Risk and Resource

Management

Structure Risk Value

(Sectors, System, Project) (VUCADD, Hedging) (WACC, TRS, ERR)

PPP - Infra Funds - PFI

 Learning from ....... All
Indian Experiences ....
.... Narmada Canal (Sardar Sarovar Dam)
.... Metros & Bullet Train
…. Delhi-Mumbai Industrial Corridor
(dedicated freight corridor)
.... Nuclear Power Plants
.... ISRO
.... Indian Railways

2
 Learning from ....... All

Global Experiences ....

.... 3 Gorges Dam & 22500 mw power plant
on Yangtze River
.... New Silk Route Road (trade routes, rail
lines, ports & highways linking countries
on 4 continents)…OBOR
.... undersea Gas Pipelines (Nordstream 1 &
now 2)
…. Euro Tunnel (Britain – France)

3
 Learning from ....... All
Adani ….journey to Nation Building
.... Transportation (Ports, Railways, Roads,
Warehousing, Airports)
.... Power (thermal, transmission, solar)
.... Mines (coal - India, Indonesia, Australia)
.... Oil & Gas (exploration, downstream -
PNG, CNG)
.... Real Estate (township, SRA)
…. Defence equipments
.... Large CSR initiatives creating Social
Infrastructure ...... 4
 Infrastructure dimensions...

# core characteristics
+ pioneering, longevity, project uncertainty,
dependencies ...
# diversified stakeholder community ...
+ sovereign, entrenched locals, NGOs,
regulators, multilateral financiers
# tied to macroeconomics, geopolitics,
government budgets & policies
+ misplaced priorities, political pressures,
business cycles, globalisation

5
 Infrastructure dimensions...

# convergence of multidisciplines
+ engineering, finance, legal, management
# managing Specialised Contracts
+ PPA, FSA, CA, E&P, EPC
# infrastructure varieties
+ economic (power, logistics, airports), social
(health, education)
# unique Arrangements
+ common access, BOOT, tolling, revenue
sharing ...

6
 Infrastructure - definition
• Definition :
“the physical components of interrelated
systems providing commodities and services
essential to enable , sustain, or enhance
societal living conditions”

• Sectors - 1. Transportation, 2. Energy, 3.

Communication, 4. Water, 5. Waste
Management serving 6. Built Environment &
7. Construction Industry
& Classification.
 Economic & Social Infra
• Transport - Land eg rail networks ; Water
eg ports ; Air eg Air Traffic Control ;
Multimodal – eg inland terminals
• Energy -Generation Conventional eg coal ;
Renewable eg solar ; Transmission &
Distribution eg gas ; Storage eg electricity
• Water –Supply eg industrial ; Sewerage eg
rainwater ; Waste eg industrial waste
• Communication – Telecommunication eg
mobile ; Space eg satellite network
 Economic & Social Infra
• Social Infrastructure –
• Health eg therapy/treatment
• Education eg libraries , museums
• Sport eg recreational , professional
• Public Administration eg e-government
• Security eg prisons , police , defence
Project eg PPP ; Asset/Facility eg physical
power plant
Infra Characteristics–further break-up
• country specific –legal , political , financial ,
institutional , economic , entrepreneurial &
conditions of competition – tangible
influence on asset & investment
• sector specifics –eg Ports(Water Trnsprt )-
organisation , value chain , providers
requirements ,user profile , financing ,
regulation , earning potential , risks ,
systems , ESG .
• asset specifics-objectives , demand , orgn
model , site , stakeholder , ownership , risk
• cross-sector characteristics–common to all
 Infra Characteristics–cross-sector
• 3 types of infra companies – 1)project- PPP
road 2) operating–Vodafone, Air India 3)
service-consulting , construction(excd)
• private sector involvement has increased
but varies between sectors / sub-sectors –
airports , telecom , rail –fully or partly ;
cross-sector standardization desirable
• 2 types of value chain elements -1)assets of
service range 2)service range itself eg rail
locos , buildings combined with operation (
frequently cross-sector ) services for these
assets
 Infra Characteristics–cross-sector
• greenfield vs brownfield investments –
common to all sectors ; reflect specific
project/asset risks associated with their
different development stages
• Yield-driven (eg insurance cos , sovereign
wealth funds ) vs IRR-driven investors
(strategic , funds ) ; holding period
• sources of revenue and financing-budget
appropriation , user payments , taxes
• competition & regulation –volume , price ,
rate of return
 Infrastructure - profiling
• Public (core needs eg clean air , water ,
education , healthcare ) vs Private purposes
(discretionary needs eg housing choices &
entertainment )- infra debates about global
problem of poverty,
• Infra – a system of systems (composite view), a
third deficit (problem of neglect )– along with
National Debt & Social Security
• Infra-physical or operating e.g. Roads – Cars,
Trucks ; operating entities provide public
services-using roads owned by govt
Infra Industry integration : Owners, Operators
 Infrastructure - profiling
• Sustainable Infra Systems : ESG ; pursuit of
efficiency & equity, energy conservation ,
environmental management , security, triple-
bottom-line thinking
• Market approach of pricing : how private
market cannot fully deal with issues of public
goods; market vs government failure ;
improved models for PPP or a“ middle way”
Infrastructure Report Card