Looking West

In a country like India, the level of infrastructure development varies significantly across states. On one end of the spectrum there are states such as the seven sisters in the Northeast that are less developed, while on the other, there are states such as Maharashtra that have a wide range of high quality infrastructure facilities. The state is the recipient of the largest foreign direct investment in the country, which is indicative of the confidence that investors place on its present and future development. The statistics confirm this too.  As per the state’s economic survey 2016-17, its projected GDP for the year was 9.4 per cent over the previous year, much higher than the country’s GDP of 7.1 per cent. The outlook for the state is promising too, and Maharashtra is expected to be replete with infrastructure development activity, as indicated by a strong pipeline of projects across various segments.

Roads and highways

The future of road development in Maharashtra looks bright. Several big-ticket projects have been planned. The state government has increased its budget allocations for the road sector, from about Rs 43 billion allocated in 2016-17 to Rs 70 billion in 2017-18. Further, around 195 construction projects worth Rs 300 billion have been proposed for implementation under the hybrid annuity model and Rs 35 billion has been allocated for these projects in the current fiscal year. The state also plans to complete the construction of 10,000 km of roads in the next two years, after which the roads will be maintained by contractors for the next 10 years.

Several big-ticket road projects have also been launched. In August 2016, the Maharashtra government announced a detailed plan for the 706 km Mumbai-Nagpur Super Communication Expressway to connect 24 districts and improve access from rural communities in the east to commercial hubs in the west. The Maharashtra State Road Development Corporation  has received 33 bids for the project in response to the requests for qualification issued in March 2017. The long-awaited Mumbai Trans Harbour Link project also reported progress after witnessing a cost escalation of about 350 per cent due to inordinate delays since its inception. In a major breakthrough, in March 2017, the Japan International Cooperation Agency signed an agreement with the Mumbai Metropolitan Region Development Authority for disbursing around Rs 86 billion through an official development assistance loan to implement the project. The project is finally set to leave the drawing board and start on ground construction this year.

Recently, Maharashtra’s cabinet sub-committee on infrastructure approved the implementation of several projects including the Bandra-Versova Sea Link, the augmentation plan of the old Mumbai-Pune highway, and the construction of a new bridge over Thane creek in Vashi and the Sion-Panvel highway. These projects together entail an investment of Rs 75 billion.

In a bid to improve asset management and maintenance, the state government has decided undertake repair and maintenance work in packages spanning a length of 10 km each to ensure proper supervision. Nonetheless, issues such as land acquisition, utility shifting and approvals continue to impede project implementation, especially in space-constrained parts of the state like Mumbai.

Urban infrastructure

The urban infrastructure sector has a positive outlook and offers huge opportunities for all stakeholders. Several new water supply and sanitation projects are being developed under the three centrally sponsored programmes – the Swachh Bharat Mission (SBM), the Smart Cities Mission and the Atal Mission for Rejuvenation and Urban Transformation. Further, metro construction activities are also being undertaken in a big way across the state.

Maharashtra is currently developing 12 water supply projects involving a total investment of Rs 63 billion. Together, these projects will create an additional treatment capacity of 1,387 million litres per day (mld) and a pipeline network of over 2,400 km. At the same time, 18 water supply projects worth Rs 239.97 billion are in the planning stage. These projects will create 2,138 mld of capacity and lay a pipeline network of over 69.7 km. In the sewage management sector, the state has over 1,067 mld of upcoming treatment capacity. At present, 11 sewage management projects worth Rs 177.69 billion are under construction. The cities of Mumbai and Pune are among the top 10 Indian cities attracting the largest investment for upcoming sewerage projects. Pune is also developing the largest sewage treatment facility in the country (with a capacity of 396 mld).

Further, four solid waste management projects will be developed across the state on a public-private partnership (PPP) basis. These projects will create 7,450 tonnes per day (tpd) of capacity at a cost of Rs 8.74 billion. In Mumbai alone, about 3,000 tpd of solid waste treatment capacity is expected to be operational in the next three-four years. In addition, Navi Mumbai has also planned the development of 3,150 tpd of waste treatment infrastructure. The works will entail an investment of Rs 5.5 billion.

Significant investments are also being made for the provision of efficient urban transportation services. Works are currently under way on metro rail projects in three cities – Mumbai, Navi Mumbai and Nagpur. A total of 117.9 km of metro rail lines will be laid under these projects, at a total investment of Rs 533 billion. In addition, four metro rail projects have been announced for execution in Mumbai (Phase I, Line 2B, Phase II, Line 4 and Phase III, Line 6) and Pune (Phase I). With regard to bus rapid transit (BRT) systems, the state has two upcoming BRT corridors in Pimpri Chinchwad, spanning 21.27 km. In addition, four corridors spanning 73.5 km will be developed in the next phase of the Pune BRT project.

Power

Under the Power for All programme, significant investments are expected in Maharashtra’s power sector. The state genco plans to add a capacity of around 3,480 MW by 2018-19, besides undertaking renovation and modernisation of its existing power projects. Overall, a capex of Rs 471 billion has been proposed by the genco by 2019. The share of renewable energy in the state is expected to increase to 32 per cent by 2019. On the transmission side, to ensure that the system can handle the projected growth in demand and build redundancies in the system, Maharashtra State Electricity Transmission Company Limited plans to invest nearly Rs 85.44 billion in transmission sector projects. Further, the state discom, Maharashtra State Electricity Distribution Company Limited (MSEDCL) is expected to continue to have a healthy power supply position in energy as well as in peak terms. In order to ensure that the state achieves 24×7 power for all its consumers, MSEDCL plans to invest around Rs 283.94 billion by 2019 and over Rs 96 billion beyond 2019. The capex is proposed to be funded through a mix of external borrowings, equity and grants under various state and central schemes including the Deen Dayal Upadhyaya Gram Jyoti Yojana and the Integrated Power Development Scheme. These investments along with the reforms expected under the Ujwal Discom Assurance Yojana are expected to ensure that Maharashtra’s power sector outlook remains robust.

Ports

The outlook for Maharashtra’s maritime sector appears to be positive overall. The central government’s ambitious programme, Sagarmala, aims to promote port-led development in the country. All maritime states will benefit from the initiative, and Maharashtra is no exception. As per Ministry of Shipping estimates, traffic at the Jawaharlal Nehru Port Trust (JNPT) and Mumbai ports is expected to grow to over 200 million tonnes (mt) and 95 mt, respectively, by 2035.

With big plans for capacity augmentation on the anvil, Maharashtra will remain one of the key maritime states in the country. A total of 24 capacity augmentation projects of 105 mt have been planned at JNPT and Mumbai port, at an investment of Rs 165 billion.

Ports are also taking various steps to improve operational efficiency and promote the ease of doing business. JNPT is testing the direct port delivery scheme at all its terminals. The radio frequency identification (RFID) system is fully operational at all the container terminals of JNPT. For Mumbai port, work for the RFID system has been awarded and is currently in progress. Apart from these, gate automation, deployment of container scanners, etc. is expected to increase operational efficiency at these major ports. Meanwhile, at the state level, 20 projects related to the development of new ports, captive jetties, multi-purpose jetties, shipyards, etc. are in the pipeline.

Going forward, while Maharashtra is expected to attract greater participation from both investors and private developers, an attempt must be made to fast-track long-delayed PPP projects such as Rewas port, to sustain private sector interest in the state.

Oil and gas

The state’s oil and gas sector is expected to witness significant activity in the coming years, if plans are implemented as scheduled. This is on the back of the government’s aim to achieve greater self-reliance with respect to hydrocarbons in the times ahead. One of the mega projects in the offing is the Rs 1.5 trillion mega refinery and petrochemical complex in Ratnagiri district. Public sector units Indian Oil Corporation Limited, Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited plan to jointly build a 60 million tonnes per annum (mtpa) refinery in two phases of 40 mtpa and 20 mtpa respectively. The project is being lauded as one of the biggest in the oil and gas sector so far. At present, the land acquisition process is ongoing. Another key project is the expansion of the Dabhol LNG terminal, after which its capacity will rise from the current 1.69 mtpa to 5 mtpa by 2020. The midstream and downstream network, however, will take shape as per company-specific expansion plans as well as the feasibility of the planned projects.

Airports

Maharashtra has big investments lined up in the airport sector. It has four key upcoming greenfield airport projects, at Navi Mumbai, New Pune (Purandar), Sindhudurg and Shirdi, which are expected to add capacity of more than 82 million passengers per annum once they are completed.

Needless to say, Maharashtra’s biggest airport, Mumbai is a jewel in the crown of India’s aviation sector. However, with the ever-growing traffic woes, it might soon lose its charm. Although the flurry of activity being undertaken in aviation in the state has set the ball rolling for the sector’s development and growth, much needs to be done to streamline the process.

A step in the right direction will be the finalisation and formal signing of the contract for the Navi Mumbai International Airport and ensuring that the implementation of the project is undertaken in a time-bound manner, especially since the Maharashtra government is yet to approve the deal. The new airport is expected to provide the much-needed respite to the saturated Mumbai airport, where the frequency of delayed operations and low on-time performance has been on the rise. Besides, despite the completion of civil works at Shirdi airport, the airport is yet to obtain the mandatory licence from the Directorate General of Civil Aviation.

Nonetheless, the Maharashtra government’s concerted drive to tap unexplored opportunities in the sector – be it by way of developing a cargo hub, setting up maintenance, repair and overhaul facilities, or establishing new airports – is expected to play a pivotal role in the country’s aviation growth story and simultaneously open new areas of growth for the state. In comparison to other Indian states too, Maharashtra appears to have performed better in proactively taking steps to improve the sector dynamics.

Conclusion

One of the leading states of India, Maharashtra is likely to continue to take big steps with regard to infrastructure development. With mega projects coming up and works on several others under way, the outlook for the state is bright. A supportive policy framework from the centre, a proactive state government, sector-specific pull factors and the unlocked market potential are some the key factors that bode well for the future of infrastructure development in Maharashtra.

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