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PRESENTATION ON :PRESENTATION ON :

´INFRASTRUCTURE´INFRASTRUCTURE

FINANCING µFINANCING µ

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INTRODUCTIONINTRODUCTION

INFRASTRUCTURE :INFRASTRUCTURE :

Definition :Definition :

Underlying basic buildingUnderlying basic building, institutions and facilities, institutions and facilities

or other essentialor other essential

element necessary toelement necessary to

sustain and enablesustain and enable

growth and developmentgrowth and developmentof community .of community .

Features :Features :

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OBJECTIVESOBJECTIVES

Highlight importance of finance for the growth andHighlight importance of finance for the growth anddevelopment of infrastructure sector .development of infrastructure sector .

 Activities involve in infrastructure sector  Activities involve in infrastructure sector 

Government support for promoting privateGovernment support for promoting privateinfrastructure financinginfrastructure financing

Hidden risk associated with infrastructure financingHidden risk associated with infrastructure financing

Overview of urban infrastructure in IndiaOverview of urban infrastructure in India

To understand evaluation of BOT project with the helpTo understand evaluation of BOT project with the helpof BOT project with the help of road studyof BOT project with the help of road study

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RESEARCH METHODOLOGYRESEARCH METHODOLOGY

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LITRATURE REVIEWLITRATURE REVIEW

Various infrastructure sectorsVarious infrastructure sectors

Construction RailwayConstruction Railway

Transport Sector Transport Sector 

Water WaysWater Ways  Airport Airport

SeaportSeaport

Pipeline TransportationPipeline Transportation

TelecomTelecom Power Power 

EnvironmentalEnvironmental

HousingHousing

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CONT«.CONT«.

Mechanism for funding of infrastructure projectMechanism for funding of infrastructure project

Financier 

Receipt of Funds

Bodies ExecutingInfrastructure Projects in

India

Funding to Infrastructure

Construction Companies

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CONT«.CONT«.

Methods Of FinancingMethods Of Financing

TraditionalTraditional

NewNew

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CONT«.CONT«.

Evaluation Of Financial Viability Of BOTEvaluation Of Financial Viability Of BOT ± ±Road Project :Road Project :

BOT SchemeBOT Scheme

Financing BOT ProjectFinancing BOT Project

Construction PeriodConstruction PeriodConcession PeriodConcession Period

Estimate Annual Cash FlowEstimate Annual Cash Flow

Financial AnalysisFinancial Analysis ± ±

NPVNPV

IRRIRR

Payback PeriodPayback Period Acceptance Criteria Acceptance Criteria

Risk And UncertaintiesRisk And Uncertainties

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ANALYSISANALYSIS

The project is setup as a separate entityThe project is setup as a separate entity

Sponsor company promote the projectSponsor company promote the project

Project company employs high debt equity ratioProject company employs high debt equity ratio

Long Term Funds CommitmentLong Term Funds Commitment

Inherent Project RiskInherent Project Risk

Opportunities in Urban infrastructureOpportunities in Urban infrastructure

Problems in Urban infrastructureProblems in Urban infrastructure

Government take active part to encourage entrepreneur :Government take active part to encourage entrepreneur :

Land acquisitionLand acquisition BTLO modeBTLO mode

Give special laws for financingGive special laws for financing

Tax benefitTax benefit

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LIMITATIONSLIMITATIONS

Inadequate coverage and service levelInadequate coverage and service level

Poor quality of service to the consumer Poor quality of service to the consumer 

Inefficient financial and managerialInefficient financial and managerialresourcesresources

High nonHigh non--revenue componentrevenue component Inefficient operations and maintenanceInefficient operations and maintenance

High investment needs and project costHigh investment needs and project cost

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RECOMMENDATIONSRECOMMENDATIONS

Encouragement to domestic and foreignEncouragement to domestic and foreign

financial investor for equity capitalfinancial investor for equity capital

Encouragement to infrastructure focusedEncouragement to infrastructure focused

NBFCNBFC

Introduce local benefit tax for urbanIntroduce local benefit tax for urban

infrastructureinfrastructure Establish project working groupEstablish project working group

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