Finance Ministry is doing the right thing by lowering its Sovereign Guarantee charge for channelising funds from Multilateral/Bilateral institutions into infra projects. Earlier it was 0.2%. Then raised to 1.2%. Now bringing down selectively to 0.5%
• Sovereign guarantee impetus for infra The Rewa Ultra Mega Solar project will be charged 0.5% for sovereign guarantee on a $98 million loan. The cut in sovereign guarantee charge is to be extended to smart cities.
With the merger of the Railway Budget with the Union Budget, all the earlier lively discussions on the gOperating Ratioh of the Railways seems to have disappeared. Not one mention, or query on this historically important statistic!
• Railwaysf operating ratio must get better The operating ratio of the Railways was marginally lower in FY18 (95%) over FY17 (96%). The govt is targeting a 75% ratio by 2023, and is eyeing a 20% reduction in opex this year.
”Winner’s curse” in reverse auctions taken note of in the Eco Survey. Aggressive price discovery is good for consumers but detrimental to sector viability. Public policy must tread middle path. Best to shift to Median Bidding. All bidders will then strive to bid rationally
• EcoSurvey flags gwinnerfs curseh While aggressive bidding has helped to end rent-seeking and increased transparency, it has also affected sector viability. For coal blocks, the govt is reported to be considering moving to a revenue- or production-sharing model like it is for oil.
Looks like sufficient funding has been tied up for inland waterways. World Bank has agreed to give $375 million loan for Haldea to Varanasi stretch. NIIF & DPWorld have created an investment platform. Now to get going on real-time projects
• Funding for inland waterways The Haldia-Varanasi project is envisaged as $800-mn Jal Marg Vikas Project. While $380-mn will come from budgetary sources and bond issue, $45-mn will be raised through PPP.
Industry bodies were right in their concern that the stage was not quite set for implementing the E-way bill system from Feb 1. Serious IT glitches have now forced the Govt to extend the trial period. New date is still open
• Glitches halt e-way bill roll-out While interstate e-way bills were supposed to be generated from February 1, 17 states started generating intrastate bills, increasing pressure on already stressed e-way bill window.
Solar Energy Corp announces 2000 MW of solar projects on reverse auction basis with ceiling tariff of Rs 2.93 per unit. Currently lowest tariff is Rs 2.44 /unit at Bhadla, Rajasthan. But that was before 70% safeguard duty on imported components came in. Letfs see quotes now
• Import duty trips solar tariffs The industry is expected to refrain from quoting unviable tariffs, especially since it is heavily dependent on imports for solar equipment. Also, as in many infra projects, the developer will have to take on land acquisition and approval risks.
EcoSurvey highlights that 28% urban Indians live in rented premises vis a vis 54% in 1961 as a result of security/satisfaction of ownership + rise of home finance options. 2 takeaways. Problems in rental market + huge stock of vacant houses ~ eg 5 lac in Mumbai & 3 lac in Delhi
• Rental market needs fixing Even as the govt undertakes an eaffordable housingf mission, 12% of total housing stock in India remains vacant, indicating, among other things, systemic problems in rental market.
Whilst Civil Aviation Min dilly-dallies on choice of PPP models, Kerala quietly finalises its 2nd PPP airport.Kannur. Kochi was 1st path-breaking PPP airport; & now Kannur. Kannur shareholding is Kerala Govt 35%, PSUs 25%, AAI 10%, Coop Banks & indiv shareholders at 30%
• Kerala takes to PPP for airports The airportfs development was planned in phases on a modular basis, to minimise initial investment. For the Rs 1,892 crore phase 1, Rs 1,000 crore was raised through equity capital and Rs 892 crore through debt.
A weekly collection of the authorfs tweet – with a brief backgrounder by Sarthak Ray