Over the past decade, Punjab has seen rapid urbanisation and its cities have grown in a haphazard manner. At present, about 37 per cent of its population resides in urban areas. To keep pace with urbanisation, the Punjab government has made massive investments in infrastructure development through the Punjab Infrastructure Development Board (PIDB). About 55,000 projects were taken up at an investment of Rs 40 billion as part of the Punjab Urban and Rural Mission. So far, expenditure of about Rs 33 billion has been incurred.
The state government has focused on a mix of implementation models to create the infrastructure asset base. Development of road and rail connectivity, ensuring power availability, and provision of healthcare and education services has been undertaken through a mix of the engineering, procurement and construction (EPC) model and the public-private partnership (PPP) model. In order to create a conducive environment for project implementation, initiatives such as setting up of the Punjab Infrastructure Regulatory Authority, creation of the Business First Portal for easy clearances and the empanelment of consultants for conducting financial viability studies and providing technical advisory services were taken.
While asset creation kept pace with the requirements of the state, operations and maintenance (O&M) of these assets had been left mostly unattended. The state is now focusing on taking up O&M projects. Further, the government is aiming to attract greater private investment in infrastructure development. PIDB has identified a pipeline of PPP projects to be taken up during 2019-20. The projects involve the development of airports, a bus rapid transit system (BRTS), medical colleges, and ring road projects, among others.
Current state of infrastructure
After the promulgation of the Punjab Infrastructure Development and Regulation Act, 2002, the state witnessed an increase in the pace of infrastructure development. Significant progress has been achieved in various verticals through the extensive efforts of PIDB.
With respect to the aviation sector, two international airports, at Amritsar and Mohali, have been developed. The airport at Mohali was operationalised in April 2019. Flights to several domestic and international destinations are being operated by different airlines from both the airports. With increasing passenger traffic, new flights are being added regularly.
Similarly, the logistics segment is abounding with opportunities mainly due to the availability of the requisite infrastructure. At present, three multimodal logistics park (MMLPs) are operational. One MMLP has been developed by Adani Logistics Limited at Kila Raipur, Ludhiana, while the other two are being operated by Hind Terminal Private Limited and Punjab Logistics Infrastructure Limited at Dehloh and Ahmedgarh, respectively, in Ludhiana district .
Apart from this, the state has also performed well in terms of power availability. A net exporter of power, Punjab remains power surplus throughout the year. At present, it has an installed capacity of about 13,700 MW with nearly 100 per cent of its villages electrified. The per capita power consumption is also high at 1,500 kWh, which is better than the national average of 1,200 kWh.
The state of road infrastructure is also commendable as Punjab’s network is ranked second in the country. So far, about 800 km of road network, with tolling booths, has been laid. Almost 100 per cent of the state is connected by roads and the road density stands at about 133 per square km. Social infrastructure development has also been a key focus area and healthcare facilities and educational institutions are easily accessible.
In order to successfully develop these projects, the EPC and PPP models were adopted. Efforts were made to make PPP projects attractive. For this, the Punjab Infrastructure Regulatory Authority was formed to take up public consultations, and finalise funding and execution structures of infrastructure projects, besides adjudicating on litigations. PIDB on the other hand ensures that clearances are in place and land is allocated prior to project award.
Attractive opportunities for private players
With the existing infrastructure asset base fa-cing capacity constraints, the state government has laid emphasis on the development of urban infrastructure. A realistic pipeline of PPP projects, to be taken up during 2019-20, has also been identified. This will offer significant opportunities to the private sector.
In a bid to boost air connectivity, the state government has approved the development of a civilian airport at Halwara near Ludhiana. A world-class maintenance, repair and overhaul hub is also planned to be developed at the Patiala Civil Aviation Club. The project, however, is at the inception stage. In the long term, airports at Jalandhar, Bathinda and Pathankot have also been planned for development or upgradation under the Ministry of Civil Aviation’s Regional Connectivity Scheme.
Another focus area is the development of aerotropoli at Ludhiana and Mohali at an investment of Rs 35 billion and Rs 120 billion respectively. In order to attract private participation, the government has proposed the provision of subsidies for these projects. Meanwhile, about 2,500 acres of land in Ludhiana and 5,350 acres in Mohali has also been earmarked for the aerotropolis projects.
The Punjab government has also unveiled plans to develop six city ring roads in the state by 2010. These have been approved by the National Highways Authority of India.
In the urban transport segment, the government plans to develop a BRTS in Ludhiana. Meanwhile, a mobility plan has also been drafted for Patiala. PIDB also plans to develop 14 bus terminals with commercial centres on a PPP basis. Currently, such bus stands are being planned at Gurdaspur, Patiala, Rupnagar, Mansa and Raikot. The requests for proposal (RfPs) for the bus stands at Gurdaspur and Patiala have been prepared and bids are yet to be invited. Meanwhile, bid documents for the Rupnagar and Mansa bus terminals are under preparation and the tenders are likely to be floated by July 2019. Tenders for the remaining bus stands are expected to be invited by August 2019.
In the healthcare sector, development of medical colleges at Gurdaspur, Sangrur and Pathankot is in the pipeline. The state government has already appointed a transaction adviser to conduct feasibility studies and prepare bid documents for the projects. According to the plans, bids are expected to be invited by August 2019. The government also plans to set up diagnostic centres in hospitals such as Max Hospital, Mohali, on a PPP basis.
Emerging opportunities
Punjab’s logistics sector is set to witness huge growth on account of linkages with the upcoming dedicated freight corridors. This will create opportunities for the development of MMLPs in and around the state. Opportunities also exist in the tourism sector. The state government has unveiled plans to develop an ecotourism project near the Ranjit Sagar dam on the Ravi river.
About 77 acres of land has already been allocated for the project. The authorities are currently in the process of securing forest and environmental clearances for the site. While the bid documents have been prepared, tenders are expected to be invited by August or September 2019.
The state also plans to put projects entailing upgradation, and O&M of 18 industrial focal points located in Amritsar, Ludhiana, Jalandhar and Mohali on the block. A transaction adviser has been appointed and the works are likely to be tendered in September 2019.
Meanwhile, to enhance the preparedness of urban local bodies in the case of an emergency, funds amounting to Rs 5 billion have been earmarked for the deployment of fire safety infrastructure across the state. Plans are also afoot to set up convention and commercial centres at Amritsar, Mohali and Ludhiana. Bids for these projects have already been invited.
Future holds potential
The large pipeline of projects identified by the Punjab government makes the state an attractive investment destination for private players. However, the successful completion of projects is essential for private players to get returns on their investments. For this, the government has initiated steps such as the acquisition of land before the award of a project and empanelment of independent consultants to assess the projects’ financial viability. Besides this, changes are being introduced to the existing RfP documents to make them investor-friendly. Consultants such as Deloitte and EY have been appointed to assist in the project development stage. With such noteworthy initiatives, the state has strengthened its asset building efforts besides widening the net to attract private investments.
Based on a presentation by Yashanjit Singh, Additional Managing Director, PIDB, and Additional Secretary, Finance, Government of Punjab, at the India Infrastructure Forum 2019