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Gujarat Infrastructure Development Board (GIDB) is a high-powered body chaired by the Chief Minister of Gujarat. Formed in June, 1995, Gujarat Infrastructure Development Board was given a mandate to be the nodal agency to prepare Gujarat’s infrastructure Agenda incorporating the Government’s vision for the state up to the year 2010 A.D. With such a proactive move, GIDB has made the first ever attempt in the country to draw up an integrated and holistic infrastructure plan called Gujarat Infrastructure Agenda – Vision 2010, highlighting linkages over a ten-year period.

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The scale of the estimated infrastructure requirement in next 10 years requires large investments to be committed. It is envisaged that budgetary allocations will be made for this. But it will only be a part of the entire outlay required. The major resource gap therefore calls for attracting very large-scale private sector capital inflows into the state for infrastructure development. The Gujarat Infrastructure Agenda Vision 2010 seeks to address this requirement and presents the state with a coherent and comprehensive action plan for integrated development across all the sectors of infrastructure. The agenda develops a prioritized shelf of projects for inviting and attracting private participation for infrastructure development in the state and identifies the policy initiatives needed by the state to facilitate the same.

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Gujarat Infrastructure Agenda – Vision 2010 represents the Board’s initiatives with regard to the master plan, which spans all major infrastructure sectors over a 10 year planning horizon. The agenda aims to lay down a road map for the development of infrastructure in the state.

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The primary objective of the Master Plan agenda is to estimate the sector-wise infrastructure requirements of the state for the decade 2000 to Gujarat Infrastructure Development Board and to identify projects and linkages across sectors for co-ordinate development.

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These sectors include Power, ports, transport (Road, Rail and pipelines), industrial parks, urban infrastructure, water supply and miscellaneous sectors like airports gas grid and information infrastructure.

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Gujarat Social Infrastructure Development Board had prepared a master plan - Gujarat Social Infrastructure Agenda: Vision 2010 which envisaged a total investment of Rs.48,313 crore in social sectors such as education (Rs. 8990 crore), health (Rs. 9753 crore), housing (Rs. 3335 crore), employment & training (Rs. 5150 crore), environment (Rs. 1857 crore) and water supply & sanitation (Rs. 19228 crore) to be materialized by 2010, with a view to upgrading the facilities for the well-being of the citizens of the State.

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Gujarat Infrastructure Agenda: Vision 2010 envisages an investment of Rs.1,16,983 crore encompassing 383 projects in sectors as diverse as: power, ports, industrial parks, roads, railways, water supply & sanitation townships, urban transports, water, airport, gas grid, information infrastructure etc.

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The issues are as follows:

The ability of the state's economy to finance and sustain the created infrastructure.

The ability of the state Government to support the development of projects through financial and/or policy supports.

The experience of other countries suggests that private investment requires facilitating Government policies as well as wide ranging sectoral reforms including legislative amendments, restructuring of existing Government operations and the introduction of regulatory mechanism. The review of the policy in each sector aims at identifying these requirements.

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The Build Operate-Transfer (BOT) scheme is a contractual arrangement entered into by a private sector participant (PSP) with the Government for the financing, construction, operation and maintenance of an infrastructure facility for a fixed period, after which the infrastructure facility is transferred to the Government.

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The BOT programme offers a particularly attractive alternative to governments whose financial resources cannot possibly meet their economies' huge capital investment requirements to sustain economic growth BOT and its variants are therefore good venues for:

• Accelerate the build-up of much needed infrastructure facilities;
• Encourage PSP in the government's infrastructure development programs;
• Overcome the government's fiscal constraints in implementing infrastructure projects;
• Tap more superior technology/expertise and operation/maintenance mechanism of the private sector.

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Whilst the BOT projects vary in terms of its packaging, they share a number of characteristics : 

Project has to be so structured so as to be profitable. The project must have the potential to generate sufficiently attractive returns to the investor's equity.

BOT's high debt/equity ratio is highly leverage. The equity financing usually comes from the concessionaire, while the debt financing usually comes from commercial sources, as well as bilateral and multilateral lenders.

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The BOT law seeks to accelerate the development of vital infrastructure projects through mechanisms that allow private companies and individuals to finance, build, operate and maintain necessary infrastructure facilities or participate in the provision of other public services.

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The BOT law is very flexible and very liberal because the GoG recognizes that the legal and policy environment has to be flexible to allow projects to be structure of the BOT law :

• It treats BOT primarily as a financing scheme;
• Provides flexibility to both the government and private sector by allowing the use of more BOT scheme to suit a variety of project conditions;
• Broadens the type and variety of projects that can be implemented under the BOT process;
• Recognizes the need for private investors to realize rates of returns reflective of market conditions;
• Allows Government support for BOT projects; and

• Allows Government agencies to accept unsolicited proposals.

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The provision in the law allows the following other contractual arrangements for BOTs and the use of other variants. These are :

BOOT (Build, Own-Operate and Transfer)

BOLT (Build, Operate, Lease and Transfer)

BOOM (Build, Own-Operate and Maintain)

And other variants as approved by the GoG from time to time.

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The construction, rehabilitation, improvement, betterment, expansion, modernization, operation, financing and maintenance of the projects identified in the Master Plan Agenda-Vision Gujarat Infrastructure Development Board described above. This also includes other infrastructure and development projects as may be authorized by the appropriate agencies, may be implemented under the provisions of the law and its implementing rules and regulations.

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The Private sector participant can take part in any BOT projects via any of the two types of project implementation modes:

Public Bidding or tender of projects; and

Submission of unsolicited proposals.

The rules governing the conduct of public bidding and unsolicited proposals are clearly specified in the act.

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The unsolicited proposals for projects may be accepted by an implementing agency provided that the project in question involves a new concept or technology and/or not part of the list priority projects and no direct Government guarantee, subsidy, or equity is required.

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The participant must submit a complete proposal to the implementing agency. A complete proposal includes :

• Feasibility study consisting of market analysis, technical aspects, financial analysis, economic analysis and operational./institutional aspects;
• Basic contractual terms and conditions;
• Pre-qualification requirements, which include legal requirements, experience or track record and financial capability to undertake the project;
• Preliminary financing plan, which describes how the project will be financed; and
• Implementation plan, which would show the timeframe of construction and implementation.

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GUJARAT INFRASTRUCTURE DEVELOPMENT BOARD
Block No.18, 8th Floor
Udyog Bhavan, Sector 11
Gandhinagar - 382 017
Gujarat, INDIA
Phone: 91-79-23232701 / 4 / 6
Fax: 91-79-23222481
E-mail: gidb@gidb.org
Web:   http://www.gidb.org