Creating Future Capacity

India Infrastructure Research has tracked over 400 ongoing projects across seven infrastructure sectors. These are worth at least Rs 15 trillion. In terms of project cost, the maximum share is of power projects at 57 per cent, followed by roads at 15 per cent and metro rail at about 13 per cent.

The power projects will add significant amount of capacity upon completion. According to the analysis, going forward, 110,268 MW of generation capacity will be added. Of this, 90 per cent will be thermal based, 6.5 per cent large hydro based, and the remaining will be nuclear based.  The road network will also see an addition of over 25,000 km of quality roads; the railway will expand by 8,300 km; and the metro rail will increase by over 700 km. Also, works with a cargo capacity of about 400 million tonnes per annum are currently ongoing across ports.

Almost half of the ongoing projects are greenfield development, while the remaining are brownfield expansions. In the power sector, 118 of the 147 ongoing projects are greenfield, followed by roads at 37 out of 187, water at 16 projects out of 20, and metro at 12 out of 17 ongoing projects.

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In terms of mode of implementation, 191 ongoing projects are being developed on a public-private partnership (PPP) basis out of the total 408 projects, and the remaining through non-PPP modes, including engineering, procurement and construction (EPC) basis. In terms of cost, PPP projects account for 36 per cent and non-PPP projects account for the remaining 64 per cent.

The key big-ticket projects implemented through government funding include the Dedicated Freight Corridor (DFC) (eastern and western corridor) project involving a cost of over Rs 700 billion and the Rs 200 billion-plus Jammu-Udhampur-Katra-Qazigund-Baramulla railway line in the railway sector; metro projects in Delhi (Phase III) worth Rs 350 billion, in Bengaluru (Phase II) worth Rs 264 billion and in Chennai (Phase I) worth Rs 184 billion; the interstate transmission system project worth Rs 188 billion, Kudgi Super Thermal Power Plant Stage I worth Rs 152 billion and Barh Super Thermal Power Project Stage I worth

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Rs 151 billion in the power sector; and the Rs 150 billion Agra-Lucknow Expressway project in Uttar Pradesh, Rs 36 billion Indo (Bihar)-Nepal border road project, and Rs 32 billion Digha-Didarganj Ganga Expressway project in Patna in the road sector.

Meanwhile, the private sector continues to play a critical role in undertaking projects in power, roads, ports and metro rail. In the power sector, 55 PPP projects worth Rs 3.57 trillion are ongoing. The biggest PPP power project – the 3,980 MW Chitrangi coal-based power project in Madhya Pradesh – is being implemented by Reliance Power Limited at a cost of Rs 242 billion – a cost escalation of

Rs 57 billion has been reported. The second largest PPP project in the sector is being undertaken by Bajaj Hindusthan Limited. This is the Rs 172 billion Lalitpur thermal power project in Uttar Pradesh. The first unit of 660 MW was commissioned in September 2015, while work on two other units is currently ongoing. The project has reported delays due to delays resource mobilisation, heavy rains, difficulty in commencement of work, turbine generator erection, boiler insulation, fuel oil system readiness issues.

In the road sector, 116 projects covering over 13,500 km and worth Rs 1,443 billion are under implementation on a PPP basis. One of the costliest PPP projects under implementation is the Rs 35 billion Bakhtiyarpur-Tajpur bridge over the Ganga river in Bihar. The concessionaire, Navayuga Engineering Company Limited, is constructing the 45 km project on behalf of Bihar State Road Development Corporation Limited. The concession period is 30 years. Meanwhile, the completion deadline has been revised four times and the project is now scheduled for completion by 2019, a time overrun of 59 months owing to land acquisition issues. Another project, the widening of the 192 km Varanasi-Aurangabad section in Uttar Pradesh and Bihar, is being implemented by the Isolux-Soma consortium. This Rs 32 billion project is expected to be completed by 2017 as against the scheduled completion year of 2014. Project execution is behind schedule on account of non-availability of complete right of way and difficulty in procuring aggregates for construction work, due to the non-grant of mining licences in Bihar.

Other big-ticket projects being implemented on a PPP basis include the Rs 200 billion Hyderabad Metro Rail Project Phase I by Larsen & Toubro in the metro rail sector; the Rs 79 billion fourth container terminal project at the Jawaharlal Nehru Port Trust by PSA International; development of the Rs 75 billion Vizhinjam greenfield port by Adani Ports and Special Economic Zone Limited in the port sectors; the Rs 19 billion Kannur International Airport project in the airport sector; and the Rs 13 billion Surface Water Based Water Supply Scheme for Kulpi in the water sector.

Overall, with regard to the expected completion of ongoing projects (for which information is available for 331 projects), 168 projects are scheduled to be commissioned during 2016. Of these, 95 projects, including state and national highways, are in the road sector, and 53 projects are in the power sector. Meanwhile, 83 projects are scheduled to be commissioned in 2017, 52 in 2018 and 20 in 2019 (including the DFC project).

However, some of these projects have faced significant time overruns which has resulted in massive cost escalations. Going forward, in order to meet these deadlines, it is imperative for the concerned authorities and private concessionaires to fast-track project development and monitor such projects regularly.