Kamal Nath calls for foreign investors to build India's roads

Betwa Sharma

New York, Sep 17 (PTI) India Transport Minister Kamal
Nath has called for foreign investment in the construction of
roads and other infrastructural projects in India.

"I've been here as part of an effort to sensitise the
investors, consultants, contractors on the new road program,"
Nath told the Indian media after concluding his week-long tour
to the United States.

"Roads in India are not merely a matter of connectivity
but is an important component of inclusive growth," he said,
adding that the new road program, announced by Prime Minister
Manmohan Singh on August 15, aims to lay down 20 kilometers
of road everyday.

The total project costs for 2009-2010 is estimated at USD
20 billion and both debt equity and pension funds are being
invited to participate in this program. The share of private
sector investment in this will be about USD 12 billion.

Over the next few years, out of the total projected
investment of USD 80 billion, the private sector investment is
estimated to be 45 billion dollars. This makes the road
project the largest Public-Private Partnership in the world.

To get a diverse set of investors on board, the Minister
has travelled to Singapore, London, Zurich and NYC to listen
to their concerns.

"While India remains an attractive investment destination
we have to see that the model of our projects are also
investment attractive," he said.


Nath also announced the construction of at 18,000 kms of
expressways in the country. "We're going to set up an
expressway division in the next fortnight and I propose
bringing in legislation for expressway authority," he said.

The minister has also negotiated a project with the World
Bank for USD three billion to transform 6,300 km of single
lane roads into two lane highways.

"They have for the first time informed me that they will
be willing to fund the viability gap funding and also fund 50
per cent of our annuity project," he said.

The CEO of ICICI Bank Chanda Kocchar noted that the 20
billion dollar-road program offered an attractive opportunity
for both equity and debt investors.

"The roads asset is an asset class that provides a very
steady and stable return to the investors," she said.

"What we have been doing working with the government in
the last few months is to try and look at the facilitative
factors that can make all the road projects even more
economically viable," she added.

Ajit Gulabchand of Hindustan Construction Co said the
road project will create two kind of investors; those who are
solely developers and those who want a steady annuity from it
by investing in a toll.

"Those who wish to simply develop the road, build it, put
into operation, operate it for two years and then can actually
get an exit," he said.

This is leading to new opportunities for investors who
previously engaged in engineering, procurement and
construction can move to development area, Ajit said. PTI BS