PUBLIC

INFRASTRUC-

TURE IN INDIA – direct financing

opportunities

Assessment

Identification

Profiling

Established Development Principles 1

Infrastructure Sectors 2

Transport | Utilities | Housing | Social | Tourism 3

Non Contemporary Financing – Smart Cities 4

JLL – Infrastructure Services 5

Outlines

Public Infrastructure Development Principles

Construction and Development Risks are mostly handled by the concessionaires

(private players)

Government evades Operations and Revenue Recognition responsibilities due to

chances of inefficiency and pilferage

In all PPP projects, financing responsibilities are the onus of private player only.

Government prefers multi lateral donor agencies over commercial borrowings in case

of public funded projects

The lending agencies generally prefer state guarantee or rights over revenue

Government doesn’t allow rights over or mortgage of assets as collateral

Established Development Principles

1. Transportation

2. Utilities

3. Housing

4. Social Infrastructure

5. Tourism Infrastructure

6. Smart Cities

Infrastructure Sectors

Transport S.

No.

Sub-sectors Development thrust by

government

Funding

Opportunity

Mode of

investment

Tenure of

Investment

Risk Profile

A. Roads

1 Highways High Indirect Through

Concessions 15 – 25 years

Low (user fee is

acceptable)

2 City Roads Low (already developed)

direct funding

can be

assessed

Annuity

concessions 8 – 10 years

Medium (user

fee not

acceptable) |

capital recovery

through cross

subsidization of

land assets

B. Road Transport

1. Intercity Bus Service Low (mostly private

players) Very less

Hire

Purchase of

Buses

5-10 years

Very high (most

of the RTCs*

are defunct and

out of revenue)

Transport S.

No.

Sub-sectors Development thrust by

government

Funding

Opportunity

Mode of

investment

Tenure of

Investment

Risk Profile

B. Road Transport

2.

Intra-city Bus

Service / Urban

Transport / Rapid

Mass Transit

High (by certain states /

municipalities deprived

of such facilities)

High

Direct

Funding /

Hire

Purchase of

Buses

5-10 years Operation Risk

is high

3.

Bus Depot /

Terminus

Development

High (by certain states /

municipalities deprived

of such facilities)

High

Commercial

Debt for

Depot

Development

15-20 years

Less risk -

terminus fee

component can

be introduced in

the tickets

which can be

transferred to

the financer

Transport S.

No.

Sub-sectors Development thrust

by government

Funding

Opportunity

Mode of

investment

Tenure of

Investment

Risk Profile

C. Railway

1. Rail Network

Connectivity

Low (by Government

of India) – Already

developed rail

connectivity to

maximum locations

Low (mostly public

funded through

budgetary

provisions)

Direct

borrowing by

Government

- -

2. Railway Station

Redevelopment

High (by Government

of India through

dedicated

organisation)

High (400 railway

stations; all may not

be taken up under

PPP)

Commercial

Debt for

Station

Development

15-30 years

(depending on

the size of the

station)

Less risk -

Station fee

component can

be introduced in

the tickets

3. Rolling Stock /

Components

High (setting up of

factories across

India)

Medium (opportunity

for long term capital

for factories may be

assessed)

Long term

debt or short

term working

capital

Variable

(dependent on

the project)

Less Risk –

demand for

rolling stock in

high

Transport

S.

No.

Sub-sectors Development thrust

by government

Funding

Opportunity

Mode of

investment

Tenure of

Investment

Risk Profile

D. Shipping

1. Ship Building &

Repairs

Medium (lately

government has

developed

Sagarmala Project)

Low (new industry;

less known markets)

Long term

debt or short

term working

capital

Variable

(dependent on

the project)

Medium (this

industry shall

have to establish

market)

2.

Port / Port

Estate

Development

High (by Government

of India through new

Sagarmala Project)

High (several new

minor / fishing ports

being planned)

Commercial

Debt for Port

Development

15-30 years

(depending on

the size of the

station)

Less risk - Port

fee component

can be

introduced as

user charges

3. Connecting

Logistics

High (by Government

of India through new

Sagarmala Project)

Moderate (projects

in nascent stage) - - -

Utilities

1. Utilities Infrastructure except power is mostly developed through public funding

2. Large portion of Non Revenue Water (NRW) is prevalent in most of the municipalities | No user fee concept for sewerage, drainage etc.

3. Smart City concepts aims to address these issues

4. Financing opportunities can be assessed in core infra development like distribution network augmentation, WTPs, STPs etc.

5. Subject to consent of government and provisioning in the regulatory framework, loan repayment can be mechanized through enhanced taxation.

6. However, at present, many municipalities are not even able to collect and realize the existing property taxes.

Housing

1. Financing opportunities in premium segment housing being developed

by Government Undertakings like Development Authorities, Housing

Boards

2. Financing of Affordable Housing Segment based on annuity payments.

3. However, multi lateral donor agencies offer soft loans and grants along

with term loan to subsidies it significantly and also tie up loan

arrangements of high value at state government level

4. Opportunity for financing rental housing, transit accommodations, shelter

for homeless is prevailing in many states through their ULBs.

Social Infrastructure

1. Education – Financing of schools , colleges and technical institutes with

loan repayments on annuity model by the Government.

2. Healthcare – Primary Health Centers and Specialty Hospitals are

potential opportunities.

3. Most of educational and healthcare infrastructure developments in

developed or developing states are developed through their budgetary

provisions and may not need financing

4. The under developed states mainly eastern and north eastern may

keenly appreciate such financing offer.

Tourism

1. High potential of tourism development in India across most of the states

2. States are deprived of funds – Neither State nor Central Government

schemes cater to the need

3. Municipal level awareness growing for improvement of local area for

booming economy and quality of life

4. High revenue generator with multiplier factor especially through tax

revenue to government from allied industries

5. Projects in various states can be identified for exploring opportunities

Public Infrastructure Development Principles

Captive investment into rental housing development

Pooled Municipal Debt Obligation Fund (Municipal Bonds)

Many municipalities are preparing to release their bonds for raising PMDOF to

implement key projects in their area.

Government of India supporting this activity through technical assistance in the form

of documentation and agency selection support

Smart City Development Components (primarily ICT, IOT and other

smart features)

Typically, ULBs will procure the technology by paying upfront from the funds being

made available by GoI

Required to develop the concept of Managed Service Contracts / Annuity payments

for utilities and other public services forming part of the smart city proposals.

Non Contemporary Financing

For further information, kindly contact: -

Sumeet Sharma

Asst. Vice President

Infrastructure Services

Jones Lang LaSalle Property Consultants India Pvt. Ltd.

Level 7, Tower A, Peninsula Business Park,

Senapati Bapat Marg, Lower Parel,

Mumbai – 400 013.

Tel: - +91 22 6620 7575

M: - +91 95722 80454

defining new horizon