Archive for the 'PPP' Category

Four laning of Sambalpur-Angul

NH 42 (261 Kms: NH-6@Sambalpur - Redhakhol - Anugul - Dhenkanal - NH-5@Nergundi), PPP 2 Comments »

Update on July 12 2011: As per a report in Business Standard:

The financial ministry approves the four laning of Angul-Sambalpur section of NH 42 in Orissa for Rs 1,220.32 crore and two/four laning of Birmitrapur to Barkote section in Orissa (Rs 778.15 crore). These are to be done via PPP.


Original part published on: June 19th. 2008, 11:55pm

Following is an excerpt from a report in New Indian Express.

The Lok Sabha petitions committee rapped the National Highway Authority of India (NHAI) for the inordinate delay in four-laning of the National Highway No 42 from Angul to Sambalpur. As a number of steel industries and thermal power plants are coming up in Jharsuguda, Sambalpur, Angul and Dhenkanal districts, traffic on this route has increased manifold. The State Government has been demanding the NHAI for further widening of this route in view of movement of large number of heavy vehicles. The petitions committee chaired by Pabhunath Singh met at Delhi recently and sought to know from the Ministry of Shipping, Road Transport and Highways about the delay in four-laning the road. The NHAI officials reportedly told the committee that the proposal of the State had been approved. After survey on traffic intensity on the route, the 107-km stretch between Manguli and Angul has been been identified for four-laning. The Ministry has made a budgetary provision of Rs 2.3 crore in the current year�s budget for feasibility study and preparation of detailed project report (DPR). Steps have been taken to engage a consultant for DPR preparation. … Dharmendra Pradhan, a member of the committee, reportedly suggested that the four-laning should be done up to Jarpada in view of the steel project coming up there. However, the Ministry officials said that there is no proposal for four-laning beyond Angul. On the development of 209-km-long NH-23 from Banarpal to Birmitrapur, the Ministry said that widening of 9- km road to two lane is in progress and the four-laning of Birmitrapur to Rajamunda depends of the traffic intensity. A consultant has been appointed for feasibility study.

 

Designs of proposed PPP based modrn bus terminals at Baramunda (Bhubaneswar), Badambadi (Cuttack), Angul and Dhenkanal

Angul, Anugul- Talcher - Saranga- Nalconagar, Bhubaneswar- Cuttack- Puri, Cuttack, Dhenkanal, Khordha, Modern Bus Stands, PPP 3 Comments »

(Thanks to Devasis Sarangi for the pointers.)

Update on various PPP projects in Odisha

Bhubaneswar- Cuttack- Puri, Jajpur, Keonjhar, Khordha, Odisha govt. action, PPP, Puri, Sambalpur, SEZs, Sundergarh Comments Off on Update on various PPP projects in Odisha

Following is from a report in Business Standard.

The Orissa government has decided to undertake 14 projects on the Public Private Partnership (PPP) mode involving an expenditure of Rs 6,218.02 crore.

A total of 46 projects, to be taken up on the PPP mode, are under the consideration of the state government, A U Singhdeo, minister for Planning & Coordination said in the state assembly.

… The Infocity-II project, one of the major PPP projects, being planned over 600 acres of land at Janla on the outskirts of the city, has gathered some steam after being marred by inordinate delay.

As part of its commitment to expedite this project, the state government has set in motion the process to prepare Request for Qualification (RFQ) for this project.

"An empowered committee of the state industries department has been asked to oversee the bidding process of the Infocity-II project. The RFQ is currently being prepared. The land acquisition for the project has been already completed and environment clearance has been obtained. The state government has also submitted an application to the Government of India for Special Economic zone (SEZ) notification for the project,” the minister said.

The other notable projects in the information technology sector taken up on the PPP mode are Mindspace IT Park involving a cost of Rs 480 crore, the DLF Infopark project entailing an investment of around Rs 1,000 crore and an IT & Corporate Tower being taken up at Chandrasekharpur at a cost of Rs 140 crore.

In the tourism sector, the Empowered Committee on Infrastructure (ECI) has approved the revised Request for Proposal (RFP) for selecting the master developer for the Shmauka beach tourism project being taken up at a cost of Rs 3,500 crore on around 3,000 acres of land at Sipasarubali near Puri.

In the road transport sector, the High Level Clearance Authority of the state government has approved a proposal to seek Viability Gap Fund (VGF) assistance for the four-laning of the Sambalpur-Rourkela road involving a cost of Rs 1,483 crore.

For the Koira-Tensa-Lahunipara road in Keonjhar district, involving an implementation cost of Rs 392.2 crore, PricewaterhouseCoopers (PwC) has submitted a draft preliminary report. This project needs 38 per cent VGF as per the toll rates of National Highways Authority of India Ltd (NHAI).

Meanwhile, feasibility study is underway for three other road projects- Shaukati-Dubuna road in Keonjhar district, Tensa-Barsuan-Lahunipara road in Sundergarh district and Chorada-Duburi road in Dhenkanal  Jajpur.

Samaja’s Shilpayana Supplement: Private investment encouraged in healthcare

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HLCA approves 4-laning of Sambalpur-Rourkela via PPP: Dharitri

High Level Committee, Jharsugurha, PPP, Rourkela- Kansbahal, Sambalpur, Sambaplur- Burla- Bargarh- Chipilima, State highways, Sundergarh 3 Comments »

Tathya.in has some interesting tidbits on this. Following is an excerpt.

Minister was speaking in the High Level Clearance Authority (HLCA) on 17 November.

HLCA Chaired by Naveen Patnaik cleared the proposal of 4-laning of Sambalpur-Rourkela Highway on PPP Mode with an investment of Rs.1270 crore.

He said by slapping tool tax on the commuters and funding the project is passé.

Now while roads are coming up in a big way, lands are identified at some vantage points by the side of the roads.

These places can be handed over to the developers so that they can develop shopping malls, housing projects and this should be included in the package.

And this initiative will lessen the burden of tax payers, who are forced to pay huge toll tax for years to come.

Secondly Minister said that while we are going for expansion of the Highways, encroachment of land is posing a big problem.

… It would be a better proposition to acquire land and lay the road in such a way that more space is left inwards.

So that later that space can be used for expansion of roads and no body will be able to encroach upon and inside the highway, said the Minister.

Foundation stone laid for Konark Knowledge (Bio-Tech, Pharma, IT) park in Andharua Bhubaneswar

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The above is from Samaja. Following is an excerpt from a report in Economics Times by Nageshwar Patnaik.

A knowledge park is coming up here at an estimated cost of Rs 100 crore. This is the first public private partnership integrated industrial park by Government of Orissa and Bharat Biotech International [BBI].

Work at the 100 crore ‘Konark Knowledge Park’ at Mouza-Andharua near the state capital here began today with the ground breaking ceremony held here on Sunday. …

The project aims to boost investments in the areas of biotechnology and pharmaceuticals in the state of Orissa. When completed, this infrastructure will create world-class, state-of-the-art research and development enterprises in an exceptional environment designed to foster novel approaches to healthcare and its delivery.

The state government has allocated 64.86 acres of land (30 acres in Phase I and 24.86 acres in phase II) including 10 acres of land for development of Biotech Incubation Centre through a Special Purpose Vehicle [SPV] for development of an integrated industrial park to attract and promote biotechnology, pharmaceutical and information technology industries here. The land for park has been allocated in the form of a long term lease to the SPV named Konark Knowledge Park Pvt. Ltd.

The SPV will execute the Lease cum Development Agreement with Orissa Industrial Infrastructure Development Corporation (IDCO). The project is expected to be completed over a period of 8 years.

… Orissa Industrial Infrastructure Development Corporation (IDCO) will provide all external infrastructure facilities, such as four-way lane roads to the gate, uninterrupted water supply, uninterrupted power with 33KVA sub-station, sewage etc to facilitate rapid development of internal infrastructure.

BBI has successfully developed an integrated Agri-Biotech Park in Bangalore and establishment of Genome Valley BioPharmaceutical cluster located in the outskirts of Hyderabad.

Excerpts from the Presidents’ speech to the new parliament on 4th June 2009

Aaam Admi Bima Yojana, ADMINISTRATION & REPs, Agricultural insurance, Bharat Nirman Program, E-governance, Elections 2009, Fishermen insurance, Health insurance for BPL workers, Health insurance for weavers, Marquee Institutions: existing and upcoming, National Food ... (NFSM), National Old Age Pension (NOAP), NFBS, NMBS, NOAPS, NREGS, NSAP: NOAPS, NFBS, NMBS, NURM, JNNURM, PPP, RURAL & SPECIAL PROGRAMS, Universities: existing and upcoming Comments Off on Excerpts from the Presidents’ speech to the new parliament on 4th June 2009

The whole speech is at http://presidentofindia.nic.in/sp040609.html. Following are excerpts. The underlining and other emphasis is mine.

18. The flagship programmes which my Government introduced have moved the country towards inclusive development. It would be our endeavour to consolidate these programmes in the next five years. The National Rural Employment Guarantee Act has proved to be what it promised-an effective social protection measure and the largest programme in the world for rural reconstruction. Its transformational potential is unfolding before our eyes. My Government would enlarge the scope of works permitted under the National Rural Employment Guarantee Act presently limited to unskilled manual work. The opportunity for improving land productivity through the NREGA will be maximized through better convergence of NREGA with other programmes. To ensure transparency and public accountability, independent monitoring and grievance redressal mechanisms will be set up at the district level.

19. The National Rural Health Mission has begun to strengthen rural public health infrastructure. The Mission would be consolidated to make perceptible reduction in infant mortality and maternal mortality in the next five years. Vaccine producing institutes in the public sector will be revived to support the immunization programme. My Government will expand the Rashtriya Swasthya Bima Yojana to cover all families below the poverty line in the next five years. Malnutrition has emerged as a major health challenge needing urgent response. Hence the nutrition delivery programme will be comprehensively revamped to bring it under the watch of panchayat institutions and move to provision of hot cooked meals in anganwadis.

20. Sarva Shiksha Abhiyan has been able to provide access to children to elementary schools and retention has increased on account of the universal mid-day meal programme. The focus will be on making quality education a right through the enactment of the Right to Free and Compulsory Education Bill now under consideration of Parliament. The Madhyamik Shiksha Abhiyan will universalize access to secondary education. The massive expansion in higher education through new institutions under implementation in the Eleventh Plan will enable the country to meet the challenge of education in full measure. In the last five years, a wide range of scholarships and educational loans was introduced for the needy and deserving students. This effort will be reviewed and further strengthened. Government’s strategy for higher education will be formulated around a three-fold objective of expansion, inclusion and excellence. The suggestions given by the National Knowledge Commission will guide the formulation and implementation of the strategy.

21. While male literacy went up to over 75 percent in the last census and is expected to be higher now, female literacy was only 54 percent in 2001. My Government will recast the National Literacy Mission as a National Mission for Female Literacy to make every woman literate in the next five years. Increased female literacy is expected to become a force multiplier for all our social development programmes.

22. My Government launched Bharat Nirman five years ago as a time-bound business plan for rural infrastructure. It has succeeded in reaching basic infrastructure of roads, electricity and telephone to a large number of villages. It has also achieved most of the targets of rural water supply, rural housing and has increased irrigation potential. The remaining tasks will be completed in the second phase of Bharat Nirman. It is also proposed to set enhanced targets for Bharat Nirman in the second phase.

The Indira Awas Yojana, which exceeded the original target of sixty lakh houses for the period 2004-2009, will now take up double the target of rural housing to one crore twenty lakh houses to be completed in the next five years.

Rural Water supply programme will be completed by 2011 and handed over to be managed by panchayats in the next Plan.

The rural telecommunication target will be set at reaching 40% rural teledensity in the next five years and expanding broadband coverage to connect every panchayat to a broadband network in three years. The scheme for Common Service Centres or e-kiosks will be suitably repositioned to be a network of panchayat-level Bharat Nirman Common Service Centres to provide government services to citizens in rural areas.

– New targets would be set for rural electrification, irrigation and road connectivity.

23. The Jawaharlal Nehru National Urban Renewal Mission (JNNURM) with approval of projects of nearly Rs. 50,000 crore in the last four years is reshaping our cities and has been widely welcomed. It will continue to focus on infrastructure, basic services and governance reform and increase support to cities to upgrade public transport. Over 15 lakh houses are under construction for the urban poor. There is a need to focus urban housing programmes on the poor living in slums. My Government proposes to introduce a Rajiv Awas Yojana for the slum dwellers and the urban poor on the lines of the Indira Awas Yojana for the rural poor. The schemes for affordable housing through partnership and the scheme for interest subsidy for urban housing would be dovetailed into the Rajiv Awas Yojana which would extend support under JNNURM to States that are willing to assign property rights to people living in slum areas. My Government’s effort would be to create a slum free India in five years through the Rajiv Awas Yojana.

24. My Government proposes to enact a new law — the National Food Security Act — that will provide a statutory basis for a framework which assures food security for all. Every family below the poverty line in rural as well as urban areas will be entitled, by law, to 25 kilograms of rice or wheat per month at Rs. 3 per kilogram. This legislation will also be used to bring about broader systemic reform in the public distribution system.

26. Over 50 percent of our population is below 25 years of age and their creative energy is our greatest strategic resource. The challenge is to invest in their education, employability and employment. India has the capacity to contribute to a fourth of the global work force if it invests in skill development of its youth. Education which provides employable skills holds the key for equal opportunities for Other Backward Classes, Scheduled Castes, Scheduled Tribes, and Minorities. My Government has in the last five years brought in legal changes and investment in this direction. These would be consolidated. Besides making massive investment in education, government will focus on the national skill development initiative that has commenced operation with the very ambitious goal of creation of 500 million skilled people by 2022 so that we realize the demographic dividend.

27. The implementation of the Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act would be monitored to ensure that all title deeds are distributed by end of 2009.

29. The Amendment Bill to the Land Acquisition Act and the Rehabilitation and Resettlement Bill prepared to protect farmers and others dependent on farming from unfair displacement and which was placed before Parliament could not be carried through. It will be our endeavour to have these bills reintroduced and enacted in the budget session of Parliament.

30. My Government considerably enhanced provisions for social security through old age pension for all people below the poverty line and above 65 years of age, all handicapped people and all widows above the age of forty. It will examine extending social protection to other persons at special risk. Social security schemes for other occupations like landless labour, weavers, fisherfolk, toddy tappers, leather workers, plantation labour, construction labour, mine workers and beedi workers will be appropriately expanded.

32. My Government will initiate steps within the next hundred days on the following measures:

Restructuring the Backward Regions Grant Fund, which overlaps with other development investment, to focus on decentralized planning and capacity building of elected panchayat representatives. The next three years would be devoted to training panchayat raj functionaries in administering flagship programmes;

A public data policy to place all information covering non-strategic areas in the public domain. It would help citizens to challenge the data and engage directly in governance reform;

– Increasing transparency and public accountability of NREGA by enforcing social audit and ensuring grievance redressal by setting up district level ombudsman;

Strengthening Right to Information by suitably amending the law to provide for disclosure by government in all non-strategic areas;

– Strengthening public accountability of flagship programmes by the creation of an Independent Evaluation Office at an arm’s distance from the government catalysed by the Planning Commission. It would work on a network model by collaborating with leading social science research organizations and concurrently evaluate the impact of flagship programmes and place it in the public domain;

– Establishing mechanisms for performance monitoring and performance evaluation in government on a regular basis;

– Five Annual Reports to be presented by government as Reports to the People on Education, Health, Employment, Environment and Infrastructure to generate a national debate;

– Facilitating a Voluntary Technical Corps of professionals in all urban areas through JNNURM to support city development activities;

– Enabling non government organisations in the area of development action seeking government support through a web-based transaction on a government portal in which the status of the application will be transparently monitorable;

Provision of scholarships and social security schemes through accounts in post offices and banks and phased transition to smart cards;

– Revamping of banks and post offices to become outreach units for financial inclusion complemented by business correspondents aided by technology;

Electronic governance through Bharat Nirman common service centres in all panchayats in the next three years;

– A model Public Services Law, that covers functionaries providing important social services like education, health, rural development etc. and commits them to their duties, will be drawn up in consultation with states;

A National Council for Human Resources in Health as an overarching regulatory body for the health sector to reform the current regulatory framework and enhance supply of skilled personnel;

A National Council for Higher Education as recommended by the Yashpal Committee and the National Knowledge Commission to bring in reform of regulatory institutions;

Develop a "brain gain" policy to attract talent from all over the world into the 14 universities proposed in the 11th plan to position them as "Innovation Universities";

– A roadmap for judicial reform to be outlined in six months and implemented in a time-bound manner;

– Targeted identification cards would subsume and replace omnibus Below Poverty Line (BPL) list. NREGA has a job card and the proposed Food Security Act would also create a new card. Identification of beneficiaries for other programmes which currently use the omnibus BPL list would improve identification based on programme objectives with the common underlying principle that all identification of beneficiaries will be done through gram sabhas and urban local bodies and the list placed in the public domain to be open to challenge;

– A Delivery Monitoring Unit in the Prime Minister’s Office to monitor flagship programmes and iconic projects and report on their status publicly;

– Suitably institutionalized quarterly reporting on Flagship programmes as "Bharat Nirman Quarterly Reports" where Ministers would publicly report on progress through the media.

33. Infrastructure is a fundamental enabler for a modern economy and infrastructure development will be a key focus area for the next five years. Public investment in infrastructure is of paramount importance. Bottlenecks and delays in implementation of infrastructure projects because of policies and procedures, especially in railways, power, highways, ports, airports and rural telecom will be systematically removed. Public-private partnership (PPP) projects are a key element of the strategy. A large number of PPP projects in different areas currently awaiting government approval would be cleared expeditiously. The regulatory and legal framework for PPPs would be made more investment friendly. My Government will continue its special emphasis on infrastructure development in the North-East and Jammu and Kashmir and enhance connectivity to these regions.

34. Our fellow citizens have every right to own part of the shares of public sector companies while the government retains majority shareholding and control. My Government will develop a roadmap for listing and people-ownership of public sector undertakings while ensuring that government equity does not fall below 51 %.

35. My Government is firmly committed to maintaining high growth with low inflation, particularly in relation to prices of essential agricultural and industrial commodities. It will steadfastly observe fiscal responsibility so that the ability of the Centre to invest in essential social and economic infrastructure is continuously enhanced. This will require that all subsidies reach only the truly needy and poor sections of our society. A national consensus will be created on this issue and necessary policy changes implemented.

36. My Government has been able to significantly increase realization of direct taxes as a result of improved and simplified tax administration and this process will continue. The roadmap for moving towards a Goods and Services Tax will be vigorously pursued. My Government is fully seized of the issue of illegal money of Indian citizens outside the country in secret bank accounts. It will vigorously pursue all necessary steps in coordination with the countries concerned.

37. Coordinated action for energy would be guided by the integrated energy policy. The effort would be to see that at least 13,000 MW of generating capacity is added each year through a mix of sources -coal, hydel, nuclear and renewables. Village and rural household electrification and reduction in aggregate technical and commercial losses will continue to be given the highest priority. Competitiveness and efficiency in the power sector will be enhanced through time-bound measures, including operationalising the provision of open access.

38. The pace of oil and gas exploration will be intensified and India’s oil diplomacy aggressively pursued. Reforms in the coal sector, for which a detailed blueprint has been prepared, will be pursued with urgency. The international civil nuclear agreements will be operationalised with various countries even as domestic sources of uranium are exploited and work continues on the indigenously designed fast breeder and thorium reactors.

39. My Government will ensure that our space programme which has achieved wide recognition continues to bring rich dividends to society in agriculture, tele-medicine, tele-education and by providing information to rural knowledge centres, besides contributing to telecommunication, television broadcasting and weather forecasting. Several innovative initiatives commenced by government in the science and technology sector in the last five years and now under implementation will be further strengthened.

40. My Government is proactively addressing issues of climate change through eight national missions. Of these the National Solar Mission, the National Water Mission, the National Mission on Energy Efficiency, the National Mission on Sustainable Agriculture and the National Mission on Sustainable Habitat will be launched by the end of this year. The National Ganga River Basin Authority, set up recently will evolve a new action plan for cleaning and beautifying the river in partnership with the basin states.

PPP projects in pipeline

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Following is excerpted from a report in Business Standard.

Thirty six important projects worth Rs 19,800 crore are being implemented by the Orissa government under the public-private-partnership (PPP) mode.

These projects are in the field of new ports, roads, integrated commercial complex, ITIs, tourism projects, integrated residential complex, bus terminals, info park and multi product SEZs among others.

… the important projects taken up for development in PPP mode include

  • Rs 3500 crore Shamuka Beach Project
  • Rs 562 crore Bhubaneswar-Puri road
  • Rs 304 crore Capital Region Ring Road project
  • Rs 493 crore integrated residential township at Suango and Ranasinghapur
  • International Convention Centre at Bhubaneswar (Rs 480 crore)
  • Rs 2469 crore Dhamra port and Rs 1700 crore Gopalpur port
  • Rs 594.34 crore Haridaspur-Paradeep broad gauge rail link
  • Rs 2000 crore Kirtania port
  • Rs 712 crore multi-product SEZ at Paradip are being set up in the PPP mode.

…, the Empowered Committee on Infrastructure (ECI) has cleared

  • the proposal for appointment of consultant to prepare the detailed project report (DPR) for the Capital Region Ring Road Project (CRRR)
  • the proposal for the feasibility study of the Bhubaneswar-Paradip road with revised concept.
  • the issue of Request for Proposal (RFP) for setting up 4/5 five star hotels in the Shamuka Beach near Puri; 11 firms are shortlisted after the Request for Qualification (RFQ)
  • the 4 -laning of Sambalpur-Rourkela road to seek the Viability Gap Funding (VGF) assistance from the department of economic affairs (DEA).

The proposal for developing an integrated residential township at Suanga and Ranasinghapur near Bhubaneswar has been placed before the government for approval. 

The other on-going projects include

  • Rs 68 crore Palasapanga- Bamberi road,
  • Gopalpur port,
  • Dhamra Port,
  • Rs 480 crore international convention centre at Bhubaneswar,
  • Rs 146 crore IT and Corporate Tower (Bhubaneswar),
  • Rs 500 crore Info Park (Bhubaneswar),
  • Rs 35.67 crore Knowledge park,
  • Rs 352 crore SEZ-BPO at Mancheswar,
  • Rs 76 crore Commercial and IT Complex at Rourkela.

Bharat Biotech of Hyderabad selected to develop the Biotech-Pharma-IT Park in Bhubaneswar under PPP

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Following is from a report in livemint.

… Bharat Biotech International Ltd, a producer of vaccines and biotherapeutics announced that the Orissa government has selected the company as the developer for its ‘Biotech-Pharma-IT Park’ project under public-private-partnership (PPP) mode.

The proposed industrial park is coming up on a 54.86 acre land located at Mouza-Andharua in Bhubaneswar.
BBIL will promote a Special Purpose Vehicle (SPV) to undertake the integrated industrial park. The project is estimated to cost Rs100 crore and is slated to be complete in eight years, a press release issued here stated.

“Our task is to focus on rapid development of this park by developing core infrastructure and technology to enable establishment of new companies whereby new local entrepreneurs in the biotechnology field will be created,” BBIL Chairman and Managing Director Krishna Ella said in the release.

About 10 acre land, within the park, is earmarked for development of biotechnology incubation centre, which will be funded by Department of Biotechnology, Government of India, for the equipment or instrumentation.

A formal lease-cum-development agreement will be signed between the SPV and Orissa Industrial Infrastructure Development Corporation (IDCO).

The Orissa government and IDCO, in principle, have agreed to provide all the external infrastructure facilities like power supply, water supply among others, the release added.

Reliance to lease OSRTC land

Angul, Anugul- Talcher - Saranga- Nalconagar, Bhubaneswar- Cuttack- Puri, Cuttack, Dhenkanal, Khordha, Modern Bus Stands, Mukesh Ambani group, New Indian Express, Indian Express, Financial express, PPP, REAL ESTATE, Sambalpur, Sambaplur- Burla- Bargarh- Chipilima 1 Comment »

Following is  from a report in New Indian Express.

The State Government will lease out unused land of Orissa State Road Transport Corporation (OSRTC) at Cuttack, Baripada and here to the Reliance Industries Limited (RIL) for commercial purpose.

The OSRTC has prime land at Master Canteen, Pala Mandap in Cuttack and Baripada town. The corporation will lease out the Master Canteen land to RIL for 33 years for Rs 20 crore. Reliance has proposed to open retail outlets and has agreed to pay a monthly rental of Rs 15 lakh.

The company has reportedly deposited Rs 6 crore with the Government for the OSRTC land at Baripada town. However, OSRTC will collect monthly rent from RIL for all the leased out plots. Rent will be revised every five years.

The proceeds from leased out land will be invested for procurement of more buses and modernisation of the Government bus stands.

In the first phase, five bus stands at Angul, Bhubaneswar, Cuttack, Dhenkanal and Sambalpur will be modernised under the public-private partnership.

While the bus stands of Bhubaneswar, Cuttack and Sambalpur will be renovated, two new bus stands will be developed at Angul and Dhenkanal.

The public utility has 230 on road buses and plans are afoot to add another 50 to its fleet. The corporation has submitted a proposal to the Government for pay revision of the employees, official sources said.

VGF funding scheme may come in handy for some PPP projects in Orissa

Bhubaneswar- Cuttack- Puri, Business Standard, Integrated Sewerage, Khordha, PPP, Puri, REAL ESTATE, Roads, highways and Bus stands, Shamuka Beach project, VGF Comments Off on VGF funding scheme may come in handy for some PPP projects in Orissa

Following is an excerpt from a report in Business Standard.

The Planning Commission today suggested the Orissa government to prepare a detailed project report (DPR) for three projects for availing of assistance under the viability gap funding (VGF) of the Centre.

These three projects are Rs 3200 crore Samuka Special Tourism Project, Rs 1500 crore Sambalpur-Rourkela road project and the Rs 1500 crore worth Bhubaneswar Solid Waste Management Project.These projects worth about Rs 6200 crore will be implemented on a pilot basis.

"A new format has been developed for availing of the assistance from VGF and the Orissa government will have to prepare a DPR keeping in view the new format and submit it to the Planning Commission", Subash Pani, secretary, Planning Commission said.

After reviewing the projects taken up in the Public-Private-Partnership ( PPP) mode by the Orissa government, Pani told media persons that the Centre can provide upto 20 percent of the project cost under the VGF. So the state government can take advantage of it.

He said, the Centre introduced the VGF last fiscal and no state has availed of the assistance from this fund created with the objective of bridging the gap in funding viable projects taken up in PPP mode.

Pani said, the Orissa government plans to execute 35 important infrastructure projects in PPP mode. While 25 projects are in the pipeline, 10 projects are on going.

The on-going projects include Rs 68 crore Palasapanga- Bamberi road, Gopalpur port, Dhamra Port, Rs 480 crore international convention centre, Rs 146 crore IT and Corporate Tower (Bhubaneswar), Rs 500 crore Info Park(Bhubaneswar), Rs 35.67 crore Knowledge park, Rs 352 crore SEZ-BPO at Mancheswar, Rs 76 crore Commercial and IT Complex at Rourkela.

500 crore International Convention Center in Bhubaneswar to be built in PPP mode

Bhubaneswar- Cuttack- Puri, Convention Center, IDCO projects, INVESTMENTS and INVESTMENT PLANS, Khordha, PPP, TOURISM, ENTERTAINMENT and SHOPPING 6 Comments »

Following is an excerpt from a report in expresshospitality.com.

Orissa Industrial Infrastructure Development Corporation (IDCO) has planned to set up an international convention centre through a public-private partnership model. BK Patel, head (SEZ & Infrastructure Projects) at IDCO, said, "The convention centre will be spread over 25 acres in tie-up with private developers. We have started inviting tenders for the project and expect to reach a decision to begin the project in the coming months."

The convention centre is to be built at a whopping Rs 500 crore and expected to be completed in the next three years. 

ITIR Policies: PIB

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Following is from http://pib.nic.in/release/release.asp?relid=37077.

The Cabinet Committee on Economic Affairs today gave its approval to the proposal to create Information Technology Investment Regions (ITIRs). These ITIRs would be endowed with excellent infrastructure and supported through investor-friendly policies. ITIRs were conceptualized keeping in view the need to boost the growth of both IT/ITES and Electronic Hardware Manufacturing (EHM) Units.

These regions would become major magnets for investment creating employment opportunities and economic growth in the area. Simultaneously, it will reduce the pressure on existing urban centers by enabling growth of new townships and dispersal of industry.

The regions would be a combination of IT/ITES and Electronics Hardware Manufacturing Units; Public uitilities, residential area, social infrastructure and administrative services. Such regions could include new integrated townships, SEZs, industrial parks etc. In the ITIR, there would be a clear delineation between the IT/ITES areas and Electronic Hardware Manufacturing areas. The ITIRs would generate direct and indirect employment during the construction and operational phases.

Each ITIR is expected to be a specificlly notified investment region with minimum area of 40 sq.kms. planned for IT/ITES and EHM Units. The minimum processing area will be 40% of the total area of the ITIR. The ITIRs will be developed in a phased manner.

The State Government would ensure that all physical infrastructure and utilities within its jurisdiction (power, water, roads, transportation, sewerage and effluent treatment facilities) are provided. The Central Government will facilitate development of National Highways, Airport and Rail links to the ITIRs.

The Public-Private Partnership (PPP) route is advocated for the development of ITIRs. State Government will select the developers/co-developers through a transparent process.

Balasore alloys pledges 45 crores for Balasore-Balgopalpur rail: Samaja

Balasore, Balasore- Chandipur, PPP, Samaja (in Odia), SER Comments Off on Balasore alloys pledges 45 crores for Balasore-Balgopalpur rail: Samaja

Capital ring road and other PPP infrastructure plans

Berhampur- Gopalpur- Chhatrapur, Bhubaneswar- Cuttack- Puri, Bhubaneswar-Paradip, BioTech, Pharma, Cuttack, Daily Pioneer, Ganjam, Jagatsinghpur, Khordha, PPP Comments Off on Capital ring road and other PPP infrastructure plans

Following is an excerpt from a report in Pioneer.

Under the PPT mode, the State Government has decided to build a Capital Region Ring Road. A decision to this effect was taken at a meeting of the Empowered Committee on Infrastructure (ECI) chaired by the Chief Secretary Ajit Kumar Tripathy on Tuesday.

The proposed ring road will constructed with an aim to lessen pressure on the vehicular traffic movement on Bhubaneswar-Cuttack road. The road will start from Khurda and pass through Bhubaneswar via bypass and touch Nirgundi near Cuttack. The survey work for the project will commence soon.

Keeping the growing industrialisation in view, another road under PPT will be built connecting directly Bhubaneswar to Paradip. It will also help the smooth movement of traffic from Capital to Port City. ILFS will do the necessary survey work.

In order to strengthen the PPT mode, Government has constituted seven cells in different departments like Fisheries and Animal Development, Energy, Panchayat Raj and Information and Technology.

The committee approved five proposals under PPT. In a bid to develop the infrastructure of Berhampur city, Government has decided to build an integrated commercial and residential complex under the banner Gajapati Plaza. Rs 10 crore will be spent to build this project. Government will provide five acre of land for this purpose. All the modern amenities including swimming poll facilities will also be available in the complex. The project work would be entrusted to Forum Project Private Limited. Work on the project would commence in the next 15 days. The ECI also gave its nod to set up a bio-tech farm in an area of 64.86 acres of land near Andharua on the outskirt of Bhubaneswar city. A bio-tech incubation centre will be set up in another 10 acres of land in Andharua also. Five major state-of-the-art infrastructure in the form of modular laboratories, loaded wet laboratories, common equipment facilities and amenities, pilot plant facilities and training centre would be provided in the park.

These facilities in the Biotechnology Research Platform will help to multiply the number of users on free-for -use basis. Selected private developers will be allowed to operate, manage, maintain and market the park in Bio-Tech Pharma and Bio-Informatics -IT related issues.

Rural boost to Posco plans

INDUSTRY and INFRASTRUCTURE, Iron Ore, Jagatsinghpur, Land acquisition, Mining royalty, Paradip - Jatadhari - Kujanga, POSCO, PPP, R & R, Steel Comments Off on Rural boost to Posco plans

Business standard reports that Posco near Paradip in Orissa has received a major boost with people of two grampachayats, out of three panchayats affected by the project, writing to the district collector pledging their support to the project. Excerpts:

For its steel project, Posco had sought 4,004 acres of land spreading over three panchayats Nuagoan, Gada Kujanga and Dhinkia. Of the total land, 3,566 acres are government land while the remaining 438 acres are privately owned.

However, the company was unable to acquire land due to stiff opposition by the local people to the project even after lapse of two years of signing of a memorandum of understanding (MoU) with the Orissa government in June 2005 and issue of 4/1 notification for land acquisition in May 2006.

The recent submission by the village committees of Nuagaon and Gada Kujanga to the Jagatsinghpur district collector, pledging their support to the project, has brightened up the prospect of its establishment, pointed out an official of the district administration.

The two panchayats account for 238 acres, out of 438 acres of private land slated to be acquired for the project. Similarly, of the 471 families likely to be displaced by the project, 275 families belong to these panchayats.

Further boosting up the companys moral 40 betel vine owners, who are among the most affected villagers, have recently surrendered their betel vines and accepted compensation while 250-300 others are waiting to surrender their vines.

In their letters, the respective village committees have expressed their willingness to part with land for the project and offered their participation in the peripheral development work to be undertaken by the government, the sources added.

However, the Dhinkia panchayat, which is the nerve centre of anti-Posco movement, is yet to reconcile though fissures have appeared in stitching up a united front by the people of this panchayat against the company. Seventy-two families from Patna village under Dhinkia gram panchayat have offered their land to the project.

Similarly, the people of Gobindpur village under this gram panchayat pledged their support to the project in September 2007, and invited the district collector to visit them to discussion on land acquisition and compensation packages.

The growing support for the Posco plant was further demonstrated when over 5,000 people attended a rally and public meeting under the leadership of local MLA and senior BJD leader Damodar Rout at Balitutha, the entry point to the troubled site on November 1.

This was the first show of strength by the pro-project groups whose support to the project was often muted by the vocal and often violent opposition mounted the anti-project brigade in the area. To counter the pro-Posco rally, the project opponents had organised a demonstration just across the Balitutha bridge. However, they were hugely outnumbered with about 1,000 people participating in it.

But the leaders of the Posco Pratirodh Sangram Samiti (PPSS), spearheading the agitation against the proposed plant, are willing to accept defeat just on the basis of this headcount.

Most of the people who participated in the pro-Posco rally were outsiders who were transported to the venue by the ruling party, says Abhaya Sahoo, the president of PPSS.

We will continue our fight and not allow the company to set up its plant here, he added.

This looks positive.
Just to summarize

  • GadaKujang and Nuagaon are supporting the project.
  • Some villages in Dhinkia Panchayat seem to be favouring POSCO like Patna village and Gobindpur village.
  • 5000 people supported POSCO in the rally, but , 1000 went against it.
  • 72 families from Patna village have already offered land.
  • This was the first show of strength by the pro-project groups whose support to the project was often muted by the vocal and often violent opposition mounted the anti-project brigade in the area

Telegraph: Orissa in infrastructure push

Bhubaneswar- Cuttack- Puri, Bhubaneswar-Paradip, Cuttack, INDUSTRY and INFRASTRUCTURE, Jagatsinghpur, Khordha, Paradip - Jatadhari - Kujanga, PPP, Roads, highways and Bus stands, SEZs Comments Off on Telegraph: Orissa in infrastructure push

The orissa.gov.in site has a page on PPP (private-public partnership) which contains the Orissa draft PPP policy and a list of projects in Orissa planned to be funded through PPP. Following are excerpts from a recent report in Telegraph.

The Orissa government is planning to invest Rs 125,000 crore in 36 infrastructure projects to be taken up under the private-public-partnership programme.

…Under the programme, the state government will leverage its financial resources with that of the Centre, to prepare a shelf of projects. These will be taken forward through a transparent selection process. There will also be viability gap funding, if the projects are initially loss-making.

The policy will also create Orissa Infrastructure Development Fund with a corpus of Rs 1,000 crore. Projects that are part of the programme include roads, bridges, ports and harbours, airports, airstrips, inland container depots, industrial parks, special economic zones and townships.

We have already entered into agreements with IL&FS and PricewaterhouseCoopers, who will be the consultants for these projects. A few more will be empanelled soon, said Parag Gupta, special secretary of the state secretariats public-private-partnership cell. …

Sources said IL&FS was picked as a consultant because of its joint venture with state-run Industrial Infrastructure Development Corporation for the Bhubaneswar Integrated Road Network project. PwC is also a consultant for several road projects. The state has also signed an agreement with the Infrastructure Development Finance Corporation (IDFC) in this regard. IDFC is funding some projects in association with Nabard.

Two more consultants, including Ernst and Young and another Calcutta-based firm, will be enrolled soon, the sources said.

The empanelled agencies will help identify projects that need to be taken up, prepare pre-feasibility and detailed project reports. They will then hand the reports over to respective departments.

Some of the projects being taken up are the Capital Region Ring Road, to span 98km, and the Bhubaneswar-Paradip Road, a 90km stretch. Each of the projects will cost around Rs 700 crore. They will be executed by the state public works department.

Other projects include sector-specific infotech SEZs, which will cost around Rs 352 crore and an IT & corporate tower in Bhubaneswar to be set up for Rs 146 crore.

PPP in Orissa

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Business Standard reports about various companies that have shown interest in PPP deal with Orissa government. Following are some excerpts from that report.

Internationally famed consultancy firm Ernst & Young and Kolkata based SREI are among a host of companies that have evinced interest to provide consultancy services for developing projects under Public-Private-Partnership (PPP) in Orissa.

These companies proposed to develop a shelf of projects to be taken up in PPP mode and have sought empanelment with the Orissa government. However, the government is yet to take a final decision on these proposals. Sources said, if it does not find any of the proposals suitable for its needs, the government may go in for an open bidding for selection of consultants.

… on the proposals of Ernst and Young and SREI.

Both the firms proposed to develop concepts to make the PPP projects attractive and investor friendly for the bidders.

Orissa had earlier entered into an arrangement with IL&FS as per which both shared the cost of developing the project up to the viability stage equally among them selves. This cost is later recovered from the successful bidders. Ernst & Young and SREI, however, have proposed not to charge anything for rendering consultancy service at the initial stage. They will only collect 1 percent of the project cost as their fee from the successful bidders of projects which actually get implemented.

This proposal is viewed favourably as the government does not have to bear any cost for failed projects as the expenditure incurred for these projects is borne by the consultants. The proposals are considered significant as in most cases, the potential investors are unwilling to take up projects in sectors like roads, ports, bridges citing their unviability as a major cause of concern.

Return on investment is the predominant factor in assessing the viability of the projects under PPP. Though there is a central scheme for viability gap funding up to 20 percent of the project cost from the Union government and the state government can also contribute some funds towards bridging the gap, in most of the cases the gap is too wide to be bridged.

Severeal IT townships possibly with IITs and IIMs are in the offing

INVESTMENTS and INVESTMENT PLANS, IT, PPP, REAL ESTATE, Satellite and Residential townships, SEZs, STPs Comments Off on Severeal IT townships possibly with IITs and IIMs are in the offing

Economics Times reports on such an effort. I hope Orissa government is aware of this and is making pitches for one of the locations in Orissa. Following are excerpts from the Economic Times report.

THE government is planning to build 6-7 new IT townships, called knowledge townships, close to major urban centres and international airports. The residential townships will be based on the walk-to-work concept. This means the professionals working there will be encouraged to live close to the workplace.

The companies setting up units in the townships may be extended tax sops under either the software technology park (STP) or special economic zone (SEZ) scheme. Each township would have a minimum 10-hectare (1 hectare = 2.471 acres) built-up area to make it compliant with FDI rules relating to investment in real estate. Each township is likely to entail an investment of Rs 500-650 crore, depending on the area.

A committee comprising members from the PMO, ministry of IT & telecom, urban development, civil aviation, Dipp along with Nasscom has identified several areas for setting up the knowledge hubs.

Sources in the committee said that these proposed townships will be extension of satellite towns like Gurgaon (to be called Gurgaon Plus). Similarly the township near Mohali will be called Mohali Plus. The first of these new townships is expected to come up by 2012 and the rest by 2015.

… services like IT and BPO will be encouraged in these units.

Many domestic and foreign real estate players have expressed interest in owning land and build such townships.

We want each township to be FDI compliant so that they can attract foreign expertise, a senior DIPP official said. Every township would be a special purpose vehicle where states and developers would have stakes.

Urban development secretary M Ramachandran said that his ministry would advise the committee on facilities like water, electricity, drainage and other civic facilities. We will also help in developing the structures, he said.

The townships may also have an IIT/IIM or such academic institutions to build an ecosystem. For tax sops, we are pushing for extension of STP scheme else the companies can also opt for SEZ status, said Nasscom president Kiran Karnik. The townships will come complete with educational, recreational/amusement and healthcare infrastructure.

The basic reason for proposing such townships is the existing saturation in real estate and infrastructure amongst existing IT hubs, Mr Karnik added.

Gurgaon real estate rentals have shot up meteorically in the recent past while Bangalore doesnt have any real estate. …

Currently, Mohali, Mysore, Noida and Gurgaon have come up as satellite townships to major state capitals, most of which have international airports.

… SEZs offer a five-year 100% tax exemption with two subsequent five-year exemptions of 70% and 50% to units.

Orissa’s road masterplan

BOT, PPP, Roads, highways and Bus stands Comments Off on Orissa’s road masterplan

Financial Express has a nice comprehensive report on Orissa’s road master plan. Following are excerpts from that report.

The plan will require an investment of over Rs 5,000 crore in the next five years.

We have decided to develop road infrastructure required for facilitating investments in mineral-based industries, IT and tourism, state works minister, AU Singhdeo, said. Roads are essential for efficient and cost-effective movement of commodities… and the government is working towards development of road sectors with specific focus on certain roads, he added.

The government has given top priority to three roads in the state. It proposes to upgrade the 91-km Naranpur-Brahmanipal-Dubri single lane into double lane with an investment of Rs.302 crore. This road is important as it will connect the mineral-rich Keonjhar district with the biggest industrial hub at Dubri in Jajpur district.

Then improvement of the 82-km Cuttack-Paradeep road will be undertaken with an investment of Rs 218 crore. This road will provide round ribbon transport network to the Posco India’s 12 million tonne mega steel project.

The 165-km Rourkela-Sambalpur road will be upscaled to four-lane under public-private- partnership (PPP).

The government has almost finalised a Rs 2,121 crore loan negotiation with the World Bank to undertake the Orissa State Road Project in the next five years from this fiscal. A total of 906 km of important corridors with high-density traffic have been identified under the Project. For development of road connectivity to places of tourism importance, the government has taken up seven projects with an investment of Rs 46 crore this fiscal. The Puri bypass road, Dhenkanal-Kapilash, and Padampur-Paikmal are been included in the list.

Finding some of the high-density traffic carrying important roads in industrial belt commercially viable for development under PPP, the government has lined up at least seven projects for development under BOT (built, operate and transfer) scheme. It has also floated the idea of connecting the industrially-active port town of Paradip with the state capital Bhubaneswar by laying a direct road of 93.5 km with an investment of Rs 562 crore.

The Ring Road will provide an alternative corridor to Natioanal Highway 60 for unhindered movement of vehicular traffic and decongest the township of Cuttack, Bhubaneswar and Khurda. Also in the list of BOT scheme are Joda-Bamebari, Koira-Rajamunda, Suakati- Dubuna in Keonjhar district and Sambalpur-Rourkela road projects.

PPP pages in the orissa.gov.in site

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The orissa.gov.in site is revamped and now has a lot of information. It has a page on PPP (private-public partnership) which contains the Orissa draft PPP policy and a list of projects in Orissa planned to be funded through PPP.

Orissa Road Master Plan

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New Indian express reports that a road master plan with focus on backward regions is in being finalized for Orissa.

Some projects which are worth mentioning are Motu- Jeypore road in the Viayawada-Ranchi corridor which will connect to the Vijayawada Ranchi corridor. Another project is the 82- km Cuttack-Paradip road estimated to cost Rs 218 crore.

Tender has been floated for the Khurda-Balangir road for which the Centre has provided Rs 76 crore.

Excerpts:

The Works Department will prepare the master plan jointly with the Rural Development and the Panchayati Raj departments, Works Minister AU Singhdeo informed the Assembly while replying to discussion on his departments budget on Tuesday.More projects will be taken up under the public-private partnership (PPP) mode as huge investment is required for developing road connectivity and the State Government is unable to generate funds for all the projects. A PPP policy has been formulated which will placed before Cabinet for approval, he added.

Since economic growth of a State largely depends on the road infrastructure, the Government has to reach beyond budgetary support and go for alternative funding of road projects. The PPP mode is the best possible model to arrange private funds for investment in road sector, he said.

Economic Effects of POSCO-India : A study by NCAER

Bhubaneswar-Paradip, Budget, State, INDUSTRY and INFRASTRUCTURE, INVESTMENTS and INVESTMENT PLANS, Iron Ore, Jagatsinghpur, MINES and MINERALS, Mining royalty, Paradip - Jatadhari - Kujanga, POSCO, PPP, SEZs, Steel, Taxes 1 Comment »

I came across a 1-page note someone from POSCO-India gave me when I was visiting Bhubaneswar in December 2006-Jan 2007. The 1-page note summarizes a study done by NCAER. The study has also been reported in News media such as Hindu Businessline. (POSCO-India in its web page has additional links.) We will give some excerpts from the Hindu Businessline report.

The 1-page note: POSCO-India’s rs 52,810 Cr investment by 2016 will stimulate Orissa Economy.

  • Economic Benefit:
    • Generate Rs 29,760 crores additional annual gross output for Orissa including Rs 12,610 Crore of POSCO-India’s direct gross output.
    • Create excess annual value addition of Rs. 12,100 crores for Orissa which equals 19% of Orissa’s state GDP in 2005-06 (equals 11.5% in 2016-17)
  • Employment:
    • Job creation of 870,000 man years, absorbs 88% of state unemployment backlog (i.e., decrease in backlog of employment from 9.9 lakhs in 2005-06 to 1.2 lakhs).
    • 18,000 man years of direct employment in POSCO-India.
  • Tax Contribution:
    • POSCO-India annual tax contribution (Rs 2,620 Crores) would be appx. 17.6% of total tax revenue of Govt. of Orissa in 2016-17.
    • POSCO-India SEZ would contribute Rs 174,970 crore tax revenue in next 35 years.
      • Rs 77,870 crores would be to Govt. of Orissa and Rs 97,100 crores to Govt. of India.
      • The differences of tax between SEZ and DTA status is less than 8% for Govt. of Orissa and 5% for Govt. of India.
  • Comparison with current Orissa Economy:
    • Orissa in 2003-04:
      • Gross Output: 111,378 crores
      • State GDP: 53,830 crores
      • Employment: 143 lakhs (2001 census)
      • Tax: 8170 crores (2005-06)
    • POSCO-India’s impact:
      • Gross Output: 29,760 crores
      • State GDP: 12,100 crores
      • Employment: 8.7 lakhs
      • Tax: 2620 crores

We now give some excerpts from the Hindu Business line article of January 2007 which partly explains how some of the above numbers were calculated. That article was written by R. Venkatesan who works for NCAER, but the article was his personal view.

The NCAER study broadly used the ADB/World Bank methodology on the social cost-benefit with minor adjustments for the local parameters. Econometric models were used to project border prices for the useful life of the project. The project’s impact from the State economy perspective in terms of the impact on the State GDP (output multiplier effects) and employment opportunities created within the State (employment multiplier effects) was also assessed.

The output multiplier for iron ore was found to be 1.4 compared to 2.36 for steel. In other words, every Rs 1 lakh worth of output in the iron ore sector would result in Rs 1.4 lakh of output (including the Rs 1 lakh output of iron ore) compared to Rs 2.36 lakh for every Rs 1 lakh output of steel. The employment multipliers for iron ore and steel work out to 0.35 and 0.69 man-years respectively. Therefore, in terms of both output and employment, steel has a larger impact.

These multipliers imply that the Posco project would create an additional employment of 50,000 person years annually for the next 30 years vis--vis 870,000 person years in the steel project alternative. In terms of value addition, the iron ore and steel project alternatives would contribute 1.3 per cent and 11.5 per cent to Orissa’s State Gross Domestic Product (or SGDP) by 2016-17 respectively.

An important part of the study was the Least Cost Analysis of technology options in the steel-making, the Finex process that Posco purports to bring and the traditional blast-furnace technology. The Average Incremental Economic Cost was used as the yardstick; this was followed by computing the economic IRR (internal rate of return)
to examine whether the project was economically worthwhile from the national economy point of view.

The EIRR for the Orissa project works out to 16.6 per cent for base case and even in the worst case scenario, the EIRR at 13.9 per cent would remain above the hurdle rate of 12 per cent. The economic impact of the project was estimated at $2.5 billion at the test discount rate of 12 per cent.

The significant feature of the study was the estimation of depletion premium or the opportunity cost for depleteable and non-renewable resource iron ore for reasons cited below:

India’s high-grade ore (+ 65 per cent Fe content Haematite) reserves, proven and probable, amount to only 0.58 billion tonnes. And even if we were to factor in indicative and inferred reserves (probable/feasible), the total reserves (proven and possibly future potential) would be only 0.92 billion tonnes.

India’s medium-grade ore (+62 per cent Fe to 65 per cent Fe Haematite) reserves, proven and probable, is only 1.3 billion tonnes. Here too, if we factor in indicative and inferred (probable/feasible and pre-feasibility estimated) reserves, the total reserves (proven and possibly future potential) will be only 2.8 billion tonnes.

Policy Implications

Orissa stands to gain significantly if instead of exporting iron ore it processes it to steel within the State, in terms of both employment generation (17 times), and GDP impact (9 times).

India’s high and medium grade iron ore reserves may not last more than 19 years even if exports of these grades are frozen at the current level or if the targets set out in the draft steel policy are to be met. The economic analysis considered the depletion premium for high and medium grade iron ore. This is the opportunity cost to the national economy of using the depletable resource, which is the average incremental cost of depletion premiums computed year-wise.

Any exporter of iron ore of medium and high grades from the State needs to pay a depletion premium of $27 per tonne. Even this would be a sub-optimal policy from the State’s viewpoint if it can process the medium and high grade ore to steel. No such depletion premium has been applied for coking coal as its price did not exhibit any
trend before the recent steep price hike.

For the eastern States seeking to raise the mineral sector’s share in their GDP, it may be a good idea to set up processing facilities. It would not be advisable to allocate iron ore mines through open bids or accept increased royalty payments, even accounting for the depletion premium, compared to the option of processing iron ore to steel. Future cost-competitiveness and logistical advantage imply that iron ore-rich States can compete with existing over-capacities in the US, Europe and Japan even after factoring in the capital charges for new investments.

Export of iron ore needs to be restricted to grades other than medium and high-grade ore categories; for instance, export of beneficiated ore from Goa using inland waterways logistics advantages could be encouraged. Allowing exports of high grade ore would facilitate export of steel from existing over-capacities in the US, Europe and Japan to East Asia at the expense of future steel exports from new Indian steel capacities which are likely to enjoy cost-competitiveness over existing over-capacities elsewhere.

I am not qualified to judge the above analysis. I would appreciate any comments, analysis, criticisms etc. on the above.