses. All these problems had to be foreseen and proper investments if made earlier wouldn’t have resulted in this bad scenario. The commercial losses are mainly due to low metering efficiency, theft.
Coming to transmission, The Government of India has an ambitious mission of ‘POWER FOR ALL BY 2012’. To be able to reach this power to the entire country an expansion of the regional transmission network and inter regional capacity to transmit power would be essential. The latter is required because resources are unevenly distributed in the country and power needs to be carried great distances to areas where load centres exist.
http://powermin.nic.in/ would give you more details.The story of an IIT prof
Regarding the Telecom network that we will soon discuss in the class i found a article that we can be proud of !
kindly read this
http://specials.rediff.com//money/2007/aug/08jhun1.htm
kindly read this
http://specials.rediff.com//money/2007/aug/08jhun1.htm
Hydel power - the best option ?
Hi all.
According to the latest facts [June 20th, 2007] of Power ministry of Govt. of India, the country has 1,34,716 MW of installed power generation facility, out of which 52% is state sector, 34% is central and 14% is private.
Also, 65% is thermal and 25% is hydel. This is where we need to look at.
India is harnessing only 17 % of it's potential hydel power, whereas countries like Norway [58%], Canada [50%] and Brazil [ 31%] are way ahead.
The Indus basin has 20000 MW potential, yet to be harnessed, Ganga basin has 11000 MW and the Brahmaputra has 35000 MW. Fortunately the previous central government realised the importance of this and came out with a plan of 50,000 MW power generation by 2017. This initiative has started with the preparation of feasibility report and detailed project report. 162 hydroelectric schemes have been identified with an aggregate installed capacity of 50,560 MW. They are located in sixteen States of the country. Of these, 106 schemes aggregating to about 39,000 MW are located in only four States namely Arunachal Pradesh, Uttaranchal, Himachal Pradesh and Jammu & Kashmir. These projects under this Initiative are proposed to be taken up for execution during 11th & 12th Plans i.e. between 2007-2017.
And there is a whole set of budgetary and infrastructural and governmental initiatives being taken to exploit the hydel resources.
But the social issues keep haunting with people like Medha Patkar and Arundhati Roy [ Aamir Khan being the latest addition] staging protests every other day against such massive projects. Also, one major strategic fear with the Government of India is China's claim every now and then [ the latest being last month] that Arunachal is theirs. [ remember, Arunachal is the biggest contributor in hydel sector ].
Every developmental project in this country is so, a political, social, environmental, diplomatic, strategical, regionally chauvinistic and deadly opposed by the Left.
According to the latest facts [June 20th, 2007] of Power ministry of Govt. of India, the country has 1,34,716 MW of installed power generation facility, out of which 52% is state sector, 34% is central and 14% is private.
Also, 65% is thermal and 25% is hydel. This is where we need to look at.
India is harnessing only 17 % of it's potential hydel power, whereas countries like Norway [58%], Canada [50%] and Brazil [ 31%] are way ahead.
The Indus basin has 20000 MW potential, yet to be harnessed, Ganga basin has 11000 MW and the Brahmaputra has 35000 MW. Fortunately the previous central government realised the importance of this and came out with a plan of 50,000 MW power generation by 2017. This initiative has started with the preparation of feasibility report and detailed project report. 162 hydroelectric schemes have been identified with an aggregate installed capacity of 50,560 MW. They are located in sixteen States of the country. Of these, 106 schemes aggregating to about 39,000 MW are located in only four States namely Arunachal Pradesh, Uttaranchal, Himachal Pradesh and Jammu & Kashmir. These projects under this Initiative are proposed to be taken up for execution during 11th & 12th Plans i.e. between 2007-2017.
And there is a whole set of budgetary and infrastructural and governmental initiatives being taken to exploit the hydel resources.
But the social issues keep haunting with people like Medha Patkar and Arundhati Roy [ Aamir Khan being the latest addition] staging protests every other day against such massive projects. Also, one major strategic fear with the Government of India is China's claim every now and then [ the latest being last month] that Arunachal is theirs. [ remember, Arunachal is the biggest contributor in hydel sector ].
Every developmental project in this country is so, a political, social, environmental, diplomatic, strategical, regionally chauvinistic and deadly opposed by the Left.
Tidal Power
Someone (Silesh) had mentioned Tidal Power in class. We aren't really concerned with the technology, but we're more concerned about the economics of generation. Wikipedia has this to say about the economics: http://en.wikipedia.org/wiki/Tidal_power#Economics
From the article:
"Tidal power schemes have a high capital cost and a very low running cost. As a result, a tidal power scheme may not produce returns for years, and investors are thus reluctant to participate in such projects."
As it is, our SEBs are running under huge losses and power sector in India is not in a very good financial position. To spend a large amount of money on establishing Tidal power schemes is hardly feasible. Also, the largest Tidal Power Plant has an installed peak power of 240 MW with an annual production of 600 GWh which is hardly a lot. To set up many such plants for our requirement of power would involve a huge amount of money.
Unless we come up with new technology, tidal power is not feasible, and we are better off looking at conventional methods of power generation.
From the article:
"Tidal power schemes have a high capital cost and a very low running cost. As a result, a tidal power scheme may not produce returns for years, and investors are thus reluctant to participate in such projects."
As it is, our SEBs are running under huge losses and power sector in India is not in a very good financial position. To spend a large amount of money on establishing Tidal power schemes is hardly feasible. Also, the largest Tidal Power Plant has an installed peak power of 240 MW with an annual production of 600 GWh which is hardly a lot. To set up many such plants for our requirement of power would involve a huge amount of money.
Unless we come up with new technology, tidal power is not feasible, and we are better off looking at conventional methods of power generation.
Sunday, August 5, 2007
Resources on Indian Infrastructure
Hello and Welcome to this blog. For those of you who are interested in knowing more about the infrastructure scenario in India, I would recommend reading the India Infrastructure Report - brought out by the 3i Network . The 3i's are IIM Ahmedabad, IIT Kanpur and IDFC. This is an annual publication that contains a good review of policies and actions that were initiated in the infrastructure sector over the recent past, as well as several thematic, thought provoking articles.
Another good resource on Indian infrastructure and India's growth trajectory in general, is the website of the Indian Planning Commission which contains several draft reports and copies of India's 5-year plans. A particularly interesting read is the Approach paper to the Eleventh Five Year Plan 2007-2012 which outlines the Indian governments preferred areas of focus for the next five years.
Another good resource on Indian infrastructure and India's growth trajectory in general, is the website of the Indian Planning Commission which contains several draft reports and copies of India's 5-year plans. A particularly interesting read is the Approach paper to the Eleventh Five Year Plan 2007-2012 which outlines the Indian governments preferred areas of focus for the next five years.
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