Peripheral Ring Road Data PDF
Peripheral Ring Road Data PDF
Peripheral Ring Road Data PDF
Bangalore Development
Authority (BDA)
Pre-feasibility report
April 2012
Abbreviations
Acronym Definition
[b]
Acronym Definition
[c]
Contents
[iv]
9. Operating Framework .............................................................................................................. 17
9.1 Risks and mitigation ......................................................................................................... 17
9.2 Indicative Project Structure ............................................................................................... 17
10. Way Ahead ...................................................................................................................... 18
10.1 Project Development Framework ...................................................................................... 18
10.2 Procurement Plan............................................................................................................. 19
11. Annexure 1 – Cash-flow statement................................................................................... 20
[v]
List of Tables
[vi]
List of Figures
Figure 5-1: Population growth in Bangalore between 1901 and 2011 ............................................... 11
Figure 10-1: Project development framework for PRR...................................................................... 18
Figure 10-2: Procurement plan for PRR ........................................................................................... 19
[vii]
Bangalore Development Authority
1. Executive Summary
The growth of Bangalore has been unprecedented in the past couple of decades. This fact is laid bare
from the growth in population in the last century. Bangalore continues to attract throngs of people due
to the economic opportunities it offers. This is also supported by a salubrious weather which makes
Bangalore an obvious choice for not only businesses but also for people.
Bangalore has grown at average compounded annual growth rate (CAGR) of 3.58% in the last three
decades. It is projected that Bangalore’s population will cross the 10 million mark by 2021. This
explosive growth has meant that the infrastructure in Bangalore has been put under tremendous
pressure.
BDA being the planning authority prepared the Comprehensive Development Plan (CDP) for
Bangalore Metropolitan Area (BMA), first time in 1983-84 and revised once during 1995. The ORR &
IRR's implemented by BDA were part of the CDP, indicating the tentative alignment.
The BDA observes that the outer ring road (ORR) acts as a bypass for more than 10000 trucks which
are headed towards various other destinations. However, with the immense growth in intra-city traffic,
the ORR is under tremendous pressure already. The city has already extended beyond the ORR
which is a key factor in the increasing pressure on ORR.
In order to relieve the traffic pressure on the ORR and the major road networks of the city, a
peripheral ring road (PRR) of 116 kms is planned outside of the ORR. This stretch will not only
improve connectivity of areas beyond the ORR, but will also ease the congestion on the ORR. The
current report has been prepared focused upon the first phase of the project from Hosur Road to
Tumkur Road. The total stretch is approximately 67 kms.
The current report examines the viability of the project on an annuity basis. The annuity model has
been chosen for the following reasons:
The PRR will be classified as an urban road and will have high demand for free use due to
increasing urbanization along its stretches. Urban roads are typically not tolled in the country
and no such examples exist. Event the ORR of Hyderabad is being proposed under the
Annuity model
The BDA, under the current policy framework does not have the authority to levy tolls on the
road it may develop. The Karnataka State Road Policy talks about levy of tolls on State
Highways but is currently in a draft form and cannot be invoked for this project.
The financial assessment of the project has been developed for a concession period of 20 and 25
years. The results of the financial viability indicate that the project will be attractive for a private
developer on in the case of a 25 year concession period which will allow the developer to make
reasonable returns on the investments in the project.
The execution of the project can be undertaken through a Special Purpose Company which will be
formed by equity participation from the developer.
The way ahead for the project has been analyzed and it is recommended that the key task for the
BDA is to commission the preparation of a Detailed Project Report (DPR) for the project which would
allow development of realistic cost estimates. Once the DPR has been prepared, the BDA may
appoint a transaction advisor who will conduct a detailed feasibility for the project and facilitate
selection of the private developer.
[1]
Bangalore Development Authority
The procurement plan for the proposed project envisages that the entire process of selection of
technical consultant and transaction advisor can be completed within 8 months while the selection of
developer can be achieved within 9 to 10 months after the selection of the transaction advisor.
[2]
Bangalore Development Authority
2. Introduction
CRISIL Infrastructure Advisory, a division of CRISIL Risk and Infrastructure Solutions Limited (CRIS),
has been appointed by the Infrastructure Development Department, Government of Karnataka to
work closely with the Bangalore Development Authority for the assignment “Institutional Strengthening
and Sector Specific Inventory for PPP Mainstreaming in Sectors”. Under this BDA has identified a set
of nine projects for which pre-feasibility assessments are to be carried out.
Development of peripheral ring road (PRR) around Bangalore is one of the nine projects that CRIS
has been entrusted to study. The current pre-feasibility report has been developed based on data
provided by BDA.
[3]
Bangalore Development Authority
Final Financial
recommendation assessment
We have chosen to develop the pre-feasibility on the Annuity model in view of the fact that the PRR
will largely act as a city road and not a highway per se. The fact that urban development has reached
beyond the ORR and along the periphery of the PRR necessitates that access is provided for the
residents around the PRR alignments free of cost.
For the purpose of drawing a parallel, we studied the outer ring road (ORR) being developed by
Hyderabad city. The ORR is also based on BOT Annuity model. Hence, we are of the view that the
PRR should also be based on the BOT/BOOT Annuity model.
[4]
Bangalore Development Authority
3. Sector Profile
The city of Bangalore has witnessed very rapid growth. The city today is home to over 8.4 million
people (2011 Census). The salubrious weather and the rapid concentration of economic activities in
Bangalore have fuelled the growth of Bangalore. As one of the world’s fastest growing cities,
Bangalore is experiencing a steady growth in population.
Bangalore has been substantially affected by globalization and rapid urbanization over the last
decade. The demand for services and quality of life is not confined to the central core or the erstwhile
Bangalore Mahanagra Palike jurisdiction but spreads beyond into the peri-urban areas, the
Metropolitan Area and outwards, into Bangalore Metropolitan Region. With the emergence of the
Bangalore-Mysore Infrastructure Corridor, the Bangalore International Airport and the planned ring
roads, urbanization has sprawled out.
Banaglore has incontestable advantages to develop into an international metropolis but at the same
time faces significant constraints. The city is embedded in its histors and depicts the greatness of a
truly Indian city established before the invasions and colonization. It has a diverse set of activities,
from silk to aeronautics, from clothing to information technology and is a gauge of dynamism and
solidity of the city. Natural drainage, climatic advantage and the availability of water in the Cauvery
baisn are factors assisting in improving the quality of life.
[5]
Bangalore Development Authority
Construction of houses for Economically Weaker Sections, Low Income Group, Middle
Income Group, High Income Group
Development of major infrastructure facilities
BDA has a jurisdiction of 1219 sq. kms which also includes the area under the jurisdiction of the
Bruhat Bengaluru Mahanagar Palike (BBMP). As is evident from the set of functions for BDA, the
BDA, apart from planning and regulation, also develops key infrastructure facilities like roads and
other transportation infrastructure.
[6]
Bangalore Development Authority
4. Project
4.1 Description of the Project
The project envisages development of a peripheral ring road (PRR) outside of the outer ring road
(ORR). The total length of the PRR is around 116 kms. However, the pre-feasibility as been carried
out for only 64.74 kms of stretch based on BDA suggestions. The PRR will be developed starting from
Hosur Road to Tumkur Road via K R Puram, Bellary Road, Old Madras road and Sarjarpur road.
The PRR takes off at CH 17 on Bangalore Pune (NH4) about 150 mts from major bring across
Arkavathy River. The project is being undertaken in two phases:
Phase I – 64.74 kms
Phase II – covering the remaining length
The PRR will link major highways and the district roads from Tumkur Road, Mysore Road, Old
Madras Road and Hosur Road.
• Widening of roads,
• Improvement of junctions,
• Pavement improvement
• Provision and relocation of concealed drainage under the pavements on either side of the
roads
• Upgrade of 4 lane carriageways
• Overlay treatment
• Provision of crash barriers
• Road and overhead signage
[7]
Bangalore Development Authority
[8]
Bangalore Development Authority
Road Research Institute (CRRI), it has been reported that annual traffic growth rates vary in the range
of 2 – 4% in the central zone, 5 – 7% in the intermediate zone and 8 – 9% on the regional roads in
Bangalore. CRRI study also reported delays of 26.8 sec per km of travel and 9.9 seconds per minute
of travel.
While the city centre is crowded, the BDA had developed the ORR in a bid to divert the heavy load
traffic to ease the traffic situation in the city. The ORR for a long while has been serving this need.
However, the expansion of urban areas has meant that the ORR is also increasingly stressed in terms
of the traffic volumes it handles. The vehicle composition using ORR consists of different classes
covering cars, vans, buses, trucks, auto-rickshaws, two wheeler, pedal cycles, bullock carts, etc.
The capacity of urban road for 6-lanes (two ways) is specified as 6000 PCU by Indian Road
Congress. In most of the stretches of ORR, the existing traffic volumes are far higher than the
specified intensity.
In order to provide increased options for road users beyond the ORR (since the intra-city traffic has
been rapidly growing), the PRR will be a key development that will positively impact the traffic
situation along the ORR.
project contract to develop, operate and maintain the road for a 17.5 years concession period
including the construction period of 2.5 years. An SPV - GTAEPL was formed to execute the project in
which the GMR group had 74% stake and UEM had 26% stake.
GTAEPL has also entered into a State Support Agreement dated March 18, 2003 with the State of
Andhra Pradesh and NHAI, under which the Government has agreed to extend continued support and
to grant certain rights, authorities to facilitate the implementation and operation of the project,
including all infrastructural facilities, applicable permissions, dedicated team of police personnel,
highway patrols and to generally support the project implementation.
GTAEPL does not have any right to toll, levy charges or allow any kind of other developments or
advertising options on the road. The annuity is the only project revenue for the developer. However,
NHAI has the right to levy and collect a toll or fee or permit any advertisements.
GTAEPL has entered into an operations and maintenance agreement with UEM Limited (O&M
Contractor) to operate and maintain and to take full risk in the care of the project facilities against:
An O&M fee of Rs. 0.125 crore per month; and
A periodic fee of Rs. 7.5 crore.
The O&M fee and the periodic fee are escalated by 1.5% per annum, 1 year from the date of
commencement of operations.
At the end of the concession period in November 2019, the concessionaire shall handover the project
assets free of cost to NHAI.
The estimated project cost of the project was Rs. 315 crores. The project achieved financial closure
on 26 June 2002. The project was funded on a debt-equity ratio of 3:1. The term loan component was
Rs. 154 crores, the non convertible debentures component was Rs. 82 crores and the equity
component was Rs. 78.69 crores.
ICICI Bank was the lead banker and the lending consortium included several public sector banks such
as State Bank of India, Union Bank of India, Indian Overseas Bank, Jammu & Kashmir Bank, Bank of
India, Punjab National Bank, Industrial Investment Bank of India and State Bank of Mysore. The
average spread of the loan ranged from 12.5% to 12.75%. The loan tenure was 13.5 years, including
a construction period of 2.5 years.
The equity funding for the project was primarily through the issue of preference shares.
In May 2005, GTAEPL raised further debt of about Rs. 372 crores from a consortium of lenders
through securitisation of future annuity receivables (68% of annuity receivables) to be received from
NHAI over a period of fifteen years. These funds were raised at a cost lower than the cost of project
debt by about 3% and were used for prepayment of the project debt.
[10]
Bangalore Development Authority
5. Market Assessment
90
84
80
70
60 56.86
Population in Lakhs
50
41.3
40
29.22
30
20 16.64
12.06
7.86
10 4.11
1.63 1.89 2.4 3.1
0
1901 1911 1921 1931 1941 1951 1961 1971 1981 1991 2001 2011
Source: City Development Plan, Bangalore Development Authority and Census of India
The stress on infrastructure is often most prominently evident in the transport infrastructure of the city.
To gauge the extent of pressure on the transport infrastructure, the number of vehicles registered in
Bangalore was analysed. The average year on year growth of registered vehicles in Bangalore has
been found to be 10% in the last 20 years.
The Central Road Research Institute (CRRI) found that the annual rate of traffic growth rates vary in
the range of 2 – 4% in the central zone, 5 – 7% in the intermediate zone and 8 – 9% on the regional
[11]
Bangalore Development Authority
roads in Bangalore. CRRI study also reported delays of 26.8 sec per km of travel and 9.9 seconds per
minute of travel.
[12]
Bangalore Development Authority
6. Project financials
The project costs have been largely derived from the costs indicated by the Bangalore Development
Authority (BDA).
Structures 50,800
Contingencies 5,200
[13]
Bangalore Development Authority
The viability based on the annuity structure has been depicted below. The project level internal rate of
return (IRR), IRR of equity and the net present value of the equity have been worked out:
It is evident that for the concession period of 25 years, the project would be more attractive for a
private developer since the project level IRR is roughly 15% while the equity IRR is pegged at 18%.
[14]
Bangalore Development Authority
[15]
Bangalore Development Authority
[16]
Bangalore Development Authority
9. Operating Framework
9.1 Risks and mitigation
The risk framework for this project has been outlined below:
Completion Completion of project is delayed; Penalty clauses for time overrun in the
risk inconvenience to users of road concession agreement
[17]
Bangalore Development Authority
The transaction advisor shall structure the project upon completion of the feasibility studies and shall
also prepare the relevant bid documents. The transaction advisor shall undertake bid process
management on behalf of BDA and will assist in appointment of the private sector partner.
[18]
Bangalore Development Authority
Activity M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 M11 M12 M13 M14 M15 M16 M17 M18
Appointment of technical consultant
DPR preparation
Appointment of transaction advisors
Feasibility, project structuring and bid document preparation
Bid process management
Selection of Private sector partner
The appointment of technical consultant can be achieved within 2 months. The BDA will have to allow around 6 months for preparation of the DPR. While
the DPR is under the finalization stages, the BDA should initiate the process of appointing a transaction advisor. This process can be completed in 2
months. Once the TA is in place, the BDA should allow at least 4 months for the preparation of feasibility, project structuring and bid documents.
Once the bid documents are in place, the BDA should initiate the process of selecting the private sector partner which can be completed over a 4 month
period due to the technical complexity of the project.
The current procurement plan is spread over 17 months which can be shortened depending on the manner in which BDA makes decisions relating to
appointment of technical consultants and DPR preparation timelines.
Bangalore Development Authority
Concession Period (years) 31-Mar-13 31-Mar-14 31-Mar-15 31-Mar-16 31-Mar-17 31-Mar-18 31-Mar-19 31-Mar-20 31-Mar-21 31-Mar-22
Cash from Operating Activities
PAT - - 56 917 1,604 2,930 4,539 6,184 7,203 8,926
Add :Depreciation - - 1,611 6,535 6,535 6,535 6,535 6,535 7,365 7,365
Add :Interest on Term Loan - - 2,201 8,804 8,770 7,979 6,878 5,778 4,677 3,577
Total CF from Operating Act. - - 3,868 16,255 16,908 17,444 17,952 18,496 19,245 19,868
Cash from Investing Activities
Less : Capex (22,934) (79,151) (93,563) - - - - - - -
Less : Increase in CA - - - - - - - - - -
Add : Increase in CL - - - - - - - - - -
Total CF from Investing Act. (22,934) (79,151) (93,563) - - - - (4,982) - -
Cash from Financing Activities
Add : Equity Drawdown 13,760 10,740 22,455 - - - - - - -
Add : Debt Drawdown - 36,750 33,683 - - - - - - -
Less : Debt Repayment - - - - 2,201 8,804 8,804 8,804 8,804 8,804
Less : Interest Payment on Term Loan - - 2,201 8,804 8,770 7,979 6,878 5,778 4,677 3,577
Total CF from Financing Act. 22,934 79,151 91,362 (8,804) (10,971) (16,783) (15,682) (14,582) (13,481) (12,381)
Cash generated for the year - - 1,667 7,451 5,938 661 2,269 (1,067) 5,763 7,487
Bangalore Development Authority
Concession Period (years) 31-Mar-23 31-Mar-24 31-Mar-25 31-Mar-26 31-Mar-27 31-Mar-28 31-Mar-29 31-Mar-30 31-Mar-31
Cash from Operating Activities
PAT 10,692 12,694 14,578 15,602 16,450 16,316 14,763 15,673 16,651
Add :Depreciation 7,365 7,365 7,365 7,365 7,647 7,647 7,647 7,647 7,647
Add :Interest on Term Loan 2,476 1,135 - - - - - - -
Total CF from Operating Act. 20,533 21,194 21,943 22,966 24,098 23,963 22,410 23,321 24,298
Cash from Investing Activities
Less : Capex - - - - - - - - -
Less : Increase in CA - - - - - - - - -
Add : Increase in CL - - - - - - - - -
Total CF from Investing Act. - - - - - - - -
(6,676)
Cash from Financing Activities
Add : Equity Drawdown - - - - - - - - -
Add : Debt Drawdown - - - - - - - - -
Less : Debt Repayment 8,804 6,603 - - - - - - -
Less : Interest Payment on Term Loan 2,476 1,135 - - - - - - -
Total CF from Financing Act. - - - - - - -
(11,280) (7,738)
Cash generated for the year 9,252 13,456 21,943 16,291 24,098 23,963 22,410 23,321 24,298
Bangalore Development Authority
[w]
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