Group No.: 12Abhinav Daharwal 1211090Anubhav Tiwary 1211171Aniket Ashok Karde 1211247Gourav Prakash Ahirwar 1211341

8/24/2013

Mega Projects in India

Table of ContentsCurrent State of Mega Projects in India............................3Power Projects...................................................3

Role of Sector.................................................3Need for the projects..........................................4

Key Problems...................................................4Roads and Highways...............................................4

Role of Sector.................................................4Mega Road Projects.............................................4

Kishangarh-Udaipur-Ahmedabad Project...........................5Shivpuri-Dewas project in Madhya Pradesh.......................5

Delhi-Jaipur expressway........................................5Railways.........................................................5

Role of Sector.................................................5Mumbai Elevated Rail Corridor..................................6

Delhi Airport Metro............................................6High Speed Bullet Train Project, Kerala........................7

Urban Infrastructure.............................................7Role of Sector.................................................7

Worli- Haji Ali sea link.......................................7Hyderabad Metro- Mass Rapid Transport..........................7

Delhi International Airport Expansion Project..................8Bangalore International Airport................................8

Ports............................................................8Role of Sector.................................................8

Gangavaram Port................................................8A Macro Picture..................................................9

Challenges Faced by India in Infrastructure Development...........10Coal Conundrum/Fuel supply......................................10

Volatile currency markets.......................................10

Inability to attract private investments........................10Regulation of Infrastructure- Disjoint approach by the government................................................................11Environmental Clearance.........................................11

Challenges with PPP model.......................................11a. Time and Cost Overruns.....................................11

b. Lack of due diligence and robust market assessment:........12c. The Lack of Conducive operating environments:..............12

Best Practices in Mega Projects...................................12“Reference Class Forecasting” Methodology.......................12

PPP via International Investment................................13Value for Money Framework.......................................13

Collaboration with Stakeholders.................................14Transfer of Abundant Resource to Resource Starved Region........14

Collaboration between Governments to Solve Urbanization Issue. . .14Context Sensitive Solution......................................15

References........................................................16Appendix..........................................................17

Current State of Mega Projects in India

Power Projects

Role of SectorPower sector in India is one of the largest and most crucial basicsectors. It fulfills the energy requirements of various otherindustries. It is one of the most critical components ofinfrastructure that affects economic growth and the prosperity ofIndia. The consumption pattern follows Industrial consumption (38%),domestic consumption (22%), agricultural consumption (22%),commercial consumption (8%) and other (10%) . GDP growth rate andgrowth in Power generation are positively related to each other. Inorder to sustain the growth in GDP, India needs to add powergeneration capacity commensurate with this pace.

There is a huge power deficit in India at present. Peak deficit inthe last decade was around 11-13%. Besides this the quality of poweris also an issue. Cumulative losses of state electricity boards were70,000 crore in 2010-11 which crossed 1 lakh crore in FY 2012. MicroSmall and medium enterprises are the most important part of Indianeconomy which is also the sector hardest affected by inadequatepower access as they don’t possess the financial ability to set upcaptive power plants and don’t have access to adequate credit orthey can get past other infrastructure bottlenecks.

Project name

Cost Partiesinvolved

ConcessionPeriod

SPV Capacity(MW)

Status

Krishnap-atnamUMPP

INR17,450crore

AP stategovt.CentralElectricityBoard,ReliancePower

25years

CoastalAndhraPowerLtd

3960 Deferred

MundraUMPP

INR18,000Crore

Gujrat StateGovt,CentralElectricityBoard and

25Years

CoastalGujaratPowerLtd.

4000 Unit 1 of800 MWcommissioned in Mar2012; Unit

Tata PowerLtd

2 in May2012, Unit3 in Oct2012.Unit 5in March2013.

TilaiyaUltraMegaPowerProject

INR24,000crore

Jharkhandstate govt.CentralElectricityBoard,ReliancePower

25years

JharkhandIntegratedPowerLtd.

3960 Earlydevelopment

SasanUltraMegaPowerProject

INR18,342crore

Gujrat stategovt.CentralElectricityBoard,ReliancePower

25years

SasanPowerLtd.

3960 Will befullycommissioned by June2014

Need for the projects1. In order to meet the growing gap between supply and demand in

power sector, GOI came up with the concept of UMPPs to buildlarge capacity at low cost so as to sell power at low tariffsto consumers.

2. The public sector didn’t have adequate resources to add such ahuge amount of capacity on its own and so private parties wereinvolved.

3. Some of the UMPP were based on domestic coal at areas locatedclose to coal mines while for the locations which were notclose to coal mines projects based on imported coal wereplanned.

4. This would provide a balance in terms of capacity addition inthe fuel rich areas as well as the areas which may not be richin coal resources.

Key Problems Availability of coal: In FY 2012 there was a 100 mn ton gap

between demand and supply which is likely to increase to 170mn tons by FY 2015 as demand goes up.

Coal India limited has refused to sign agreements with plantsthose which were commissioned after March 2012 as they cannotensure the coal supply

It all started when an Indonesian Govt. made retrospectiveregulations in 2010 that barred any Indonesian mine fromexporting coal at prices below global benchmark. This changedthe economics of the Indian firms that owned mines inIndonesia as they cannot import coal at cost which they hadearlier anticipated.

Tata and Reliance were looking for 35-40$/ tonne but the pricewent upto 80-90 $/ton, making the agreement which they hadsigned untenable.

Another problem is delay in land acquisition and environmentalclearances.

Thus these two issues are largely unresolved and are thereason for the halt of these UMPPs.

Need of a swift policy amendment in the current UMPP norms tointroduce full pass through of fuel cost to the end consumer whichmay expedite the progress of other 12 UMPPs that are currentlystuck.

Roads and Highways

Role of SectorRoad infrastructure is the backbone of transportation system.Transportation is a key facilitator to sustainable economic growthof the country. An efficient transportation system expands theproductivity of the country, by increasing the mobilization ofavailable resources and by enhancing the productivity of thoseresources. Furthermore a well-oiled transport infrastructureattracts resources from other regions and thus provides regionaleconomic growth. In India, there are less than 4 kilometres of roadsper 1000 people. Currently transportation sector contributes about 4.7% tocountry’s GDP in 2009-10. Indian roads carry over 65 percent of its freightand about 85 percent of passenger traffic. National Highways account foronly 2% of the total network but accounts for 40% of the total traffic. Of

the total 65,000 kms of national highways, only 9% are four-lane, 56% aretwo-lane, and 35% are single-lane

Mega Road Projects1. Kishangarh-Udaipur-Ahmedabad project- 7,700 crore- GMR2. Shivpuri-Dewas project in Madhya Pradesh- 3000 crore- GVK3. Delhi-Jaipur expressway

Kishangarh-Udaipur-Ahmedabad Project Cost: 7,700 crore Parties involved: GMR and NHAI BOT Basis, 555 km Need of the project: This project provides connectivity to

many important towns and villages of Gujrat and Rajasthan. Itis the vital link of NH-8 for traffic coming from Mumbai goingtowards Haryana, Punjab, Himachal, Delhi, Uttar Pradesh &Uttaranchal. NH-8 is one of the most important and busiestnational highways of the country.

Concession period: 26 years Issues and challenges: Environmental clearance held up due

forest clearance by Ministry of environment and forests.

Shivpuri-Dewas project in Madhya Pradesh Cost: 3000 crore Parties involved: NHAI and GVK BOT Basis, 330 km Need: the road passes entirely through Madhya Pradesh; carrying

predominantly long distance freight traffic and is expected to offer highgrowth potential for commercial traffic.

Concession period: 30 years including a construction period of 2.5 years Issues and challenges: Environmental clearance held up due

forest clearance by Ministry of environment and forests

Delhi-Jaipur expressway Cost: INR 14,000 Crore Status: 60% complete Parties involved: NHAI, Pink City Expressway ltd, State

Government Need: The idea is to construct a highway with the development

of township alongside, as a part of the Delhi-MumbaiIndustrial Corridor a new city is being built in Neemrana .There will be another half-a-dozen new towns that will spring

up along the way. Development of real estate is being donealongside the expressway which will make the projectfinancially more viable.

Concession Period:12 years from Appointed Date (Including ConstructionPeriod)

Issues and challenges: Delays due to Land acquisition problem Bankers have stopped giving loans as the project is frozen

due to non-availability of land

Railways

Role of SectorThere is a growing need to address the commuting issues in bigcities like Mumbai, Delhi, Bangalore, Chennai etc. Railways areknown as the ‘Mumbai’s Lifeline’; however every day 10—15 lives areclaimed daily in Mumbai alone while trespassing on the railwaytracks. There is a huge pressure on the present suburban systems inbig cities across country, which during peak hours presents a scarypicture with people jostling with city traffic to reach theirdestination in time. Thus it is the need of the hour to addressthese issues by undertaking mega projects in this sector.

Mumbai Elevated Rail Corridor  Cost: INR 21,000 crore (biggest PPP in India) DBFOT basis Parties involved: Maharashtra State Govt. Indian Railways and

Private entity (possibly one of L&T, GMR and IL&FS) Status: Yet to start Need: Mumbai has the most crowed and overloaded suburban

system in the world. 2300 train services run daily. Trains areover-crowded much beyond their rated carrying capacity. With aview of augment the current capacity and to provide improvedservices to the commuters the Ministry of Railways (MOR) isundertaking this project

Concession Period: Yet to be decided Issues and challenges:

Delay to kick off due to non-signing of State SupportAgreement (SSA) between Indian Railways and MaharashtraState Government. SSA ensures support from State govt onissues like land acquisition.

State government is of the view that since the concessionagreement will be signed between Indian Railways and theconcessionaire, so the concessionaire should be made topay the penalties for delays instead of State govt.

disagreement over who and how the penalty will be paid tothe concessionaire in cases where the default is on partof the state government like shifting of utilities,removing state pipelines or local disturbances that mayhamper the project work.

Contention over Floor Space Index (FSI)

Delhi Airport Metro Cost: INR 5700 crore Status : Completed Parties involved: Delhi metro rail corporation Ltd. (DMRC),

Delhi Airport Metro Express Private Limited (DAMEPL) which isthe SPV between Reliance Infrastructure and CAF, Spain.

Need: Delhi has more registered vehicles than Mumbai, Kolkataand Chennai put together. To reduce the problems of Delhicommuters like congestion on roads, increased rate ofaccidents increased travelling time, increased fuel wastageand environmental pollution.

Concession Period: 30 years Issues and challenges:

overestimation of the returns by both parties(Concessioning authority and concessionaire)

Corridor was shut since 8th July 2012 for 7 months due totechnical difficulties. Arbitration proceedings are goingbetween Reliance and DMRC. Reliance Infrastructure isasking for the compensation on account of the revenuelosses due to closure of corridor.

Both the involved parties blamed each other for variousproblems like delay in commission, technical problems,faulty constructions and misleading passengerprojections.

Delay in commissioning Faulty project structure

High Speed Bullet Train Project, Kerala Cost: INR 1,18,000 Crore

Status: Work of drawing up the Detailed Project Report is nowon

Parties involved: Kerala State Industrial DevelopmentCorporation as the nodal agency for the project. Private partyyet to be nominated

Need: Reduce traffic density and improve road safety as wellas reduce travel time.

Concession Period: Yet to be decided Issues and challenges:

Delays due to DMRC’s prefeasibility study. The districtadministration is waiting for the Delhi Metro RailCorporation (DMRC) to wrap up its survey.

Urban Infrastructure

Role of Sector Indian population is larger than entire USA and second only toChina. The cities in India are filled with vibrant activity andenergy, they are congested and chaotic. They provide plenty ofwealth and opportunities, side-by-side with immense poverty andinequality in terms of wealth, education and hygiene. A qualityinfrastructure meets these challenges by serving the basic needs tothe citizens over a long term. Thus a quality urban infrastructuretaps the true potential of the economy and helps it to grow over along period.

Worli- Haji Ali sea link Cost: INR 5000 Crore Status: Completed BOT Parties involved: Maharashtra State Govt, Maharashtra State

Road Development Corporation(MSRDC) and Relianceinfrastructure. SPV: Reliance Sea link one (Consortium ofReliance Infra and Hyundai Engineering and Construction)

Concession Period: 40 years Issues and challenges:

Finance issues: Bankers wanted state govt. to sign StateSupport Agreement, Disbursal of VGF for the project andagreement that no coastal road will be built betweenWorli and Haji Ali.

Issues on non-availability of casting yard

Hyderabad Metro- Mass Rapid Transport Cost: INR 16,500 Crore Status: Work in progress BOT (Include design and finance) Parties involved: Andhra Pradesh State Govt. and Maytas

Infrastructure, Nav Bharat Ventures, IL&FS and Ital-Thai(Subsequently cancelled in 2009)

Concession Period: 35 years Issues and challenges:

Delays for land acquisition and acquisition of propertiesalong some busy commercial roads which includes some ofthe religious structures.

Opposition by local traders Opposition by Members of the Secunderabad unit of

International Society for Krishna Consciousness againstacquisition of temple land

Barricades erected for construction were obstructingtraffic in busy areas and monsoon further added tocommuters woes.

Farmers in Uppal region asking for higher compensations

Delhi International Airport Expansion Project Cost: INR 12,700 Crore Status: Completed Parties involved: Joint consortium of Airports Authority of

India, GMR & Fraport and Eraman Malaysia Concession period: 30 years (provision for 30 years extension) Issues and challenges:

Cost overrun Relocation of slum dwellers Political delays in relocation of Statue at airport which

resulted in 17 months of delay Change in scope during detail design-additional INR1015

crore

Bangalore International Airport Cost: INR 2,400 Crore Status: completed Parties involved: Airport Authority of India, Consortium of

GVK Power and Infrastructure, Seimens Project Ventures AG andZurich Airport, Switzerland.

Concession Period: 30 years (Provision for 30 years extension) Issues and challenges:

Underestimation of passenger traffic (number ofpassengers using the airport)

Delay in ensuring connectivity to airport Delay in inauguration as the connectivity to airport was

yet to be ready Delays in construction due to changing government at the

state and centre

Ports

Role of SectorPorts play a very crucial role in the growth of Indian economy. 90%of trade by volume and 70% trade by value are carried out throughmaritime transportation which are handled by port. Trade with theneighbouring or distant countries is bound to increase on account ofglobalization. Ports are the backbone of world trade and play a veryimportant role in inward and outward goods movement. A quality portinfrastructure will provide a competitive advantage to India in thisera of globalization

Gangavaram Port Cost: INR 1696 crore Status: Completed BOOT (includes Design and Finance) Parties involved: AP Govt., Mr. D.V.S. Raju & associates,

Warburg Pincus and the Andhra Pradesh InfrastructureInvestment Company (APIIC)

Concession period: 30 years (extendable by additional 2periods of 10 years each)

Issues and challenges: Land acquisition delayed due to local protests in

relation to rehabilitation and resettlement. Realistic traffic projections were not done resulting in

speculative bids. Govt had to reject the bids andprocess was launched again. This delayed the process.

Poor bid evaluation criteria

A Macro PictureThe Ministry of Statistics and Programme Implementation (MOSPI) monitors all the mega projects in India which have an outlay of Rs. 1000 crs. or more. The latest report of MOSPI says that as on May 2013, 48% of the 207 Mega Projects have been delayed due to various reasons. These projects under 12 sectors had an initial outlay of Rs. 6,55,662 crs. which have now increased to Rs. 7,81,504 crs. due to these delays such as land acquisition, legal issues, environmental clearances, award of contract, etc. Though a Cabinet Committee on Investment (CCI) has been formed to fast track such projects nothing seems to be moving on the ground. Given below is the status of various mega projects and subsequent cost escalation.

Sector MegaProject

s

StalledProject

s

OriginalProjections (Rs.Crs.)

NewProjections (Rs.Crs.)

CostOverruns (%)

Atomic Energy 4 2 45,324

115,176

154.12%

Civil Aviation 2 0 542

1,187

119.00%

Water Resources 1 0 49,716

50,896

2.37%

Power 62 30 44,131

49,345

11.81%

Petroleum 36 22 40,442

46,726

15.54%

Petrochemicals 1 1 3,750

4,340

15.73%

Coal 9 5 5,460

8,920

63.37%

Steel 6 6 9,865

11,479

16.36%

Railways 45 19 22,363

24,788

10.84%

Road and Highways 32 13 147,984

162,059

9.51%

Shipping and Ports

6 2 61,412

66,976

9.06%

Urban Development 3 0 224,668

239,606

6.65%

Overall 207 100 19.19%

655,657 781,498Source: MOSPI

Challenges Faced by India in Infrastructure Development

Coal Conundrum/Fuel supplyPower supply has been a problematic area for India with per capitaconsumption still less 800 kWh (as per WSJ). Coal imports rose to30MT in first quarter Apr-July which was far more the same quarterlast year.[13] This entails the surge in import dependency by powersector and huge demand and supply gap existing in indigenous coalproduction. The report by FICCI estimated the demand growth fortwelfth five year plan is 9.5 % CAGR whereas the growth of coalsupply by CIL which supplies 80% of domestic coal will be only 4.5%CAGR.[14] This supply gap has firstly raised the prices of coaldrastically in recent past which has rendered many upcoming projectsunviable. Secondly it has reduced the availability factor ofexisting plants to less than 75% of national average. Thirdly itcreates dependency on coal supplying countries like Thailand whichdo not have mature export policies and thus potential mega projectswill face grave problem in future. Out of the 12 UMPPs that are yetto be awarded, especially the ones dependent on imported coal, thegovernment and the developers still have to arrive at policies and abusiness model that can absorb unexpected shocks like the Indonesianregulations and hence are stalled for now.

Volatile currency marketsIn recent time of falling rupees, infrastructure majors like TATApower have gone into shell and are rethinking on their investments.[15] The cash loss incurred by these companies are huge andunsustainable, it impairs the investment and work capitalcapabilities of these companies.

Inability to attract private investmentsIn the twelfth five year plan the target is to add 100GW of which50% investment shall come from the private player. Recently out ofnine UMPPs only 4 could be awarded to Reliance (3) and TATA (1)based on the tariff they have quoted. Further Reliance have realizedthat this rates were unfeasible and filed the petition to CERC forits’ two plants Sasan and Tilaiya for revision of the terms of

contract and tariffs.[16] The reason stated in the petition was thesharp increase in raw material prices and fuel cost.

This example manifests the doldrums condition of UMPP projects andreasons why investor stays away from bidding for these projects.This scenarios needs to be improved in future if country has toprogress in power sector:

1. Open access: providing open access to bulk consumer havingdemand of more than 1 MW

2. Flexible pricing and Cost reflective tariffs shall be factoredinto the sale agreement formalization.

3. Reduce cross subsidies to the limit mentioned in Nationaltariff policy 2001.

4. Land acquisition, individual state government should identifyand acquire the land affront for any mega project to becommissioned.

5. AT&C losses should be reduced to 20% privatization may be oneof the way to eliminate inefficiencies in it.

6. Power equipment supplier: foreign PES are bringing insynergies by forming JVs with Indian companies and more ofsuch JVs shall be conceptualized.

Regulation of Infrastructure- Disjoint approach by the governmentThe regulatory approach to the infrastructure sector has, as of now,been piecemeal with no overarching philosophy governing the workingof regulators in different sectors. Most of the sectors like Roads,Railways do not have independent regulatory body and major players –NHAI and Indian railways runs their virtual state in absence ofregulation or competition. Indian regulation scenario ininfrastructure demonstrates lack of a coordinated approach betweendifferent ministries and authorities in the sector. Ideal case wouldbe a common policy approach similar to the UK’s “Utilities Act 2000”which brought regulatory functions and objectives of variousregulators under a single statute.

Environmental ClearanceEnvironmental clearance remained the single largest hindrance inbringing any infrastructure megaproject to see light of the day. All

megaprojects have to undergo multilevel, tedious and time takingprocess of environmental clearance. Most of them take 3-4 yrs toobtain go status from MOEF. Also huge cost incurred in environmentalimpact assessment study etc. goes in vain when the project isshelved off. Getting environmental clearance is a greater problemfor megaprojects because of huge land requirement. An coordinatedmeasures shall be taken by all ministries to frame a Environmentalpolicy for infrastructure projects which thereafter will referred tofor any land acquisition, forest clearance etc.

Eg 1. A 20,000-crore UMPP of 4000MW at Sarguja in Chhattisgarh wasdropped by the government as the coal blocks for the proposedproject fall under dense forest area and was classified as no-go byMOEF.[29]

Challenges with PPP modelMost of the current infrastructure projects and future mega projectswill be based on PPP model. This model is perceived as a panacea forall infrastructure woes but has several challenges which are to beaddressed immediately

a. Time and Cost Overruns Infrastructure mega projects have a double risk involved inimplementation. They not only get delayed but also incur muchmore than actual estimated budget. The reasons for these couldbe any of the following:

1) Land acquisition 2) Funding constraints 3) Post-award changes in the scope of the project4) Poor planning and execution5) Delays in clearances

Eg. 1. Delhi- Gurgaon expressway got delayed by about 3 yearsbecause land acquisition, substantial change in scope.

Eg 2. Bandra- worli sea link was completed in INR 1600 croreas compared to initial estimate of INR 650 Crore.

b. Lack of due diligence and robust market assessment:Any PPP model may fail owing to poor demand estimate or duediligence of project. BIAL was planned based on the estimate

of 4 Million passengers per year which however caters to morethan 12 million passengers annually as of 2012. These demandescalation required additional terminal space and thus changein scope, overruns, delays etc.

c. The Lack of Conducive operating environments:This may be due to socio-political situation or localdisturbance have mired PPP projects increasing the risk of themega projects.

Eg. 1 during the operational phase of Kakinada deep waterport; Andhra Pradesh state government prohibited theconcessionaire to handle cargo mix of fertilizer, oilextractions, sugar, rice etc. even though it was previouslymentioned in the contract in response of huge protest fromworkers of Kakinada anchorage port.

Best Practices in Mega Projects

Megaprojects in infrastructure sector have been instrumental intransformation of economy of a nation. Definition of megaprojectaccording to Bent Flyvberj [1], are those projects which cost morethan USD 1 billion , take 5 years to move from design stage tooperation stage, have impact on more than a million people and havetransformation impact on the area in which project is located.Megaproject typically involves 5-10 years to go from design phase tooperational phase, and also technologies and policy keeps onchanging frequently to accommodate the complexities involved inthese kinds of projects. We have tried to analyse the best practicesin different mega projects across different sectors. Some of thesemega projects are stills in construction phase and some are inplanned phase. For the projects which are in planned phase, we havetried to identify the best practices in terms of technology,modelling and impact these projects will have on the concernedregion and people.

“Reference Class Forecasting” MethodologyMegaprojects typically results in high overrun cost, time delay.It’s difficult to accurately forecast the project cost due tocomplexity involved and biasing from promoters side. Referenceclass forecasting method bypass this kind of bias by taking “outside

view’ on prospects being forecasted and at the same time takingtraditional forecasting method as “inside view”. Here referenceclass refers to similar past projects. This class should containsufficient number of similar pastproject to be statisticallysignificant. After that, itestablishes the probabilitydistribution of selected referenceclass through empirical data for asufficient number of projects withinthe reference class in order to havestatistically significant conclusion.[1] Comparison of specificproject is done with reference class distribution to establish themost likely outcome for the planned project. This method was usedfor the first time by UK department of Transport for the evaluationof their large transportation project.[1] This methodology has alsobeen applied in many other infrastructure projects in countries likeDenmark, UK, South Africa, Switzerland etc.

In Indian context, this methodology will help to reduce forecastingerror in terms of cost and resources. In India, most of the projectfaces delay due to various issues like cost, time, resources,political issues, protest from people etc. Though some of the issuescan be quantified in this context, however the parameters like cost,time and resources can be quantified using this methodology andproject can be planned accordingly.

PPP via International InvestmentPulkovo Airport in Russia was the first PPP projects in Russiabacked by International banks without depending on state subsidy orguarantees.[2] International tender was floated to invited bids fordevelopment and operation of airport for30 years. Northern Capital Gatewayconsortium consisting of VTB capital, the international airportoperator Fraport FAG and the investment group Copelouzos was chosenas investor for this project.[3] D/E ratio for the project was 60/40since this project being an international airport was able togenerate revenue in Rubles, US Dollars and Euro. Unique feature ofthis project was attraction of private investment. Land & buildingwas leased from the city/Pulkovo Airport Company (PAC). Minimum fixconcession fee of Euro 2 million p.a. was structured as lease

Pulkovo Airport in Russia

payment along with variable concession fee approx. 11.5% of grossrevenues.[5] Contractual framework and consortium details are given inexhibit 1 and exhibit 2 respectively.

In India, most of the PPP projects are delayed due to lack of fundand investment. Investment from foreign players and banks arerequired in order facilitate smooth funding for the project and makesure that projects are not delayed due to lack of fund.

Value for Money FrameworkThis framework has been designed by Queensland government to supportthe objective of Queensland public private partnership policy. Thisframework evaluates a range of project delivery options ininfrastructure sector and identifies the project which provides bestvalue for money to government and community. This framework analysea project on all important parameters starting from project outputs,cost, risks and allocation of risk to appropriate party.[6] Inaccordance with VFM framework, $ I billion Gold Coast Rapid Transit(GCRT) project in 2006 was established to address the trafficcongestion issue in Queensland city and provide sustainable,reliable and affordable means of transportation.[7] This projecttries to solve traffic congestion problem through complex set ofinterconnection with roads,pedestrian walkways and other forms of public transport. This wasthe first public transport projectin Australia to attract fundingfrom all three level ofgovernment. State governmentfunded Early and Enabling works(EEW) and Operator Franchise (OF)PPP. Light rail feasibility study,evaluation of bus rapid transitand light rail transit option,Translink’s draft network planalong with preliminary assessmentwas done before signing the memorandum with concessionaire. Thisensured that project doesn’t get delayed by overrun cost, social andeconomic issues and is completed on time in 2014.

Gold Cost Rapid Transit Project

Collaboration with Stakeholders UK’s Crossrail project involved constructing 42km tunnel[9]

underneath the ground. This project besides being an example ofextra ordinary engineering feat is also an example which wassuccessful in communicating the value to stakeholder and bringingthem together to make this project successful. High levelunderstanding, collaboration and support from government, citizen isessential for success of any mega project. CrossRail project issponsored by Transport for London and Department of Transport besidefunds coming from other stakeholders including The Corporation ofLondon, business sector, residents, commercial developer along therail line is an important aspect of this project which makes itunique.

Transfer of Abundant Resource to Resource Starved RegionChina’s CNY 526 Bn West-East Electricity transmission project[8] isan example of project where rich power resources in the westernregion were developed to send electricity to eastern region whereconsumption is high but resources are low. This project involveddevelopment of three power supply passage through north route,central route and south route for transmission of electricitythrough constructing hydropower station, thermal station andelectricity transmission line in different region. By doing this,China have been able to exploit itsstrength of being rich in waterresources and leveraging it forgrowth of the economy.

In Indian power sector, many regionfaces shortage of water due to whichhydropower generation is not possiblein these regions and government faceshuge challenge in supplying electricity to these regions. In orderto solve these issues, efficient transfer and distribution mechanismshould be in place for transfer of electricity to those regionswhere there is electricity shortage.

Collaboration between Governments to Solve Urbanization IssueThe Sino-Singapore Tianji Eco-city project has been planned throughcollaboration between Singapore and China government.[10] Through this

project both the governments are trying to solve the issue ofurbanization and climate by building a model and sustainable city.This project has attracted investment from over 600 companies anddesigned to be fully functional with all basic amenities. Some ofthe salient features of this project are:

20% of housing initially available will be in the form ofsubsidized public housing.

Green space in the city should beequal to 12 sq.mtr. per person and 20% of total energy on siteshould be renewable.

Emphasis on green transport like public transport, bikes orwalk

Network of green corridors and water bodies around the city.

In India, this concept can be applied at state level/municipal levelto solve the urbanization issues in India and provide the affordablehousing solution to people. Two states/municipalities cancollaborate to develop model township/city.

Context Sensitive SolutionMarquette Interchange Project in Wisconsin, USA is an example ofmega project which involved efficient planning at every stage of theproject. This project was completed ahead of deadline and also withcost of $ 810 million much below the projected cost of $ 1 Billion.Project was funded through Federal Funds ($386 million) and StateFunds ($424 million) and Design-Bid-Build model was adopted for thisproject.[12] A detailed study and assessment of existing condition wasdone before the start of the project. A Context Sensitive Solutionprocess was adopted during the process through meeting localofficials and public to get their input regarding the design ofinput. Context Sensitive Solution[11] is described as the art ofcreating highways that are safe, efficient, and visually pleasing.This involves taking inputs from local community, people who willuse the highway and the concerned local authorities.

Tianji Eco-City Project

References1. Flyvberj, Bent , Concept report : “Eliminating bias through reference class

forecasting and good governance” Concept Report No 17, Chapter 62. http://www.kpmg.com/ru/en/issuesandinsights/articlespublications/

press-releases/pages/pulkovo-airport-ppp-receives-global-recognition.aspx

3. http://www.pulkovoairport.ru/eng/about_pulkovo/press_centre/news/id647/

4. http://www.transport.spb.ru/pulkovo/File/d_zo28w_p83d.pdf5. Pal,Andrea, Pulkovo Airport:”Creating a blueprint for Russian airport

privatisation”. 6. http://www.treasury.qld.gov.au/projects-queensland/policy-

framework/public-private-partnerships/value-for-money-framework.pdf7. http://gcrtlessonslearned.com.au/workspace/assets/uploads/files/

gcrt-lessons-learned-executive-4f9f68c6a1d84.pdf8. http://english.people.com.cn/english/200011/08/

eng20001108_54682.html9. KPMG, “Insights: Megaprojects”. The global infrastructure magazine.

Issue No. 4/201310. KPMG International, “Infrastructure 100:World Cities Edition” 11. http://contextsensitivesolutions.org/content/case_studies/

marquette_interchange_reconstru/12. http://www.transportation-finance.org/projects/

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Appendix

Exhibit 1 : Contractual Framework

Exhibit 2: Consortium Details