power summit – 2008, kathmandu developer’s perspectives; road ahead for hydro power project...

Power Summit – 2008, Kathmandu

Developer’s perspectives;

Road Ahead for Hydro Power Project implementation in

Nepal

1 GMR : Leading Infrastructure Player

2 Airports

3 Power

4 Urban Infrastructure & Highways

5 Strong Management

7Requests to Govt. of Nepal

Issues in Project Development in Nepal

8

Key Highlights

6 Status of Project Development in Nepal

GMR Group : A Diversified Conglomerate

The GMR Group was established in 1976 and is a listed company on Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).

GMR Group has rapidly expanded into infrastructure and other businesses:

Airports

GMR Industries LtdSugar plant in Sankili in AP having cane crushing capacity of 5000 tonnes per dayConstructing an integrated Sugar complex in Haliyal having cane crushing capacity of 3500 tonnes per day

Corporate Social Responsibility

GMR Varalakshmi Foundation The Foundation has been working with communities in the quest of improving lives and livelihoods since 1991 It focuses on Education, Health, Hygiene and Sanitation, Livelihood and Empowerment and Community Development

The Group was also engaged in the Banking (ING Vysya) & IT (iGate), which were divested with shift in focus to infrastructure.

Agro based Business

Infrastructure Energy Roads

3,300 acres SEZ in Tamil Nadu 250 acres Aviation specific SEZ on

eastern side of Hyderabad Airport 250 acres Multiproduct General

SEZ on western side of Hyderabad Airport

GMR Infrastructure : India’s Leading Infrastructure Company

AIRPORTS

ENERGY

HIGHWAYS

URBAN INFRASTRUCTURE

Delhi Airport Development Hyderabad Airport

Istanbul Airport Modernization

Power Projects (10 Nos) Operational (3 Nos) Under development (7 Nos) Gross Capacity of 4097.625 MW

Road Projects (6 Nos; 444 km) Operational (2 Nos;152 km) Under construction (4 Nos; 292

km)

Flagship company of the GMR group

Infrastructure Developer, Owner & Operator of Airports, Power, Roads and SEZs

Assets with exclusive concessions ranging from 15-60 Years

Balanced Revenue Model – blend of stable and volume driven growth streams

Current Market capitalization of Rs. 2,900 bn (US$ 7 bn)

Net Revenue ( FY08) EBITDA ( FY08)

Total = Rs. 229 bn Total = Rs. 67 bn

Key financials

FY08: Gross Revenue – Rs. 270 bn; PAT(After MI) – Rs. 21 bn

GMR Infrastructure : A Compelling Growth Story

Key player in the Indian Infrastructure story: Over US$ 500 bn investments planned over next five years

PPP model to play significant role in the Infrastructure sector

GMR is well positioned to benefit from this large growth opportunity

Entry in the MSCI India index reinforces the company’s credentials in infrastructure development

1

Broad Based Infrastructure player: Significant presence across high growth sectors like airports, power and roads

Consistently enjoyed early mover advantage in all the business segments

2

Strong track record & established Player: Extensive experience of developing and executing projects

Established a reputation of reliability and timely project completion

3

Balanced revenue mix: Healthy mix of fixed and variable revenue streams across airports, power and roads

4

Strong Management Team: Experienced management team backed by strong global partnership

5

Significant Growth Opportunities: Plans to tap into new opportunities in India and Abroad in the infrastructure space

6


2 Airports

3 Power


5 Strong Management



8

Key Highlights


Passenger Traffic : Growth In Leading Indian Airports

Delhi Airport accounted for the highest growth in air passengers movement in the world in 2006 (Source: TOI)

PAX (Dom+Int) distribution in FY2008 (Total PAX = 116.87 mm)

Traffic Growth ( % )

Delhi and Hyderabad airports control 27% of the passenger traffic

FY 08

FY 07

Delhi International Airport: Modernization and development of one of the busiest airports in the sub-continent

Project OverviewProject Overview Consortium PartnersConsortium PartnersFinancing Plan (Phase I)Financing Plan (Phase I)

Delhi International Airport: Glimpses of Phase 1A

Domestic DepartureDomestic Departure

Domestic ArrivalDomestic Arrival

International TerminalInternational Terminal

Delhi International Airport: Glimpses of Phase 1B

Terminal 3Terminal 3

Hyderabad International Airport: Development of fastest growing airport in India

Project overviewProject overview

Hyd

era

bad

In

tern

ati

on

al

Air

port

Consortium partnersConsortium partners Catchment area

Source: AAI website, Company

Hyderabad

Emergence of Hyderabad as a major IT& ITeS destination

Centrally located with respect to India, South-East Asia and Middle East Catchment area of 75mm people

Growth in the passenger traffic - 40% over the past 2 years (2005-07)

First Airport in the country to get ‘Leeds’ Certificate for leadership in Energy & Environmental Design

Airside & Landside works contractor: Larsen & Tubro

Phase I Development completed on 23rd March 2008

Phase I Development completed . . . . . . Phase I Development completed . . . . . . Uniquely positioned to capitalize on the current growth

Uniquely positioned to capitalize on the current growth

Hyderabad International Airport: Glimpses

Sabiha Gokcen International Airport – Turkey Overview

Development plan for the Sabiha Gokcen International Airport in Istanbul

Development plan for the Sabiha Gokcen International Airport in Istanbul

New International

Terminal

Hotel

Car Park Area

Existing Int’l +

Domestic Terminal

Sabiha Gokcen International Airport

Sabiha Gokcen International Airport


2 Airports

3 Power


5 Strong Management



8

Key Highlights


GMR has successfully implemented and operationlized Power Assets

GMR Energy Limited

GMR Power Corporation Pvt. Ltd.

Vemagiri Power Generation Ltd.

Barge-mounted power plant

One of the largest operational Independent Power Producer (IPP) in Karnataka

ISO 14001, ISO 9001 and OHSAS 18001 certified

Evaluating the options for relocation Post PPA

ISO 14001 and OHSAS 18001 compliant

Dr. M.S. Swaminathan Award for being an environment friendly project

Company’s third Greenfield power project

PPA got extended from 15 to 23 years

Expansion plan for additional 700 MW capacity

Operating on diverted gas made available by GAIL as per the directive from Andhra Pradesh Power Coordination Committee

Facility Mangalore, Karnataka

Contracted Capacity 220 MW

Fuel Naptha

COD 2001

PPA7 Years till 2008; at 85% PLF Take or pay fixed charges

Facility Chennai, Tamil Nadu

Contracted Capacity 200 MW

Fuel Low Sulphur Heavy Stock

COD 1999

PPA15 Years till 2014; minimum offtake at 68.5% PLFTake or pay fixed charges

Facility Vemagiri, Andhra Pradesh

Contracted Capacity Contracted – 370 MWMerchant Sale – 17.625 MW

Fuel Natural Gas

COD 2006

PPA23 Years till 2029; at 80% PLF Take or pay of fixed charges

Strong pipeline of power projects under development

Power assets under developmentPower assets under development

Location Kamalanga, Orissa Chattisgarh Badrinath, UttaranchalCapacity 1,050 MW 1,050 MW 300 MWFuel Coal Coal HydroContract details Build Own and Operate for

25 years from Plant COD

Build Own and Operate for 40 years from Plant COD

Build Own and Operate for 45 years from Implementation Agreement

Expected CoD 2012 2012 2013Project status Land acquisition process started (Sec

6(1) notification completed. Coal linkage of 500 MW obtained and awaiting LOA from Mahanadi Coal Fields. Coal allocation namely “Rampia” & Dip Rampia” obtained for 1000 MW capacity. A Joint Venture Company has been formed by all the 6 allocattees of the coal block. EPC contract finalised with SEPCO. PPA: GRIDCO (upto 25%) and remaining with Power Trading Corporation ( PTC). IDFC has appraised the project and 50% of the loan has been sanctioned.

Signed MOU with the Govt. of Chhattisgarh. State is entitled to avail 5% of net energy and has the right to purchase up to 30% of the power for 20 years. State Govt. has recommended to the Ministry of coal for coal linkage. Pre feasibility report submitted and approved by Dept. of Energy. Draft DPR under review. Land Identified and state Govt. agreed to allot the same. Railway siding feasibility and location survey being carried out for coal transportation.

DPR finalised and submitted. Project capacity revised to 300 MW with Design Energy @ 1117 MU (PLF 42.50%). Clearance obtained from Ministry of Environment & Forests. SNC– Lavalin appointed for review of DPR, Tendering and detailed engineering. Concurrence of CEA – August 2008 To execute the implementation agreement after CEA concurrence on DPR.

Planned Action Completion of Land Acquisition Finalisation of coal linkage for balance 500 MW and signing coal supply Agreement. Award of NTP. Financial Close.

Initiate forest clearance and Land Acquisition. Signing Implementation Agreement.

Facility

Orissa (Coal)1 Chattisgarh (Coal)2 Uttaranchal (Hydro) 3

Strong pipeline of power projects under development

Power assets under developmentPower assets under development

7 Himachal Pradesh

(Hydro)

6 Arunachal Pradesh

(Hydro)

5

Location Talong, Arunachal Pradesh Bajoli Holi, Himachal Pradesh Upper Karnali, Nepal Upper Marsyangdi

Capacity 160 MW 180 MW 300 MW 250 MW

Fuel Hydro Hydro Hydro Hydro

Contract detailsRun of the River on BOOT basis for a concession period of 40 years from COD

Run of the River on BOOT basis for a concession period of 40 years from COD

Run of the River Build Own and Operate for 30 years from Plant COD

Build Own and operate for 30 years from Plant COD

Expected COD 2014 2015 2015 2015

Project status MOA with the State Govt. Colenco of Switzerland has been appointed as the principal engineer. Terms of Reference for Environment study approved by MOEF. Consultants have been appointed for carrying out Environment Impact Assessment and Environment Management Plan. GEL has offered 14% free power and 12% Equity in the SPV.

Upfront premium of US $ 20.5 Mn paid to the Govt. of Himachal Pradesh Pre – Implementation Agreement signed with the Govt. of Himachal Pradesh. DPR preparation is under process by in house engineering team. Royalty power offered : 12% (Yr 1-12), 18% (Yr 13-30), 30% (Yr > 30).

MOU signed between GMR – ITD consortium and Govt. of Nepal. Incorporated a company namely GMR Upper Karnali Hydro Power Limited. GEL has offered 12% free power and 27% free Equity to the Govt.of Nepal.

GMR owns 80% shares in Himtal Hydropower Company.GMR is taking care of all Project development activities and is preparing the DPR for the Project.

Nepal (Hydro)

8 Facility

Nepal (Hydro) 7

Towards securing fuel supply for Power Plants

Acquisition of 50% shareholding in Intergen

Intergen is a global Power generation Utility with over 12000 MW of Power

Projects in 5 different continents around the world

Over 8000 MW out of the above is operational in the following countries:

Mexico United Kingdom Holland Australia Philippines

GMR’s newly acquired footprint in all these diverse locations shall help achieving its burgeoning international growth ambitions

This is the largest international acquisition by an Indian Co. in the Power Utility sector.

This acquisition has catapulted GMR as the largest power generation company from India

GMR has acquired 5% stake in Homeland Mining and Energy, a South African Subsidiary of Homeland Energy Group Ltd, Canada

GMR has the option to acquire additional 45% stake of Homeland South Africa.

Homeland South Africa owns Mining Licenses for Kendal (74% share - Reserve 34m ton), Eloff (50% share with option to increase to 74% - Reserve 382m ton) and North Field (100% share – Reserve 1m ton ) with total reserves of 417m ton.

Production from Kendal mine would be 1.8m tpa. Eloff mine would produce 6m tpa in phase 1 which would increase to 12m tpa in phase 2.

Coal mines in South Africa and Indonesia

Power projects: Continued focus on diversification of revenue, fuel mix and expansion of geographic presence

4,097.625 MW of power projects spread across the country

4,097.625 MW of power projects spread across the country

Bajoli Holi180 MW

Fuel type - HydroCoD - 2015

Alaknanda300 MW1

Fuel type - HydroCoD - 2013

Talong160 MWFuel type - HydroCoD - 2014

Orissa1,050 MWFuel type - CoalCoD – 2012

Chattisgarh1,050 MW

Coal powerCoD- 2012

Vemagiri387.625 MWFuel type – GasPPA – 23 years till 2019(80% PLF)

Chennai200 MWFuel type – SulphurPPA – 15 years till 2014(min. offtake at 68.5% PLF)

Mangalore220 MW

Fuel type – NaphthaPPA – 7 years till 2008

(85% PLF)

Operating assets Under implementation3 projects

(807.625 MW)

7 projects

(3,290 MW)

Diversified fuel mix1

Projects distributed across all the fuel types – Hydro, thermal & Gas

Tied up fuel for most of the plants

Total capacity = 4,097.625 MW

Diversified revenue mix

2

Mix of short-term & long-term Power Purchase Agreements (PPAs)

Exiting 3 projects have long term PPAs tied up Fixed revenue stream from the Mangalore &

Chennai plant Availability of gas for the Vemagiri project to

create future revenue growth potential

New projects (other than the Orissa project) have the flexibility to choose between short-term/long-term PPAs

Distribution of total capacity

PPA - 1390 MW, Merchant Power – 2,707.625 MWNote: 1Capacity to be increased to 300 MW subject to approval of project development plan by CEA

Upper Karnali 300 MWFuel type - HydroCoD – 2015

Upper Marsyangdi 250 MWFuel type - HydroCoD – 2015


2 Airports

3 Power


5 Strong Management



8

Key Highlights


Particulars GTAEPL GTTEPL GPEPL GACEPL GJEPL GUEPL

Location Tuni-Anakapalli Tambaram-Tindivanam

Pochanpalli Ambala-Chandigarh Faruknagar-J adcherla Tindivanam-Ulundurpet

Road Length 59 kms 93 kms Construct - 86 kms + O&M Sweetener - 27

kms

Construct - 35 kms Construct - 46 kms + O&M Sweetener - 25

kms

Construct - 73 kms

Concession Period 17.5 years incl. construction period

of 2.5 yrs.

17.5 years incl. construction period of

2.5 yrs.

20 years incl. construction Period of

2.5 years

20 years incl. construction period of

2.5 years

20 years incl. construction period of

2.5 years

20 years incl.

Construction Period of 2.5 years

Concession Duration

May. 2002 – Nov. 2019

May. 2002 – Nov. 2019 Oct. 2006 – Oct . 2026 May. 2006 – May. 2026 Aug. 2006 – Aug. 2026 Oct. 2006 – Oct. 2026

Project Cost(Rs.Mn) 3040 3900 6900

3911

4713

7950

Financial Closure J une 2002 J une 2002 September 2006 May 2006 August 2006 October 2006

Commercial Operation Date

Oct 2004 Oct 2004 Nov 2008 Feb 2009 Apr 2009 Apr 2009

Project status as of 31st March 08

Started commercial operations

Started commercial operations

All major contracts have been awarded

68% construction completed






42% construction

completed.

GMR Group Road Projects implemented/under implementation

AnnuityAnnuity TollToll

Mobilizing all resources and harnessing the best practices in all aspects of project implementation to ensure that the four Road projects under implementation are

commissioned on schedule

Already Operational Under Construction

Progress of Construction

Jadcherla Road

Ulundurpeth Road Pochanpalli Road

Ambala – Chandigarh Road

Project overview

Planned Action for next 12 months

Land Acquisition by December, 2008

Krishnagiri Special Economic Zone – Recent Foray


2 Airports

3 Power


5 Strong Management



8

Key Highlights


GMR has an experienced and dedicated team of individuals across hierarchy managing projects across sectors

GM Rao

Group Chairman

Srinivas Bommidala

Chairman -Urban Infrastructure & Highways

GBS Raju

Chairman – Corporate & International Business

G Kiran Kumar

Chairman - Airports

B V N Rao

Chairman – Energy & Agro

GMR Holding BoardGMR Holding Board

Management teamManagement team

AirportAirportStrategic FinanceStrategic FinanceEnergyEnergy

Urban Infrastructure & Highways

Urban Infrastructure & Highways

Raajkumar – CEO

G.K. Raghunandanan – CFO

G Subba Rao – President – Hydro

R. K Goel – VP – Transmission

K V V Rao – Director & President

S N Barde – VP – O & M

Ashish Basu – VP – Commercial & Contracts

I V Srinivas Rao – VP – Finance

V K Sharma – VP – Hydro

Harvinder Manocha – Head Nepal Projects

Rajan Krishnan – COO

D R Santhana Krishna – CFO

V Jayaraman – COO – Property Devlp.

O Bangaru Raju – COO - Strategic Initiatives & Central Procurement

Y M Shivamurthy – President, Legal

A, Subba Rao, EVP – CIG

A.S. Cherukupalli, EVP – Company Sec.

Vijay Vancheswar – Head,Corp.Comm.

P M Kumar - ED – Group Corporate Development

R. Ram Mohan – EVP – GCM’s office

B. S. Shantharaju – CEO

Andrew Harrison – COO

Shirish M Navlekar – CFO

I Prabhakara Rao – VP – Project Development

Phua chai Teck – VP - Planning & Develop

Sudhir Mathur –Chief – Commcl .Officer

Rajgopalsamy – CFO

P Sripathy – Head -Project Mgmnt. Ranjit Muregesan , CEO

Madhu Terdal, EVP

Cenk – CEO – Turkey

International DevelopmentInternational Development

K. Balasubramanian

Member Group Holding Board

GMR Infra BoardGMR Infra Board

G. M. Rao

Srinivas Bommidala

G. B.S. Raju

G. Kiran Kumar

B.V. Nageswara Rao

K.Balasubramanian

O B Raju

Arun K. Thiagarajan

K.R. Ramamoorthy

Prakash G. Apte

R.S.S.L.N. Bhaskarudu

T. R. Prasad

Udaya Holla

Uday M. Chitale

Corporate ServicesCorporate Services

Ashutosh Agarwala – CFO

P M Kumar

Member Group Holding Board


2 Airports

3 Power


5 Strong Management



8

Key Highlights


Status of Project Development in Nepal – 300 MW Upper Karnali HEP

Project MoU executed with MoWR

JVA executed with NEA

Foreign Investment approval received from Dept. of Industries (DoI), Govt. of Nepal

JVC (Public Company) incorporated in Nepal

Survey License obtained from DoED

Certificate of commencement of operations obtained from DoI

Project establishment at Surkhet finalised

Project team is in place; Engineering office operational at Kathmandu

Site is presently inaccessible due to heavy rains and landslides

EIA Consultants appointed – M/s SchEMS and data collection process started

Public Consultations for ToR and Scoping documents are being taken up

Topographical Survey agency finalised and activities will commence immediately after monsoon

DPR preparation started; Review of past studies undertaken by NEA (through CIWEC) are on

CSR activities are being taken up after the current year monsoon

At the time of DPR and Investigations stage itself

Status of Project Development in Nepal – 250 MW Upper Marsyangdi HEP

80% shareholding taken over in Himtal Hydro Power Company

Project site establishments are in place:

Project team in place; Engineering office operational at Kathmandu

Offices at Syange (Powerhouse site) & Taal (River diversion site) are operational

Site is presently inaccessible due to heavy rains and landslides

Project access road from Besisahar to Syange – washed away due to heavy monsoon

Site visits are being undertaken through trekking and through helicopter at times

Topographical Survey completed and geo-technical Investigations are underway

Both these are being undertaken through local agencies in Nepal

EIA Consultants - M/s SchEMS from Nepal ; Data collection process completed

Approval of ToR & Scoping documents for revised capacity of 250 MW is expected shortly

Approval process was delayed due to approval from ACAP / Wild life Board

Project layout finalised and Engineering activities have started

CSR activities are being taken up after the current year monsoon

At the time of DPR and Investigations stage itself


2 Airports

3 Power


5 Strong Management



8

Key Highlights


Issues in Hydro Power Project Development in Nepal

What the Hydro Project developer looks for?

Good infrastructure to and at site

Flexibility to create the same, may be on a selective basis

Availability of necessary approvals / clearances within reasonable time and efforts

Simple & clear regulations, acting as ‘FACILITATOR’ rather than ‘OBSTRUCTOR’

Clear and simple tax regime

Decent law and order situation

Supportive and facilitating Government at the centre and also at the district level

Availability of Competitive financing options

Are all these currently available in Nepal ?

The intent and will of the Government to create this enabling mix is critical

Developers have the will to implement and execute

All they need is SUPPORT’ and an ‘ENABLING ENVIRONMENT’

Nepal’s dream of achieving 10000 MW, requires some serious considerations on the above

Key Constraints in Hydro Power Project Development in Nepal

Lack of infrastructure (Access roads, Transmission links) Clearly defined Policy and Regulations

Should be free from any ambiguity Long term protection against ‘Change in Law’

Approvals and Clearances in a timely manner Supply of construction materials & machinery Conducive law and order situation Adequate availability of :

Construction Agencies and Engineering / EIA Consultants Support services like Survey and Investigation agencies etc. Skilled Hydro Manpower Resources Situation is likely to reach alarming proportions in coming years

Evacuation of Power: Licensing / Right of Way for transmission lines Connectivity with Indian Grid – Regulatory / Technical issues

Sale of Power in India: Long term / short term Open access Tariff mechanism


2 Airports

3 Power


5 Strong Management



8

Key Highlights


Requests to Govt. of Nepal

51

Select few large Hydro Power Projects: Serious development on >3000 MW of Projects - Upper Tamakoshi, Upper Karnali,

Arun III, West Seti, Upper Marsyangdi, Tamakoshi II & III, Likhu etc. Declare them as ‘National Priority Projects’ Proactively build access roads to identified Project sites Allow Developers to build Infrastructure before ‘Generation License’ Create ‘Single Window Cell’ for hassle-free and expeditious clearances Simplify Clearance procedure Demand timely achievement of realistic and pre-agreed Project development and

implementation milestones, from Developers Proactive Govt. support on:

Land Acquisition / Right of Way Rehabilitation and Resettlement Availability of Explosives

Provide impetus to manufacturing inds. supplying goods to Hydro projects: Need to explore creation of substantive indigenous capacity in Cement and Steel

Open G2G dialogue with Govt. of India: High Voltage Transmission corridor and Grid connectivity / compatibility issues Power exchange between countries on ‘Win-Win’ principles Develop large Projects on PPP route

Requests to Govt. of Nepal

51

Licensing policy: Integrated Basin development - Preference for developers of large Projects for

additional projects in the same basin: Why not look at ‘Swiss Challenge’ route for such projects?

Provide Fiscal benefits to improve ‘Investor Confidence’: VAT exemption – already proposed in current year budget – a Welcome step Restore Tax holiday provisions in Hydro Power Liberalize dividend repatriation provisions for foreign investment Generation License period – increase to 45 years Deferment of royalty to improve financeability of long gestation Projects Provide incentives to local industries in all areas of Hydro Power Support services

Local Civil Contractors and Equipment suppliers, Survey and Investigation agencies, Transport and logistics service providers

Provide nation-wide boost to technical education To promote young Nepalese Engineers

Simplify banking regulations Clarity and consistency in Customs and import policies Strengthen Legal, accounting and taxation system Consultations with IPPs in framing Acts, policies for Power sector

Thank You

power summit – 2008, kathmandu developer’s perspectives; road ahead for hydro power project...

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