India Infrastructure Rising
The first few days commuting in Delhi, Mumbai and Bangalore this Jan/Feb sapped my time and eroded my patience. Roads were broken up with endless construction (and debris) narrowing the road, funneling the ever increasing traffic into a chaos. The standard response in Delhi was...sab commonwealth game tak complete ho jayega..!
However, this frustration on being stuck on the road lasted only till I met a colleague in the Planning Commission. While shuttling through endless meetings he pointed out that Private partnership in infrastructure projects was showing a rapidly rising trend in the country. He told me that the private sector was taking up lead in building ports, bridges, highways, power plants (Dhabol extension to ex-Enron project at a power rate one fourth of what Enron proposed in mid nineties), power distribution networks, airports (Delhi International a prime example) and Metro Rail Projects in Bangalore & Hyderabad and Mono rail project in Mumbai. 94 projects, all over the country were under construction full swing, exceeding Planning Commissions expectations.
I was astonished. But wait, the best was yet to come. Not only the private sector will build (and operate) the projects, they would do so at negative bids. Sensing my ignorance, my friend explained that the parties will not charge the exchequer for taking up the projects but will actually pay, generating additional revenue for the government. Suddenly the frustration of being stuck in the traffic on the road ...Finally the giant seems to be breaking out of the slumber!
Infrastructure projects have typically a very long payback cycles. Taking projects on negative bids demonstrates rising confidence of the private sector in the growth, stability and the long term outlook of the country's economy. Politics will probably be no longer a constraining force.
This coming on the heels of global economic crisis felt....amazing!
However, this frustration on being stuck on the road lasted only till I met a colleague in the Planning Commission. While shuttling through endless meetings he pointed out that Private partnership in infrastructure projects was showing a rapidly rising trend in the country. He told me that the private sector was taking up lead in building ports, bridges, highways, power plants (Dhabol extension to ex-Enron project at a power rate one fourth of what Enron proposed in mid nineties), power distribution networks, airports (Delhi International a prime example) and Metro Rail Projects in Bangalore & Hyderabad and Mono rail project in Mumbai. 94 projects, all over the country were under construction full swing, exceeding Planning Commissions expectations.
I was astonished. But wait, the best was yet to come. Not only the private sector will build (and operate) the projects, they would do so at negative bids. Sensing my ignorance, my friend explained that the parties will not charge the exchequer for taking up the projects but will actually pay, generating additional revenue for the government. Suddenly the frustration of being stuck in the traffic on the road ...Finally the giant seems to be breaking out of the slumber!
Infrastructure projects have typically a very long payback cycles. Taking projects on negative bids demonstrates rising confidence of the private sector in the growth, stability and the long term outlook of the country's economy. Politics will probably be no longer a constraining force.
This coming on the heels of global economic crisis felt....amazing!
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