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Activity Profile
Our key business activity is the development, implementation, operation
and maintenance of surface transport infrastructure projects.
Project Development and Implementation
ITNL performs a range of project development activities from the
conceptualization of projects to commissioning and commencement
of commercial operations. These activities include the following:
- business development and finding opportunities to participate
in competitive bidding for new projects,
- evaluation and preparation of bids,
- assessment of estimated project costs,
- applications for pre-qualifications and tenders,
- preparation of structural and other designs,
- SPV formation and arranging financing for the project,
- management of logistical and development issues (such as
liaising with state and local regulatory authorities for obtaining
land and environment related approvals for the project) during
concession period, and
- management and supervision of projects during project life
cycle.
Business Development and Internal Co-ordination
ITNL has an internally well-regulated management policy governing
our strategy on bidding for projects. Our management sets our overall
strategy with respect to the procurement, development and operation
of our projects. Our business development team identifies potential
projects and prepares the bids generally by monitoring the published
tenders of local, State and Central governments. ITNL also subscribes
to news wires to stay informed on the bids published and local and
international government initiatives.
Our design and development team complements the bidding initiatives
by undertaking relevant studies and preparing preliminary designs
in accordance with the requirements of the bid documents to conclude
the viability of the project and to arrive at an estimate of cost
of the project.
Competitive Bidding
Most of our projects are awarded through a transparent competitive
bidding process. The bidding process typically consists of two parts:
the pre-qualification stage and the bidding stage.
ITNL submit a final bid after our pre-qualification for the project.
In most cases the relevant local, State or Central Government authority
follows the Model Concession Agreement formulated by the Planning
Commission of India in the bid format. Most of the terms governing
a concession are finalized as part of the Model Concession Agreement,
and concession operators like us generally have limited ability
to change these terms during the construction or operation phases
of the concession. However, ITNL has to determine the amount of
the premium it will pay to the government for the project or the
amount of financial grant or annuity we proposes to receive under
the concession agreement. As a result, forecasting both revenues
and expenses accurately during the bidding phase, identifying potential
risks, incorporating assessed and appropriate provisions prior to
submission of bid, are critical.
Bilateral Negotiations
In addition to participating in competitive tenders, ITNL has been
awarded projects through bilateral negotiations with State Governments.
ITNL, along with IL&FS, often assists the concessioning authorities
in the early stages of their processes by customizing scope of work
and the concession terms to suit the specific project requirements.
In such instances, ITNL is often awarded the project following its
submission of competitive bid. Additionally, ITNL is also occasionally
awarded concessions by the concessioning authorities for the development
of additional roads without going through a competitive bidding
process in instances where ITNL has previously developed a road
for the relevant concessioning authority.
SPV Formation and Financing
On award of a surface transport infrastructure project, ITNL incorporates
a special purpose vehicle (SPV) which holds the project and develops,
maintains and operates the concession. While the SPV is the legal
entity with rights and obligations under the concession agreement,
in practice ITNL provides all necessary support to the SPV and take
the lead in project management on behalf of the SPV in accordance
with the terms of the concession agreement and also operate and
maintain the toll/annuity roads, road on behalf of the SPV once
it is completed.
Construction
The construction phase of a toll or annuity road project begins
after financial closure is achieved. Our concession agreements often
contain incentives for early completion of a project. The construction
phase of a project often takes between 15 months and three years
to be completed. Our concessions typically range from a period of
11 to 32 years, after which they are transferred to the concessioning
authority.
A team from the project implementation department and design unit
is deployed, to finalize the detailed design of the project, liaise
with the concessioning authority and respective government agencies
in connection with the land acquisition process, utility shifting,
procurement of necessary approvals/permits and supervise and manage
construction work. Throughout this phase, ITNL monitors and controls
the various work processes closely with the objective of controlling
costs, maintaining quality and other logistical issues such as land
acquisition, environmental rehabilitation or social resettlement.
The Project SPVs typically sub-contract construction activities
for the projects. Contractors procure all resources for the works
and are typically paid based on the completion of construction milestones.
As the project nears completion, an independent engineer is asked
to certify that the road has been completed in accordance with the
technical specifications set forth in the concession agreement.
Upon receipt of the independent engineer's report, the concessioning
authority issues a completion certificate, which allows us to begin
collecting toll receipts or receive annuity payments as per the
provisions of the concession agreement.
Operation and Maintenance
ITNL has project implementation teams located on all Project sites
to monitor the roads for maintenance, upkeep and operations services,
as well as user and emergency services. These services are provided
through facilities owned by ITNL and also by sub-contracting some
services to specialist companies. ITNL considers the relative efficiencies
of self-sourcing and outsourcing for each required service when
making our sourcing decisions.
In-house Testing Laboratory
ITNL has set up a material testing laboratory in Raipur, Chhattisgarh,
certified under ISO 9001:2000, for a number of project development,
construction, operations, maintenance, and tolling activities and
to serve as a testing facility for the materials used in the construction
of the projects that ITNL operate or develop. To the extent this
laboratory has unutilized capacity, it is also engaged by third
parties to test the construction materials used in their projects.
Accident and Emergency Services
ITNL seeks to meet or exceed internationally accepted safety standards
for the management and maintenance of its Toll Roads. Our accident
prevention strategy prioritizes construction, acquisition and provision
of new safety features, such as pedestrian overpasses, concrete
barriers, speed limit controls, improved signals and signage, roadway
widening, ambulance response capability, traffic inspection and
removal of dead animals and other obstructions.
ITNL provides traffic inspection and emergency, rescue and search
services. Our traffic inspection teams patrol our toll roads monitoring
potential problems and emergencies, placing emergency signs and
taking other appropriate measures when necessary. They also look
out for toll road users evading the toll fee. Our service team provides
emergency aid to vehicles with mechanical problems on our roads,
using tow trucks to remove broken down or damaged vehicles. ITNL
also operates mobile rescue units that are equipped to provide first
aid and evacuation in case of medical emergency. Most of our mobile
rescue units have a GPS tracking system installed that permits us
to monitor the vehicle's activity, fuel levels and other critical
details on a real-time basis by means of a satellite network.
Traffic Information
ITNL maintains several traffic information systems for our road
users, including technologically advanced traffic management systems
such as variable message panels along certain of our concession
toll roads to provide traffic condition information.
Project Management Information System (PMIS)
PMIS is a web-application designed to be user friendly and provides
technologically advanced capabilities, including project information,
to our project teams. PMIS employs both Geographic Information System
(GIS) and Remote Sensing (RS) technology. GIS is licensed by the
Company. PMIS monitors activities such as road inspection, maintenance,
arboriculture, accident management, traffic management and traffic
safety compliance. In addition, PMIS enables project teams to compile
the results of such monitoring in a continually updated database.
Tolling
Toll collection systems
ITNL typically uses automated toll collection systems at our toll
plazas and the level of automation at the toll plazas are designed
based on the type of traffic and volume at the toll plazas. The
technology used for automation of our toll plazas is generally scalable
and adaptable to the changing requirements. It also help in creating
an audit trail for reconciliation of revenue collection and in achieving
efficiency in the manpower required at the toll plazas
User Fees
The user fees that ITNL charges the users of our toll roads are
set according to the user fee notification provided as part of the
concession agreements. The user fee is typically increased at scheduled
intervals, sometimes by reference to certain indices. The user fee
also varies depending on the type of vehicle.
Auctioning toll receipts
ITNL has auctioned the toll receipts attributable to some of our
roads for one-year periods in order to provide greater certainty
and stability to our revenues. ITNL advertises the auctions via
newspapers and other media, and ITNL typically sells the receipts
to the highest bidder. ITNL requires all selected bidders to guarantee
a part of the payments that they are required to deposit with us
as part of their toll auction. Purchasers of the future toll receipts,
which are generally local or national toll operator companies, pay
us a fixed weekly fee in exchange for the actual toll receipts,
which may be higher or lower than the fixed fee. The purchasers
of these toll roads receipts are typically responsible for collection
of tolls and expenses such as maintenance of toll plazas and electricity
while ITNL continues to remain responsible for the maintenance and
repair of the toll roads. Upon expiry of the one-year period, ITNL
will generally sell the toll receipts for a fresh term of one year
either by re-negotiating the fee terms with the existing toll operator
or by conducting a fresh auction to sell receipts to the highest
bidder. |
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