1. Public Private Partnerships
Initiatives of Madhya Pradesh Government in Infrastructure Development

2. Structure of Presentation
Madhya Pradesh – Economic Indicators
PPP Framework of Madhya Pradesh Govt.
About Madhya Pradesh Road Development Corporation
Evolution of MPRDC
MPRDC project portfolio
Financial Models for Project Financing
Innovative PPP Projects
Innovative PPP Projects undertaken by MPRDC
Value for Money – Significance
Innovative PPP projects undertaken by other departments
Swiss Challenge Policy
Venture Capital Fund

3. Madhya Pradesh – Economic Indicators

4. Madhya Pradesh – ‘The heart of India’
India – An emerging economy…
Major Cities
Delhi
Chennai
Pune
Kolkata
Mumbai
Bangalore
Madhya
Pradesh
Bhopal
Gwalior
Jabalpur
Indore
200 KM
300KM
400KM
500 KM
GSDP- INR 2488 billion for FY14
Second largest state in India
- 308,252 sq. Km.
Current Population – 75 million
Road connectivity between major & distance in kilometers
GSDP is at constant prices, base year FY05

5. Consistently strong Financial fundamentals
18% average growth rate in Tax Revenues during FY09-FY14
Consistently revenue surplus since
6 times the growth in Capital Expenditure during FY 04- FY 14
Expected reduction on Interest payment burden from 22% in FY04 to 7% in FY14
22% expected outstanding debt* in FY (limit under FRBM Act- 34%)
*(as % of GSDP)

6. PPP Framework of GoMP

7. PPP Framework of MP Government
Cabinet Committee on PPP under Chairmanship of Hon’ble Chief Minister
State Level empowered Committee on PPP under Chairmanship of Chief Secretary
PPP Cell in Directorate of Institutional Finance
VGF as well as non VGF models followed for various sectors.
DBFOT Model of PPP and MCA are adopted
Two stage bidding RFQ and RFP
MP Infrastructure Investment Fund Board
Estabished for support of unviable infra projects
VGF contributon of GoMP released through MPIIFB

8. About MPRDC & Its Evolution

9. Transition to New Regime
Background
1. MP was known for bad roads
2. Improper design based on traditional approach.
3. Budget driven construction methodology in place of demand driven.
4. Poor fund flow for projects – low budget outlay.
5. Result - Poor Connectivity, low industrial investment, sluggish business growth
New Regime
1. Government-embarked on program to revamp road sector.
2. M.P. Bridge Corporation Ltd.
3. Revived in December 2000 and
4. Given mandate to upgrade highways on PPP
5. Considering poor traffic, grant was made bidding parameter.
6. Madhya Pradesh Infrastructure Investment Fund Board (MPIIFB) created to arrange funds for grant.
7. Rs. 500 Crore outlined for the purpose.
8. Approx km. Road length identified to be developed in phases.

10. About Madhya Pradesh Roads Development Corporation
Incorporated as wholly owned State Govt. Company under Companies Act 1956, in July 2004.
State Highway Authority under the State Highway Act
Mandated to develop, regulate and maintain highways with focus on PPP.
The Chief Minister of MP is the Chairman, Minister of Public Works Department & the Chief Secretary are the Vice Chairmen, the Secretaries of the PWD, Finance , Forest, Urban Affairs and Mining Dept. are members on the Board.
MD, MPRDC is also a Director.

11. Shift in Strategy
Takeover of entire state highway network including maintenance.
To overcome the limitations of existing PPP model new financial models introduced.
All remaining state highways were taken for development in different stages.
Important Major District Roads also taken up to complete the network under PPP.
Performance based maintenance introduced through OMT.
MOU signed with MORTH for reconstruction of National Highways.

12. MPRDC Project Portfolio

13. Road Portfolio MPRDC Category Total Length (In Kms) MPRDC (In Kms)
National Highways
4709
1443
State Highways
10297
Major District Roads
19574
5032
TOTAL
34580
16772

14. Project Portfolio MODEL NH SH MDR OTHERS TOTAL In INR Crores
BOT (TOLL)
6744
11227
96.73
ROB/RUBs
Border Check posts
Singrauli Airport
OMT
20832
BOT (TOLL+ANNUITY) -
2005
970.16
2975
BOT (ANNUITY)
101.04
Medical Colleges
ARS
3195
ADB FUNDED PROJECTS
4707
(ADB-I,II,III)
3000
(ADB-IV)
7707
REGULAR CONTRACT/ EPC
3484
1821
5305
3000 (JICA ODA Loan)
Building Works
4053
GRAND TOTAL
10228
19861
9388
4590
44067
In INR Crores

15. OUR PROJECT COST SHARE

16. EXTERNALLY AIDED PROJECTS
Loan No.
Length(In km)
Project Cost
(US $)
Status
1959-IND MPSRDP
190 Million
Completed
2330-IND MPSRSP-II
400 Million
2736-IND MPSRP-III
375 Million
Nearing completion
ADB-IV
1500 of MDR
500 Million
Loan Activated
J.I.C.A ODA Loan
Proposed 16

17. Financial Models for PPP

18. PPP- Financing Models Public Private Partnership Models
Invite private investment by providing grant/ annuity to/ premium by the concessionaire on competitive bidding
Public Private Partnership Models
Build- Operate Transfer
BOT (Toll)
BOT (Toll + Annuity)
BOT (Annuity)
Deemed Shadow Fee Model
OMT

19. Engineering Procurement & Construction
PPP- Financing Models
Engineering Procurement & Construction
Engineering Procurement & Construction
External Funding Agencies
(Asian Development Bank)
State Budget

20. Initiatives of MPRDC – BOT MODEL
Pioneer in the field of road sector development through Public Private Partnership in India
Adopted DBFOT Model of Tendering based on Model Concession Agreement of Planning Commission of GOI.
First agency in the country to get VGF from GoI.
Under VGF scheme of GOI
40 % of project cost is sanctioned to make projects viable.
20% is given by GoI.
20% is given by the State Government.
GoI has sanctioned INR Crores as VGF for 24 BOT projects of MPRDC.
In several Projects MPRDC receives Premium.
VGF/Premium is the bidding criteria.
Distance based user fee (Toll) B o T

21. Initiatives of MPRDC - BOT (Toll + Annuity) Model
Hybrid Model of BOT (Toll) & BOT(Annuity).
Formulated to increase Viability of the projects which are not viable on pure toll.
Toll as a sweetener.
Concession Period is kept 15 years including 2 years of construction.
Six Monthly Annuity is quoted by the bidders.
Annuity is the bidding criteria.
Annuity is the deferred payment over a period of 13 years as per payment schedule defined in Concession Agreement.
Incentive for early completion as a bonus along with first annuity.
Penalty for delay as a reduction of annuity. B o T
+ Annuity

22. Initiatives of MPRDC - BOT (Annuity) Model
Formulated to implement the projects which are not viable on pure toll or Toll+ Annuity Models.
Concession Period is kept 15 years including of 2 years of construction.
Six Monthly Annuity is quoted by the bidders.
Annuity is the bidding criteria.
Annuity is the deferred payment over a period of 13 years as per payment schedule defined in Concession Agreement.
Incentive for early completion as a bonus along with first annuity.
Penalty for delay as a reduction of annuity.

23. BOT(OMT) Model O M T OPERATE MAINTAIN
Roads build under Asian Development Bank assistance and state budget taken for maintenance and tolling under this mode
Concession Period – Project specific, normally 9-12 years
Concessionaire to undertake management, operation & maintenance of Highways
Augmentation of facility to be done
Construction, monitoring and inspection by Independent Engineer.
Tolling only on commercial vehicles.
Passenger vehicles exempt including buses. O
OPERATE M
MAINTAIN T

24. Deemed Shadow Fee Model
Deemed shadow Toll is given in lieu of exempted vehicles.
Acts as sweetener to increase the viability of project with maximum permissible VGF of 40%.
It is given in addition to maximum VGF of 40% with maximum limit of 10%.
This will be contributed by State Government.
Proposal of deemed shadow fee model is pending with DEA GOI.
OPERATE
MAINTAIN

25. Innovative PPP Projects

26. Innovative Projects under PPP
Projects Under Implementation
Border Check Post
Accident Response System
Projects Under Development
Railway Over/Under Bridge
Medical Colleges
Singrauli Airport

27. Innovative PPP Projects – Border Check Post
Up-gradation and integration of 24 Border Check Posts in MP covering all State border crossings
An integrated, real time system for Transport, Commercial Tax, Forest, Mandi & Mining departments
Purpose of the project
To increase the revenue of State Government.
To control overloading & damage to state roads.
To reduce leakage & corruption.
To use technology for reduction in transaction time and ensuring complete transparency.
Check posts to serve as facilitation centres

28. AUTOMATION SYSTEM CENTRAL CONTROL FACILITY SURVEILLANCE CAMERA
ALL TRANSACTIONS,
VEHICLE PICTURES
DIMENSIONS MEASUREMENT EQUIPEMENTS
Operator Booth
Barrier &
Traffic Lights
Control
License Plate
Reader Camera
RFID
Reader
Lane
Traffic
Controller
WEIGHING
CONTROLLER
WEIGHBRIDGE
Lane Computer
Automatic Vehicle Classification System

29. CCF GWALIOR BUILDING
CCF Gwalior
Conference Room
Side view

30. Border Check-post e-Data Capture Components
Automatic Vehicle Classifier
Automatic Number Plate Reader
Electronic Weigh Bridge
Automatic Boom Barrier and Traffic Light 30

31. Innovative PPP Projects – Under Development
Railway Over/Under Bridge
Development of ROB’s with more than 1 lakh T.U.V traffic in the state on PPP.
Total 34 ROB’s in two parts are being taken up costing INR Crores .
First Phase includes 16 ROB’s/14 LHS’s cleared by DEA with grant of 40%. Bids invited but no Bids received.
Second phase 18 ROB’s/ 9 LHS’s is submitted to DEA.
Railway will provide 50% share upfront & Balance 50% will be met through Toll collection plus viability gap funding by state government.

32. Innovative PPP Projects – Under Development
BUILDING CONSTRUCTION & MAINTENANCE OF MEDICAL COLLEGES ON BOT (ANNUITY)
Location of Project: Vidisha, Ratlam & Shahdol
Construction period – 2 years
Concession Period – 10 years from the date of completion
40% project cost to be paid during construction in 5 installments on the basis of project milestones
Remaining cost to be paid after completion in six monthly Annuities during 10 years
First annuity to be paid six months after COD bank rate plus 2% with annuity payments during O&M period
O&M expenses to be paid with annuity at the fix rate of 1% of project cost during first three years, 2% during 4-6 years and 3% during remaining years.

33. Innovative PPP Projects – Under Development
Accident Response System
Implementation of ARS system on PPP mode .
Technical Assistance through ADB for capacity building in road safety.
Accident Response System & Traffic Management Centre including operation & maintenance for 5 years with estimated cost of Rs Crore is being set up.
ARS includes centralized call center, GIS based automatic vehicle tracking system (AVTS), Computer aided dispatch system, Traffic Management Centre.
Trial run started from 24th Dec State wide number 1099 and Citizen portal available for assistance.

34. Our Strengths - MPRDC Transparency in bidding process.
Lender’s faith in MPRDC ensuring Financial Closure of BOT Projects.
Strict Quality Control Guidelines.
Adequate Budget provision for Annuity & VGF payments by the State Government.
Onboard Panel of Experts for Superior delivery
Political commitment & support.
Land Acquisition and Environmental Clearances are planned and executed well in advance.
Chief General Manager at Head Office & Divisional Manager coordinate with District Administration.

35. Ensuring Quality - MPRDC
3-tier system of checking: PMC of Concessionaire > Independent Quality Control Engineer > Officers of MPRDC
Quarry approval after thorough testing.
Field & lab testing is mandatory as per the norms of MORTH.
Use of Graders for maintaining the camber at sub grade/GSB level.
Crushed GSB
Layer -1 (drainage) Coarse graded.
Layer -2 Close graded.
WMM in place of WBM with pavers.
Use of Sensor Paver in place of mechanical paver for BT works.
Use of RMC plant in place of normal concrete mixers.

36. State Highway Fund Sources of Fund Application of Fund
State Highway fund established under an Act for investment in highways & infrastructure projects.
Executive Committee under the Chairmanship of Chief Secretary to administer the fund.
Sources of Fund
Application of Fund
All payments of Premium
For Maintenance and Repair of Highways
Proceeds towards encashment of Performance Security or Bid Security
For Meeting any Development Cost of Highway or Infrastructure Project
All returns on investments made out of the Fund
For Project Preparation, Pre Tender Activities, Cost towards Utility Shifting, Land Acquisition

37. Value For Money – Significance in MPRDC

38. Value for Money: Applications at MPRDC
During VFM analysis of MDRs, 22% Annuity for BOT (Annuity) Projects was envisaged.
After bidding, the projects awarded on Annuity of 18.30% under BOT(Annuity) projects & 12.88% as on average under BOT (Toll+Annuity) projects.
10 lakh; 100 lakh;12 lakh
Parameter
EPC
BOT-Annuity
NPV calculated
2838.8
Value for Money
( NPV of EPC –NPV of Annuity)
343.16
Figure in INR Crores

39. Value For Money Analysis
Project Details
Total Project Cost : INR Crores
Total Length of the Projects : Km
Average Annuity (actual) : % of Project Cost
Parameters
EPC
BOT -Annuity
Construction Cost
INR Crores
(Escalation by 25%)
INR Crores
(Including 25% of TPC for financing cost, contingency & other charges)
Construction Period
2& ½ Years
1 & ½ yrs
O & M Exp
Routine Maintenance
0.004M$/km/p.a. -
Periodic Maintenance
0.02M$//km/p.a..
Electricity & Patrolling
0.002M$/km/p.a.

40. Value For Money Analysis
Parameters
EPC
BOT -Annuity
Interest
9.00%
13%
Debt: Equity Ratio
100
70:30
Funds Requirement
Immediately
6 months after COD
Discount Rate for NPV Calculation
15%
Loan Repayment Period( in years) 10
Quality of Roads
Average
Excellent
Efficiency of private sector
Not availed
Availed
Technology
Traditionally applied
Latest available
Setting up of full infrastructure & staff
Required
Not required

41. Innovative PPP Projects in Other Sectors

42. Innovative Projects under PPP
Projects Under Implementation
Logistic Hub at Pawar Kheda
Construction of Steel Silos for Storage of agricultural commodities
Power Transmission
Urban Transport – City Bus Service
Projects Under Development
Solid waste management
Rural Water Supply
Air Taxi

43. Innovative PPP Projects - Under Implementation
Setting up Composite Logistics Hub at
Pawar kheda, Madhya Pradesh
Integrating the value chain from Procurement to Logistics under one umbrella
Implementing Agency- Agricultural Marketing Board
Land acres land
Concession Period -33 years, extendable by 15 years
PPP Mode- DBFOT
Project Cost – INR Crores
Bidding parameter- Highest Upfront Premium
Facilities Planned
Rail Terminal
Warehousing
Container Freight Station
Cold Storage
Grain & Horticulture Procurement
Agro & Horticulture Services
Market Information Systems
Trading & Collective Marketing
Negotiable Warehouse Receipts

44. Innovative PPP Projects - Under Implementation
Considerations For Determining PIA for logistic hub
Cargo originating and consumption clusters
Consolidation and distribution centers
Location of competing facilities
Potential of attracting transshipment cargo
Key Findings
Major cargo consumption centre in Madhya Pradesh are outside 200 kms of project site except Bhopal
Originating clusters within PIA include locations like Mandideep, Budhni, Itarsi, Piparia etc. All are within 100 km from proposed Logistics Hub
All consumption centers outside 100 Km radius have presence of competing facilities
Service demand and supply gap within these facilities
Conclusions
PIA area considered restricted to radius of 100 km, though for certain commodities PIA might extent beyond considered radius

45. PROJECT TRANSACTION STRUCTURE
The Project was successfully closed with Kesar Terminals Ltd. offering approx 14 crore premium to GoMP.

46. Innovative PPP Projects - Under Implementation
Setting up of Steel Silo’s at ten locations
50,000 Metric Tonnes capacity of Steel Silo at each site.
GOI to support the Project through Viability Gap Funding (VGF) up to 20% of Total Project Cost.
Government of Madhya Pradesh to support the Project through:
State portion of VGF up to 20% of Total Project Cost to support O&M if required.
Providing 7 acres of land.
Guaranteed Storage Charges to be paid to the private developer for first 10 years (in Concession Period of 30 years) at 100% utilization of the proposed project capacity.
Average cost of each Project facility is around INR Crores

47. Innovative PPP Projects - Under Implementation
Power Transmission – On DBFOT
Construction of 400 KV (DCDS) Transmission Line between Satpura and Astha
Evacuation of Power from 2 x 250 MW extension unit at Satpura Thermal Power Station)
Grant: Rs Cr. (Rs Cr as Equity Support from VGF and Rs 4.21 Cr as O&M Support)
Completion period: 15 months
Revenue Stream:
Monthly Fee (“Unitary Charge")
20% of actual wheeling charges (additional revenue) for transmission for other parties, on spare capacity availability (80% of additional revenue for Authority)
75% Revenue from Advertisement on poles
Unitary Charge for 1st year: INR crore / month

48. Innovative PPP Projects – Under Implementation
Urban Transport – City Bus Service Indore
Objective: To create a specialized and effective agency to monitor and provide intra-city public transport system
Self-financing and revenue generating model for bus stops.
Fully computerized ‘Ticket Vending system’ & Vehicle Tracking System
Concession Period: 5 years
Estimated Cost: Rs crore
Financing: 60% : AICTSL & 40% : Operator
Revenue Stream: Per bus monthly income:
50% : Fare
30% : Advertisement
20% : Passes
Status: Project under operation. 111 buses operational on 15 routes

49. Innovative PPP Projects
Regional Integrated Solid Waste Management Project on DBFOT
Implementing SWM in smaller ULBs is neither operationally nor financially viable.
Door to door collection, transportation, segregation, scientific treatment and disposal of waste
The processing technology will be decided by the private operator.
Revenue for concessionaire for Tipping fee from ULBs and Sale of by-products or any useful components of Waste.
Full guarantee by GoMP for tipping fee payment to Private Operator
User Fee: 60 Rs for APL and 30 Rs for BPL in Municipal corporations and Councils; Rs 40 for APL and Rs 20 for BPL in Nagar Parishads
Large ULB has been chosen as a lead member and smaller ULBs within a distance of kms as consortium members.
The landfill site shall be at the headquarters of the lead member

50. Innovative PPP Projects – Under Development
Multi Village Rural Water Supply Schemes (MVRWSS) in Madhya Pradesh on DBFOT
Sourcing from Intake well up to house service connection
Operation & Maintenance for 20 years concession period.
State Govt. to state predetermined water charges.
Capital grant of 40% to be provided to meet viability gap.
Bidding parameter: V.G.F.
Water charges for Bulk Supply to be paid by GoMP

51. Innovative PPP Projects – Under Development
Air Taxi Services
India’s first dedicated state level air connectivity between Bhopal, Indore, Gwalior and Jabalpur.
3-4 seats underwritten on sectors within MP operations at pre-determined rates.
Tariff other than underwritten seats to be fixed by operator
100% re-imbursement of VAT on ATF uplifted in the State.

52. Innovative PPP Projects – Under Development
Air Taxi Policy: Salient Features
Subsidy per flying hour shall be applicable
Minimum 100 flying hours flying per month to be eligible for subsidy
Subsidy shall also be available in case of interstate operations (max 40%).
Subsidy shall not be available if the aircraft connects two cities of another state.
Minimum of 4 cities to be connected with in Madhya Pradesh
VAT reimbursements shall be made on the ATF uplifted from within the state for approved flight schedule
The government shall reimburse the ambulance and fire brigade charges.
Security shall be provided free of charge for airports owned and controlled by the state government
The maximum amount of subsidy per month shall not to exceed Rs.1 Cr no subsidy would be paid in case of zero load flights (to & fro)
MOU period will be of 3 years and extendable up to 2 years
Atleast 2 aircraft of minimum 9 seating capacity to be operated. In case, if the operations are started with one aircraft initially, then, the second aircraft should be inducted with in period of 2 months.

53. Swiss Challenge Policy

54. Swiss Challenge Policy
Under open and transparent process of Swiss Challenge, long-term financial solution will be provided by inviting expertise and capital from private and public sectors.
The sectors and projects not covered by existing PPP framework will also be augmented through this.
Initiative can also be taken to identify and implement projects for providing social and basic facilities.
The right of first refusal will be given to the proposer

55. Innovative PPP Projects Under Swiss Challenge
Rural BPO
Establishing 15 Rural BPOs across M.P to create jobs in IT/ITES sector by provision of training for skill  development.
Project Commitment: INR Crores required from Investor with government to underwrite business for 18 month
Restructuring  of Industrial Water Supply in Dewas
With total mandate to deliver 23MLD, currently project is delivering 3-5 MLD
Project Restructured under Swiss challenge scheme to be implemented under PPP
Total Project Cost of INR Crores and 80% of debt due of previous project.
Benefits of Swiss Challenge
Concessionaire (existing or new) shall not be paid for any Debt Due and the existing Debt will be serviced by him from the same revenue stream.
In Swiss challenge mode, the maximum water charges payable shall be obtained through the open bid and the existing Concessionaire will be asked to match the bid.
Consumers continue to get water supply at the same rate as per the current Agreement

56. Venture Capital in Madhya Pradesh

57. Venture Capital Fund of GoMP
GoMP is creating a INR Crores Venture Capital Fund (VCF) for MSME sector.
The fund aims to help new and talented entrepreneurs, who cannot set up innovation-based new enterprises due to lack of adequate share capital
GoMP will contribute INR Crores as promoter and balance amount of INR Crores would be raised from financial market.
Inviting to contribute to the Fund as Investors (Limited Partners)
Domestic investors - Insurance Companies, Banks, Corporates etc.
Overseas Investors – VC Funds, Private Equity, Sovereign Funds, Pensions Funds, Financial Institutes, DFIs etc.

58. Structure of Asset Management Company
(Share Capital)
Government of Madhya Pradesh
Maximum 49%
Financial Institutions, Banks, International Financial Agencies & Corporates etc.
Minimum 51%
GoMP shareholding will be capped at 49% in the company.
The minimum shareholding of the Investors/Financial Institutions will be kept at 51%
The proposed structure will lead to enriched operational and managerial flexibility.
VC Investors may be offered Directorship in the AMC in proportion to investment
AMC managed by Expert Venture Capitalist and Professionals from the Industry

59. Thank you
Vivek Aggarwal IAS Secretary to Government of Madhya Pradesh, Chief Minister’s Office, Managing Director, Madhya Pradesh Road Development Corporation Commissioner, Institutional Finance, Government of Madhya Pradesh Office: ; | Fax: ; | ; Website: