Big boost! Kudos to Nitin Gadkari for much-awaited changes to the PPP format for ports

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Published: January 10, 2018 4:08:54 AM

Changes to model concession pact allow developers to divest 100% of their equity after two years of completion of commercial operations. Rent for additional land has been reduced from 200% of applicable scale of rates to 120%.

infra tweets, vinayak chaterjee infra tweets, nitin gadkari on ppp modelUnion Minister Nitin Gadkari.

Kudos to Mr.Gadkari for proposing, and the Cabinet for endorsing, the much-awaited changes to the PPP format for Ports. A whole bunch of positive resets have been welcomed by industry including exit & royalty clauses, reduced land rental & dispute resolution mechanism.
Revamped PPP for ports
Changes to model concession pact allow developers to divest 100% of their equity after two years of completion of commercial operations. Rent for additional land has been reduced from 200% of applicable scale of rates to 120%.

The two major issues facing the Union Budget are Agrarian Distress & declining Gross Capital formation in economy ( now down to 26% from peak of 34% ). So key response suggests itself – greater public expenditure in agri/ rural infrastructure. Right?
Sowing rural infra growth
The Gujarat polls put the spotlight on agrarian distress, thus focus will be on the sector before the 2019 polls. Rural infra spending’s focus likely to be on housing and roads.

Now here’s the first tentative step towards suggestion of having a National Power Procurement & Distribution Co to save power sector. It’s reported that PFC & PTC will together procure and sell from stranded units. On track to counter geographic monopolies called Discoms.’
Rescuing stranded gencos
Power generation NPAs account for 5.9% of banks’ overall outstanding advances of `4.73 tn. Bids to supply to states will be invited from projects without PPAs to help rescue them.

FE headlines data to show that most Discoms hv missed key UDAY targets for FY 17. This was feared – that the scheme’s re-arrangement with state finances would reduce interest burden , but that there was no definitiveness to substantively achieve operational targets. Deja vu ?
Missing UDAY targets
Just six states and one UT from the 31 that signed up for UDAY have met their targets for AT&C loss reduction; only 10 states /UTs have narrowed the cost of supply-revenue realised gap.

Rather paradoxical that in era when India is investing heavily in green energy – wind power equip makers r saddled with huge unsold inventories & laying off staff ( @shreya_jai in BusStd today );dom solar mfgerers r struggling to stay afloat & most hydro projects are stalled
Slowing capacity addition hits turbine-makers
Wind power tariffs have fallen and capacity addition has slowed. Turbine-makers estimate unsold inventory at `100-150 bn.

Who would have imagined “negative” electricity prices ?!” Power prices go negative in Germany due to overproduction https://goo.gl/35DBBN
Paid to consume
Over-generation from renewables, thanks to the weather conditions, is responsible. This also compensates users in later billing.

It’s good to see pvt sector and govt working in tandem to make a scheme succeed. ET reports that various state governments and corporates in smaller towns are underwriting /guaranteeing seats usage in the UDAN aircraft . Cheers to the spirit of regional air connectivity.
States, firms give wings to UDAN
Uttar Pradesh is reportedly the first state to be doing this. In a 19-seater, currently, the Centre underwrites as many as nine seats for tickets to be priced at `1,500-1,800.

Thermal power plants delaying mandated pollution-control equipment for economic reasons; almost a half decade delay now. As one time installation costs pretty high, policy makers considering 2 pronged approach – increase of tariffs by 62-93 paisa and capex loan facilitation
Powering the fight against pollution
India’s planning to make all its coal-fired plants compliant with emission reduction norms by 2022. Given thermal power plants contribute a large chunk of pollutants, the move to pass on costs to users and provide loans for one-time installation costs is a sound one.

A weekly collection of the author’s tweets—with a brief backgrounder—by Sarthak Ray

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