for 2012-2017
Table of Contents S.No. Content Page Number 1.0 Introduction 2 2.0 Civil Aviation 6 3.0 Railways 10 4.0 Logistics 12 5.0 Ports 14 6.0 Gas 16 7.0 Mainstreaming PPPs in Karnataka 18 8.0 Statutory Provisions and Institutional Building 22 Annexure 1 Civil Aviation Perspective Plan 2 Status of Railway Projects- Karnataka 3 Gas Pipeline Project 4 Annual Outlay- Planning Department, GoK 1
1.0 Introduction 1.1 Background The Government of India has set a target of USD 1 trillion in public and private investments in infrastructure during the 12th five year plan, starting in April 2012. In order to achieve this target, infrastructure development needs to be directly proportional to the quality of infrastructure provided in the State for facilitating growth and attracting investments. s current investment in various infrastructure projects (under implementation) is about USD 18000 million (Rs. 86,400 Crores). At present, infrastructure investment is about 3.2% of the SGDP. Figure 1 provides the investments in various infrastructure projects. However, the State Government intends to achieve a target index of 8-9% of the SGDP, which would translate to an annual investment of USD 6250 million (Rs. 30,000 Crores). Figure 1 Some of the target infrastructure indices that the envisagess to achieve are set out below; Sector Current Index Target Index Investment (USD mn) Railways (rail km/ 1000sq km) 16 41 4,9000 (by 2020) Roads (km/ Sqkm) 1.07 1.5 26,000 (by 2020) Energy (units/ capita/annum) 7 (7800MW) 14 (18500MW) 17,700 (by 2020) Airports (number of districts) 11 30 310 (by 2012) The government and other stakeholders face the daunting task of providing world class infrastructure facilities, connectivity, utilities and access to basic/civic amenities for all denizens to improve the quality of life. Since the central government and states alone cannot shoulder the responsibility due to financial and resource constraints, the role of private sector hence becomes crucial. Factors like lack of skilled manpower, project management expertise, time and financial resources act as major constraints before the government to execute projects on its own in areas like national highways, power, transport, 2
airports and seaports. It therefore presents a huge opportunity for the private sector, developers and Non-Governmental Organizations to jointly execute infrastructure development projects on a warfooting through Public-Private Partnership model. Thus, Public Private Partnerships or PPPs and private investment wherever feasible have become the thrust areas. Development of infrastructure through Public Private Partnerships has been tried, tested and adopted in the State across sectors such as transport and urban infrastructure. To date, various PPP models have been tried in Karnataka, including public contracting; joint ventures; and long-term contractual agreements (such as BOT, BOOT, BOLT). The major strength of PPPs is their ability to deliver value for money in public service procurement and operation. By utilizing the differing skills, resources and experience of each party, they allow the public and private sectors to complement each other the public sector provides its expertise in identifying public needs, service requirements and desired outcomes, and the private sector brings its capacity to effectively utilize assets and manage the construction and operation of services. 1.2 Infrastructure Development Department (IDD) The is actively promoting the expansion of Public Private Partnership activities across all key infrastructure sectors including highways, ports, airports, power and telecom. Infrastructure Development Department (IDD), established in the year 1996, has a mandate to develop key infrastructure projects like Airports, Railway Network in partnership with Railways. The main objective of IDD is to play a significant role in the areas of developing air, rail and maritime connectivity and in promoting increased private investment through Public Private Partnership (PPP). Key achievements of IDD include development of Airports in Bidar, Gulbarga, Shimoga, Bellary, Bijapur and Hassan under PPP, development of Rail Network in partnership with Indian Railways, announcement of New Infrastructure Policy 2007, facilitating energy security through 1147 km of Gas pipeline for the State in partnership with GAIL etc. The Infrastructure Development Department works for the development of selected railway projects such as Hassan-Mangalore rail line in partnership with Ministry of Railways through Railway Infrastructure Development Corporation of Karnataka (K - RIDE). IDD is also associated with Bangalore International Airport Limited by way of equity participation and infrastructure support through KSIIDC. IDD established PPP cell in the year 2007 as mandated in the New Infrastructure Policy to mainstream PPP in Infrastructure projects and to act as the nodal agency to receive proposals in respect of PPP projects and place them before the State Level Single Window Agency (SLSWA) for consideration and approval. The scope of activities of PPP cell include assisting various State departments/agencies in different stages of project development cycle namely sector study, project identification, project development, transaction management etc. The key sectors of facilitation include education, healthcare, energy, industrial infrastructure, agri-infrastructure, irrigation, tourism, transportation & logistics, urban 3
infrastructure and public markets. The PPP Cell is headed by the Director, Infrastructure Development Department with PPP (expert) from ADB. Infrastructure Development Corporation (Karnataka) Limited (ideck) provides technical advice and support to PPP Cell. The PPP Cell engages consultants as and when necessary. The PPP Cell is the nodal agency to receive proposals in respect of Public Private Partnership (PPP) projects and place them before the SWA for consideration and approval. The PPP Cell also helps various state Departments/Agencies in different stages of project development cycle. Key achievements of PPP cell include establishment of Transaction Advisory panel of 20 consultants to assist in bid advisory and studies, issue of Swiss Challenge guidelines, development of 22 key strategic projects, formation of Karnataka Infrastructure Project Development Fund (KIPDF), coordinating development of 91 PPP projects in the State with a total investment of Rs. 67793 crores. Future plans of PPP cell would include development of PPP law, sector focused approach, guidelines on Competitive Procurement of PPP projects and bringing in Social Inclusion and Environmental Sustainability as the cornerstone for all infrastructure projects. 1.3 Strategic Plan The Strategic Plan has been prepared by IDD based on the Vision 2020 and the objectives that the has set for itself to achieve the Vision, in terms of development of various sectors, particularly infrastructure in the State. The Plan has been prepared based on the budgetary allocation by the Planning Department for the next five years. The indicative expenditure by the Planning Department is set out in Annexure 4. The Strategic Plan discusses the core sectors that IDD focuses on are Airport, Rail, Logistics, Port etc. Apart from this, IDD is also associating itself with the Gas Authority of India Limited (GAIL) for setting up a Gas Pipeline project for the State. The current development/ initiatives being undertaken by IDD and the ones proposed over the next five years have been provided in Chapters 2 to 6. IDD is also actively involved in Capacity Building and knowledge dissemination programs on PPP projects for government professionals. IDD has chalked out a plan for capacity building in the State and the same has been presented in Chapter 8. In order to facilitate implementation of infrastructure projects and PPP in the state, the Government of Karnataka through IDD, has also drafted the Infrastructure Bill. The timelines for implementation of the Infrastructure Bill, subsequent actions, such as drafting of Rules etc, which have been envisaged over the next few years have been discussed in Chapter 9. also proposes to establish an Infrastructure Authority that would facilitate review and approve infrastructure projects taken up under PPP framework on public need basis and value for money principles. IDD also intends to revise the Infrastructure Policy 2007 in light of several 4
developments that have taken place over the past five years in the infrastructure sector and projects implemented through PPP in particular, to include emerging sectors such as logistics, rail etc that have witnessed private sector participation in development of projects. The policy would therefore be revised with a five-year perspective. A brief note on the same has been provided in Chapter 9. 5
2.0 Civil Aviation Karnataka is emerging as one of India s most dynamic states and the State government is positioning Karnataka as a major investment destination. Over the years, Karnataka has transformed to become the aviation hub of the country and is also the leader in the manufacture of machine tools. While many large firms like European Aeronautic Defence and Space Co. (EADS) operate from Bangalore, other new companies are establishing operations in the key industrial belts surrounding Bangalore and in other cities of the State. The growth of other allied industries such as the auto components, steel producing has also helped the aviation manufacturing industry. The State has the largest density of aerospace institutions and has the potential of developing into an innovation and R&D hub in the future. In addition, the state capital, Bengaluru, is one of the leading hubs for Information Technology (IT) and Bio Technology (BT) services catering to several international markets. The state is also home to a large industrial base, distributed across different regions. The aviation sector in the state continues to attract significant interest and is set to see robust growth due to the presence of aerospace skill and expertise, favourable Government policies, domestic and global aerospace majors investment and expansion plans in the State. The strong base of IT, BT companies, institutions, industries and the tourism sector contribute significantly to the airline passenger traffic in the state. 2.1. Objectives of GoK GoK is keen to promote itself as the destination for domestic and foreign investment to catalyse industrial growth. GoK intends to develop high quality infrastructure as a means to achieve the economic development. The key objectives of GoK are to: a. Provide efficient and effective aviation services to local businesses, tourists, home travelers and recreational flyers; b. Provide access to the aviation services to all its citizens within 100 km of the place of origin; c. Provide an efficient and reliable connectivity to the aerodrome to facilitate development of inter-linkages to the airports with other modes of transport in order to ensure efficient passenger and cargo movement and to enhance accessibility to the aerodromes; d. Provide a congenial platform for the development of aerodromes by providing support infrastructure, concession and other incentives and establish a contractual structure so as to provide equitable allocation of risks between GoK and the private sector; e. Encourage and attract private participation in the development of greenfield airports and airstrips; f. Promote / develop aerodromes in a manner that would develop the surroundings areas as business centers with a significant emphasis on development for the local citizens; and 6
g. Institute appropriate governance and monitoring frameworks for effective decision making, co- if ordination with various arms of Government and resolution of conflicts / disputes any. 2.2. Current scenario a. Airports Karnataka has six operational airports located at Bangalore, Mangalore, Mysore, Hubli, Belgaum and Bellary (Toranagallu). Currently, Bangalore and Mangalore airports cater to domestic and international destinations while the rest of the airports cater to domestic destinations. Greenfield airports are being taken up for development at Shimoga, Bellary, Bijapur, Hassan and Gulbarga. Defence Airports at Karwar and Bidar is likely to be opened for civil traffic. b. Civil Enclaves The state has two defence airports at Bidar and Karwar. Currently they are not open for civil operations. However, Bidar airport would commence civil operations on receiving a no objection certificate from Hyderabad International Airport. The Indian Navy proposes to build an airport at Karwar which could be used both for military as well as civilian purposes. Operations at the Karwar airport would commence once the airport is completed by the Indian Navy. c. Airstrips In keeping with the state government s policy of providing air connectivity to all district headquarters and important industrial and tourist centres in the state, the State Government has proposed to develop airstrips at various locations whichh have no existing air connectivity. The State Government is in the process of finalising a policy for the development of airports / airstrips in the state. Based on the policy the airports / airstrips would be taken up for development. d. Helipads In addition to the airports and airstrips that are being developed, the State Government is also proposing the development of helipads across the State thereby providing the basic infrastructure for developing helitourism in the State. The Department of Tourism (DoT), GoK has been instrumental in promoting the Karnataka as the premiere tourist destination in the country. 7
2.3. Strategic Plan for Civil Aviation from 2012 2017 Infrastructure Development Department (IDD), Government of Karnataka (GoK), has submitted the draft State Perspective Civil Aviation Plan to Directorate General of Civil Aviation (DGCA) for its approval. The Draft Plan is set out in Annexure 1. The perspective plan for the aviation sector is strategically divided into two phases consolidation phase () and expansion phase (2017-2022). A periodic review of the perspective plan would be undertaken to assess the realistic conditions. Concurrently, the economic development of the various regions would be monitored to assess if the need for aerodromes development/ expansion arises. This is more so due to the investments that are proposed in the State as a result of the Global Investor Meet in 2010 & 2012. Legend: Black icons Existing Airports; Green icons Greenfield Airports; Orange boxes- Proposed airstrips In the consolidation phase, the perspective plan focuses on the following aspects: a. On-time completion of the ongoing and proposed projects b. Develop and enabling framework for monitoring the project development and operations c. Set out a mechanism for assessing the need of an airport (economic benefit / value for money analysis) and development mechanism of the asset d. Discuss and evaluate various revenue models that are equitable for all the stakeholders while developing the aviation, connectivity and commercial activities The following table summarizes the perspective planning approach of GoK in the civil aviation sector. Activity Implementation of airports / airstrips / helipads in the state that are under various stages of implementation Assessment studies for identifying gaps in airport infrastructure and type of interventions required Monitoring of projects undertaken on PPP formats Facilitate approvals, clearances, land and other utilities Promote air traffic and airline operations in minor airports / airstrips / helipads Consolidation Phase () 8
Incentives and mechanisms for enhancing private sector participation The below table summarizes the development plan over the next five years. S. Location Type of Development Framework Status No Airport 1 Shimoga Minor Public Private Partnership Will commence operations in 2012 2 Bijapur Minor Public Private Partnership Will commence operations in 2014 3 Gulbarga Minor Public Private Partnership Will commence operations in 2012 Given the growth drivers and the increase in passenger traffic in the years to come, in the expansion phase(from 2017 to 2022), the need for development of new assets, redevelopment/enhancement of existing assets would be evaluated and would be implemented as per the frameworks set out from time to time. 9
3.0 Railways Karnataka is the leading state in the country to implement projects with Ministry of Railways on Cost sharing basis. Govt of Karnataka is sharing the cost of the Railway projects since 2002-03. The cost of Kottur-Harihar New Line and Ramanagar-Mysore doubling projects are being shared at 2/3 rd and 1/3 rd (GoK and MoR respectively). The State Govt are sharing the cost of the project on 50 : 50 basis for other railway projects and RoB / RuBs in the State. The proposed new lines that are envisaged to developed are a. Kottur Harihar (67 kms.) on 2/3 rd and 1/3 rd cost sharing between GoK and MoR respectively. GoK has released USD 45 million (Rs.218.33 crores). The project would be completed and open to passenger traffic shortly. b. Bidar-Gulbarga (107 kms.) on 50 : 50 basis. GoK has released USD 32 million (Rs.155 crores). Work under progress. c. Munirabad-Mehboobnagar (190 kms.) on 50 : 50 basis. USD 12.5 million (Rs.60 crores) has been released by GoK. Work under progress. d. Hassan-Bangalore (166 kms.) 50 : 50 basis. USD 8.3 million (Rs.40 crores) released by GoK. 14 kms. from Chikkabanavara to Nelamangala and 42 kms. from Hassan to Shravanabelagola is completed. Remaining work under progress. Railway line passing through Kunigal Stud Farm is being diverted. e. Kadur-Chickmagalur (93 kms.) on 50 : 50 basis. USD 11.5 million (Rs.55 crores) released from GoK. Work under progress. f. Tumkur-Rayadurga (102 kms. in Karnataka) on 50:50 basis. USD 4.2 million (Rs.20 crores) released by GoK. Land acquisition process under progress. g. Bagalkot-Kudachi (141 kms.) on 50:50 basis. USD 2 million (Rs.10 crores) released by GoK. Land acquisition process under progress. h. Shimoga-Harihar (71 kms.) on 50:50 basis. Sanctioned in 2011-12 budget. Survey under progress by SWR. 10
i. Davangere-Tumkur (210 kms.) on 50:50 basis. Sanctioned in 2011-12 budget. Survey under progress by SWR. j. Whitefield-Kolar (52 kms.) on 50:50 basis. Sanctioned in 2011-12 budget. Survey under progress by SWR. The estimated cost and the indicated date of completion are set out in the table below. Sl.No. Name of Project Length in Km. Latest Cost (Rs.in crores) Anticipated date of completion Cost Sharing Projects 1 Hassan-Bangalore (New Line) 166 944.55 2015-16 2 Kadur-Chickmagalur (New Line) 93 595.22 2012-13 3 Tumkur-Rayadurga (New Line) 102 970.00 2016-17 4 Kottur-Harihar (New Line) 67 302.23 Completed (2011) 5 Munirabad-Mehboobnagar (New Line) 170 850.00 2016-17 6 Shimoga-Talaguppa (Gauge Conversion) 97 225.00 Completed (2011) 7 Kolar-Chickballapur (GC) 90 428.00 2012-13 8 Ramanagara-Mysore (Doubling) 93 526.00 2014-15 9 Bagalkot-Kudachi (New Line) 142 816.00 2016-17 10 Tumkur-Davangere (New Line) 200 913.00 2016-17 11 Shimoga-Harihar (New Line) 80 562.74 2016-17 12 Whitefield-Kolar (New Line) 53 341.05 2015-16 13 Bidar-Gulbarga (New Line) 107 369.00 2013-14 14 Gadag-Sholapur (GC) 284 475.00 Completed (2008) Non-Cost Sharing Projects 15 Hubli-Ankola (New Line) 167 2,315.00 Pending with CEC 16 Bangalore-Satyamangala (New Line) 162 1,800.00 Pending with CEC 17 Dharwad-Kambargavi (Doubling) 27 135.00 March 2012 18 Arsikere-Birur (Doubling) 45 224.00 March 2012 19 Yesvantapura-Yelahanka (Doubling) 12 27.23 October 2013 20 Yelahanka-Channasandra (DL) 13 37.82 December 2013 21 Birur-Shivani (DL) 29 142.64 March 2013 22 Hosadurga-Chickjajur (DL) 29 116.00 2014-15 23 Tornagallu-Ranjitpur (DL) 23 146.75 2014-15 24 Shivani-Hosadurga 10 45.00 2013-14 The detailed update on each of the projects is set out in Annexure 2. 11
4.0 Logistics Karnataka is one of the states in the country witnessing rapid economic growth due to various central and state level policy initiatives that have facilitated the development of industrial and allied infrastructure. The state recognises that the logistics sector is a key driver of a state s competitiveness in the national and international markets. Hence, all components of the logistics business need to be examined for opportunities to improve efficiencies. With massive development programs on the anvil, providing logistics support and necessary infrastructure was of vital importance to attract and retain investors. The state is also looking at the establishment of cold storage facilities to enhance the current capacity level from 250,000 metric tonnes to 4,800,000 metric tonnes in the coming years. For the establishment of a seamless logistics network in the state, IDD, in the past has undertaken pre-feasibility studies across the transportation, storage and distribution components to assess the projects that can be taken up for development in the logistics sector. In continuation of IDD s efforts to strengthen the logistics sector in the state, a Concept Report highlighting the current status of logistics sector in Karnataka, the issues in the sector. The Concept Report also identified priority locations and industrial projects that can be undertaken for the development of the logistics sector in the state. 4.1 Strategic development plan In order to obtain an expert opinion for the development of projects in the logistics sector, a round table discussion on Identification of projects in the logistics sector and drawing up a roadmap for implementation was jointly organised by the IDD and the Bangalore Airport Rail Link Limited (BARL) on February 02, 2012 in Bangalore. The objectives of the interactive round table session was, to identify specific projects in the logistics sector that can be taken up for development by GoK on a priority basis and discuss the implementation roadmap for these projects. The round table also sought to obtain key inputs for drafting the logistics policy for the state. The round table session comprised participation of professionals and consultants from the logistics industry and officials from the state government. Some of the key project ideas that emerged from the round table discussion were: 1) Development of a Logistics Parks at strategic locations 2) Development of Container terminals as aggregation / consolidation points for different types of cargo at specific locations in the state. 3) Development of Inland Container Depot (ICD) 12
4) Development of Cold Storage Facilities at strategic locations 5) Undertake a detailed study of the existing warehousing facilities in the State and identify specific warehouses which need to be upgraded / modernized IDD plans to develop the above mentioned projects over the next five years and project development studies for these projects are currently underway. Apart from these projects, the State also intends to prepare a policy for the logistics sector. 13
Infrastructure Development Department 5.0 Ports Karnataka is endowed with a vast coastline of around 300 km between Karwar (at the North) and Mangalore (at the South) flanked by Uttara Kannada, Udupi and Dakshina Kannada districts, with favourable and strategic port locations. The entire coastal belt as well as the adjacent districts are rich with mineral and natural resources and hence offer good scope for industrial investment. This belt is well connected by National Highways and the Konkan Railw Railway broadgauge line, both running parallel to the coastline. 5.1 Overview of Ports in Karnataka At present, there is only one major port in Karnataka viz., The New Mangalore Port. This is located at the southern end of the coastline and hence is predominantly being utilized by the southern districts of the State. The port has handled 35.5 MT and 31.5 MT of traffic in 2009 2009-10 and 2010-11 respectively. 5.2 Minor Ports The coastline of the State is lined with ten minor ports between Karwar in the North and Mangalore in the south, flanked by Uttara Kannada, Udupi and Dakshina Kannada Districts. The ten minor ports of the State are- Karwar, Belekeri, Tadri, Honnavar, Bhatkal, Kundapur, Hangarkatta, Malpe, Padubidri and Old Mangalore. 5.3 Strategic Plan for development of Ports in Karnataka The state is currently undertaking development of two ports at Tadadi and Haldipur on Public Private Partnership and Swiss Challenge modes respectively. Tadadi The technical studies for development of the port are complete and curren currently tly the bid process for selection of a private developer for development of the port on PPP frameworks is underway. It is expected to complete the bid process by 2013. The construction of the port would commence in 2013 and is expected to be completed in 4 years. Haldipur The project has received an in in-principle principle approval from the Cabinet for development on a Swiss Challenge mode. The bid process for selection of the developer for the project is likely to 14
commence in 2012 and would be complete by 2014. Thereafter construction activities are likely to be taken up and completed in 4 years. In addition to the two ports mentioned above, IDD is currently undertaking a pre-feasibility study to identify the potential for development of additional minor ports in the state. Based on the output of the Report, IDD would consider development of additional ports in the next 5 years. 15
Infrastructure Development Department 6.0 Gas A Memorandum of Intent was signed between GAIL (India) Limited and on during the Global Investors Meet 2010. The G.O.No.IDD 18 UIP 2010 dated 20.01.2010 has approved; Formation of a JV Company between GAIL & Karnataka State Infrastructure ucture Investment Development C Corporation (KSIIDC), on behalf of GoK, for the City Gas Distribution Project. Entering into a JV agreement between KSIIDC & GAIL KSIIDC to invest Rs.24 crores on behalf of GoK being 24% of the equity share capital of JVC upt upto an authorized capital of Rs.100 crores. Setting up a Steering Committee The JV agreement was executed in June 2011 for formation of a Joint Venture Company. The proposed roposed Capital structure of JV Company is Rs. 100 Crores in the following proportions: GAIL / ITS AFFILIATES KSIIDC Strategic Investors /Non-Government Government Companies / Financial Institutions (max of 20% each) TOTAL 26% 24% 50 % 100% The Steering Committee formed with 4 members from each side. The Govt. of Karnataka is represented by Principal Secretary, IDD, Principal Secretary, C&I, Principal Secretary, Energy and Managing Director, KSIIDC. The representatives from GAIL include ED ((Marketing), Marketing), CEO, GAIL Gas, Noida, GM (Construction) and DGM (CGM), GAIL Gas, Bengaluru. The name for the JVC has been finalized in the Steering Committee meeting as Karnataka Natural Gas Limited. Dabhol - Bangalore Gas Pipeline Project GAIL has taken up Dabhol-Bangalore Bangalore & Kochi to Bangalore & Mangalore Pipeline Projects to distribute Regasified Liquified Natural Gas from LNG Terminals at Dabhol & Kochi. An MOU signed between GAIL and GoK on 29.04.2009. The terminating point would be at KPCL, Bidadi Te Terminal rminal at Bangalore The proposed capacity of the trunk pipeline is 16 MMSCMD and Phase I includes main line and spur lines of Goa (from Gokak) and Bangalore (along ORR) and Phase II includes all other spur lines. The 16
pipeline passes through the districts of Belgaum, Dharwad, Gadag, Bellary, Davangere, Chitradurga, Tumkur, Ramnagar and Bangalore, 19 Talukas & 265 villages. The scheduled completion of the pipelines is 2012, subsequent to which the gas would begin to flow in the year 2013-14. The users of the gas would be power companies, ceramic industries, the public transport agencies such as BMTC and KSRTC, domestic gas consumers in the cities that lie along the proposed gas pipeline from Dhabol to Bangalore. The project details have been provided as Annexure 3. 17
7.0 Mainstreaming PPP in Karnataka As part of its mandate for mainstreaming PPP in Karnataka, IDD has undertaken several initiatives through its PPP Cell. In association with Infrastructure Development Corporation (Karnataka) Limited (ideck), IDD has undertaken capacity building programmes for various government departments and has also chalked out a programme for the next five years. It intends to train 1000 persons from various fields and disciplines including ministers, elected representatives, NGOs, government officers etc. The following section details out the current and proposed programmes for capacity building. 7.1 Capacity Building IDD in order to promote Public Private Partnership has undertaken initiatives to continuously train the officers in the department through capacity building programs. The primary objective of the training program is to educate the officials on infrastructure policy and challenges, PPP concepts and salient features, project development cycle, legal documentation and financing options. Currently training is provided by experts from the sector / senior officials from various departments in association with Administrative Training Institute, and National Law School, Bangalore. IDD proposes to have a strategic tie up with institutes like the National Law School, Indian institute of Management, Bangalore where government and as well as non-government officials could be trained. Discussions are underway and MoU would soon be executed with these two institutes. ideck would be assisting IDD in conducting the training programmes. The programme would span over a period of five years and aims at imparting training to 1000 persons. Over the past few years IDD has conducted 6 training programs and 11 seminars / workshops and about 1029 officials have been trained on various topics such as; a. Infrastructure Policy and Challenges b. PPP & JnNURM c. Experiences in PPP Projects in Road Sector, Industrial Estates, Housing and Urban Development d. PPP Concepts and Salient Features e. Project Development Cycle f. Legal Documentation g. Rail infrastructure h. Industrial Development in the State i. PPP in infrastructure: Design & Financing j. Policy enablers for PPP projects 18
7.2 Engagement of Transaction Advisors IDD envisaged strengthening the project development process in the Departments responsible for implementing Infrastructure Projects through Public Private Partnership (PPP). The PPP concept is relatively new and the implementing officers required necessary insight, orientation and assistance into the project development for effective marketing and implementation of the projects. Currently in the State around 105 PPP projects are at various stages of development and implementation with an estimated investment of USD 16,667 million (Rs. 80,000 crores). In order to create a shelf of projects, there is a need for creating a sector-wise inventory, undertaking pre-feasibility studies, identifying Transaction Advisor (TA) for projects to be taken for bidding. Further the respective departments / organizations would require hand-holding during the project development process in areas of information generation /sharing, monitoring of projects, etc. IDD, through a bidding process has appointed Transaction Advisors for some of the government departments, such as; a. Health Department b. Education Department c. Commerce and Industries d. Infrastructure Development Department e. Tourism Department f. Energy Department g. Public Works Department h. Directorate of Municipal Administration i. Bangalore Development Department & Bruhat Bangalore Mahanagara Palike j. Department of Urban Land Transport and Transport Department The scope of work of the Transaction Advisors includes the following; a. Draw up Sector inventory and undertake five pre-feasibility studies: b. Procurement Plan for further project development of projects identified as part of the pre-feasibility studies. c. Assist in Information collation / updation about the programmes / projects in necessary websites / MIS d. Assist in creating sector / departments PPP cell to institutionalize the PPP mainstreaming e. Assist the department in the Global Investor Meet 2012. 19
The timelines for the above are; 7.1 Contract Monitoring In order to ensure successful implementation of PPP projects, it is essential for the contract authority to efficiently monitor and manage the PPP contract, not just during the implementation or construction phase, but throughout the term of the contract. Efficient contract management would ensure that the project meets the desired objectives and service levels. A number of PPP projects fail on account of limited and ineffective contract management. Inefficient contract management has a significant negative impact in terms of: Social impact of disruption in service delivery levels Financial impact of time and cost overruns during the construction phase and variations in revenues and costs during the operation phase Reputational impact of lower than expected Service Delivery Level Relational impact between the contracting parties arising from disputes The process of contract management goes beyond purely administering the contract. It involves developing and implementing processes and procedures required to meet contractual obligations so that the project attains the desired objective and monitors and manages the risks associated with the 20
project. The primary objective of contract management is to assist the contract authority in anticipating, monitoring and managing risks over the entire project lifecycle. IDD intends to carry out contract monitoring, through competent agencies, for all the projects currently being undertaken through PPP. To begin with, it intends to engage an agency for carrying out contract monitoring services for the minor airport projects, for which it has executed agreement with private developers (at Hassan, Shimoga, Gulbarga, Bijapur, and Bellary). IDD has already engaged the services of ideck for carrying out the construction management services. The construction of two airports is underway, by the time the construction is complete, IDD would engage contract monitoring agencies as well. Simultaneously, IDD would conduct training on contract monitoring to officials as part of its capacity building programme. 21
8.0 Statutory Provisions and Institution Building The Vision for infrastructure development for Karnataka is Building strong Public-Private Partnership in infrastructure to achieve the twin objectives of growth and equity. has undertaken various initiatives to achieve the objectives to fulfill its Vision and is according high priority to invite private capital and efficiency in Infrastructure Sector. 8.1 Infrastructure Bill However, in the absence of a specific legislation streamlining the participation of private sector in infrastructure development in Karnataka, the environment in Karnataka is not much conducive for private sector participation. With an intention to encourage private investors to partner with Government/ULBs to deliver public services, Infrastructure Development Department through Infrastructure Development Corporation (Karnataka) Limited, has prepared the draft legislation viz. Karnataka Infrastructure Development and Regulation Bill. The draft bill is also uploaded in Infrastructure Development Department, (http://www.idd.kar.nic.in/docs/karnataka_infra_bill.pdf) with a view to obtain feedback from general public. 8.2 Karnataka Infrastructure Authority Karnataka Infrastructure Development and Regulation Bill is a comprehensive and overarching law to provide a framework for development of infrastructure under PPP frameworks. The law intends to streamline the process of identifying, structuring, awarding and implementing infrastructure projects in the State. It enables setting up of a separate institutional framework known as the Karnataka Infrastructure Authority with the Chief Secretary as its Chairperson. The Authority will review and approve infrastructure projects taken up under PPP framework on public need basis and value for money principles. The Bill also envisages for constitution of a body called PPP Cell which shall assist Karnataka Infrastructure Authority in discharge of its obligations. Before procurement of private investors, it is imperative that proper project development activities are carried out and the law sets out clear provisions in this regard. A fund called Infrastructure Viability Gap Fund with initial corpus of Rs. 500 crores would be established to meet the funding requirement of projects approved by the Authority. 8.3 Infrastructure Policy The new Infrastructure Policy was introduced in 2007 for the state of Karnataka. It is felt that time has come to revisit and review the Policy in the light of several developments that have taken place over the past five years in the infrastructure sector, and projects implemented through PPP in particular. Some of the key developments at the national level have been; 22
the introduction of model documents for inviting private sector participation by the Directorate of Economic Affairs, Government of India (GoI) provision of viability gap funding for infrastructure projects availability of the India Infrastructure Project Development Fund at the GoI level to States for undertaking project development activities. Emerging sectors such as logistics, rail, horticulture, agriculture etc have witnessed private sector participation in development of projects. Therefore, there is a need to re-visit the sectors that have been currently addressed in the Policy. There has been a significant change in the principles of private sector participation over the past few years in the light of change in the economic scenario, globally as well as in the country, change in lender s perspective etc. The above necessitates a review of the Policy and re-drafting the Policy with a five year perspective. IDD has now embarked upon re-drafting the Policy and expects the draft to be ready within the next three months. The Policy would set out, among other aspects, the framework for the following; Overall framework and key interventions for accelerating PPPs Principles of Value-for Money (VfM) rationale and public sector comparator Principles for procurement strategy for projects and standards for examining PPPs as the preferred mode of implementation 23
ANNEXURE 1 Civil Aviation Perspective Plan
ANNEXURE 2 Status of Railway Projects Karnataka
ANNEXURE 3 Gas Pipeline Project
CITY GAS DISTRIBUTION PROJECT 1 Name of the project City Gas Distribution Project 2 Name of the Department in Government Infrastructure Development Department 3 Role - Nodal Agency / Others Nodal Agency 4 Government Order IDD 18 UIP 2010 dated 20.01.2010 5 Type of Development - PPP / EPC / IRT Tender by PNGRB for CGD to selected cities Tenders by JVC for allocated cities EPC / IRT 1) Memorandum of Intent signed between GAIL and Govt Of Karnataka on 03.06.2010 (GIM 2010) 2) G.O.No.IDD 18 UIP 2010 dated 20.01.2010 has approved: a) Formation of a JV Company between GAIL & KSIIDC (on behalf of GoK) for the City Gas Distribution Project. b) Entering into a JV agreement between KSIIDC & GAIL c) KSIIDC to invest Rs.24 crores on behalf of GoK being 24% of the equity share capital of JVC upto an authorized capital of Rs.100 crores. d) Setting up a Steering Committee with PRS - IDD; C&I; Energy & MD, KSIIDC as members. 6 Brief Profile of the Project e) Authorizing PRS, IDD to take further necessary actions as required regarding extension of scope of Apex Level Committee & High level Commiitee constituted for the Dabhol-Bangalore Gas Pipeline Project and for any other issues required in respect of the project 3) JV agreement has been signed on 08.06.2011 for formation of JVC. 4) Proposed Capital structure of JV company : The initial authorized Share Capital of JVC is proposed to be Rs. 100 Crores in the following proportions: GAIL / ITS AFFILIATES 26% KSIIDC 24% Strategic Investors /Non-Government Companies / Financial Institutions (max of 20% each) 50 % TOTAL 100%
7 Estimated cost of the Project Depends on cities. 8 Details of Fund released Head of Account G.O. No. & Date Amount (Rs. In Lakhs) 3451-00-090-1-06-059 Infrastructure Preliminary Studies Other Expenditure IDD 18 UIP 2010 dt: 20.01.2011 86.50 5465-01-190-1-17-City Distribution Project Gas IDD 18 UIP 2010 dt: 03.08.2011 83.14 Total 169.64 9 Expenditure Incurred Year Amount (Rs. In lakhs) 2010-11 86.50 2011-12 (31.08.11) 16.50 Total 103.00 10 Consultants, if any Yet to be appointed 11 Present Status 1) Steering Committee formed with 4 members from each side : Govt. Of Karnataka: GAIL: a) Principal Secretary, IDD b) Principal Secretary, C&I c) Principal Secretary, Energy d) Managing Director, KSIIDC a) Shri J. Wason, ED (Marketing), GAIL b) Shri M. Ravindran, CEO, GAIL Gas, Noida c) Shri A.K. Singh, GM (Construction), GAIL, Bengaluru d) Shri A. Anbarasan, DGM (CGM), GAIL Gas, Bengaluru 2) Two meetings of the Steering Committee held on 05.09.2011& 09.01.2012 3) Name for the JVC has been finalized in the Steering Committee as Karnataka Natural Gas Limited and Logo selected
DABHOL-BANAGALORE GAS PIPELINE PROJECT 1 Name of the project Dabhol - Bangalore Gas Pipeline Project 2 Name of the Department in Government Infrastructure Development Department 3 Role - Nodal Agency / Others Nodal Agency - for Co-ordination 4 Government Order IDD 14 UIP 2008 dt: 25.11.2009 5 Type of Development - PPP / EPC / IRT IR / EPC by GAIL 1) GAIL has taken up Dabhol-Bangalore & Kochi to Bangalore & Mangalore Pipeline Projects to distribute Regasified Liquified Natural Gas from LNG Terminals at Dabhol & Kochi 2) MOU signed between GAIL and Govt Of Karnataka on 29.04.2009. 3) Project Approved by GAIL Management on 22.06.2009 4) ORIGINATING POINT : LNG Terminal of M/s RGPPL at Dabhol 6 Brief Profile of the Project 5) TERMIANTING POINT : KPCL, Bidadi Terminal at Bangalore 6) Capacity of Turnk Pipeline is 16 MMSCMD 7) Phase I includes main line and spur lines of Goa (from Gokak) and Bangalore (along ORR) Phase I includes main line and spur lines of Goa (from Gokak) and Bangalore (along ORR) 8) Phase II includes all other spur lines 9) Pipeline Configuration : Trunk line - Dia. : 30 Length : 730 KM,; Spurlines - Dia. : 18 /10 /8, Length: 650 km; Pressure at Bidadi is 45 kg/cm2 10) The pripeline is passing through are Belgaum, Dharwad, Gadag, Bellary, Davangere, Chitradurga, Tumkur, Ramnagar and Bangalore),19 Talukas & 265 villages Scheduled Completion : June, 2012 7 Estimated cost of the Project Rs.4544 crores (GAIL) 8 KSIIDC's Fee Structure Year Amount (Rs. In lakhs) 9 Details of Fund released 2009-10 19.50 2010-11 55.00 2011-12 60.00 Total 134.50
Head of Account G.O. No. & Date Amount (Rs. In Lakhs) "3451-00-090-1-06-059 - Infrastructure Preliminary Studies-Other Expenditure" IDD 14 UIP 2008 dt: 25.11.2009 19.50 "3541-00-090-1-06-059 - Infrastructure Preliminary studies other expenditure" IDD 14 UIP 2008 (P-III) dt: 29.07.2010 55.00 5465-01-190-1-16-Gas Pipeline Project IDD 18 UIP 2010 dt:08.06.2011 25.00 Jan 2012 35.00 Total 134.50 10 Expenditure Incurred Year Amount (Rs. In lakhs) (after accounting salaries) 2009-10 19.50 2010-11 55.00 2011-12 (31.08.11) 24.46 Total 98.76 11 Consultants, if any Nil 12 Present Status a) Dabhol-Bangalore Gas Pipeline Project Status 1) Land acquired for Trunk line & spur line 2) Permanent land for locating terminals / sectionalizing valve stations / integrated pigging stations tap off points, etc., acquired. 3) Land acquired for laying of pipeline as per Right of Use under P&MP Act 4) Land allotted for locating GAIL's office and staff quarters at Bangalore by BDA 5) Most of the necessary approvals / clearances / No Objections from Railways, National Highway, Karnataka Public Wroks Dept, Irrigation Department, Forest, KSPCB obtained 6) The work of laying of pipelines is in progress along Dabhol to Bangalore & ORR at Bangalore b) Constitution of Committees and convening of meetings i) High Level Committee has been constituted vide Govt. Order No.IDD 14 UIP 2008 dated 18.08.2009; - Members of the Committee are Chief Secretary ( Chairman) Principal Secretaries of IDD, Energy, UDD, Revenue, C & I, Forest, Transport and PWD. - Four meetings held: 1) 06.04.2010 (2) 27.08.2010 (3) 21.06.2011 (4) 16.01.2012
iii Apex Level Co-Ordination Group (ALCG) constituted vide MoU Dt. 29.04.2009 13 Issues : - Members of this ALCG are Principal Secretary, IDD / Director (Marketing), GAIL (Chairman), MDs of KSIIDC, KPCL, KSRTC, and ED (Marketing); ED (Projects); CEO, Gail Gas Ltd - Four meetings have been convened : 1) 20.07.2009; 2) 10.08.2009; 3) 08.02.2010; 4) 03.12.2010 a) Stoppage of work / protests from land losers Magadi in Ramanagaram District,Hiriyur in Chitradurga District, Gadag, Davangere and Belgaum Districts b) KRIDL for additional land change in annual increment rate from 5 % to 10 % c) BMTC Rate to be finalized d) BDA : Land allotted by BDA for RGMC Manyatha Developers have approached court and taking up of road restoration work e) Forest Clearance Stage II Clearance to be provided withput insisting for NOC from Gram sabha resolutions f) KIADB - Balance land to be notified & balance payments
ANNEXURE 4 Annual Outlay- Planning Department, GoK
(Rs. Lakh) Department Annual Plan 2012-13 Proposed Outlay (State Sector) Twelth Five Year Plan (2012-17) proposed outlay (State Sector) S t a t e S e c t o r S t a t e S e c t o r State Out of Which State Out of Which Sector IEBR EAP SDP Earmaked Sector IEBR EAP SDP Earmaked 1 2 3 4 5 6 7 8 9 10 11 Dept: Infrastructure Infrastructure Dev. Dept. - Project Investment 42500.00 198500.00 Cost Sharing Bidar-Gulbarga new railway line O.E.-SDP Cost sharing for New Projects - SDP 15000.00 45000.00 Development of Minor Airports-Investments-SDP 4000.00 16000.00 Amount met from Cess 30000.00 30000.00 160000.00 160000.00 Total : Infrastructure 72500.00 19000.00 30000.00 358500.00 61000.00 160000.00