List of Exhibits

Contents List of Exhibits

4

Preamble

5

List of Abbreviations

6

Andhra Pradesh Infrastructure Mission

7

Laying the Foundation for the Sunrise State of Andhra Pradesh

7

Mission Objectives

8

Mission Functions

8

Andhra Pradesh Infrastructure Mission Structure

8

Targets

11

Shifting the Growth Trajectory

11

Defining Developed Economies

11

Economic Targets from Andhra Pradesh Vision 2029

11

Structural Transformation of the Economy

12

Transformation Catalysts

13

Missions Mode A - Game Changing and Holistic Approach

13

Five Campaigns

14

Approach and Strategy

19

Role of Infrastructure

19

Multiplier Effects and Benefits of Infrastructure Investments

20

Infrastructure Development for Port led Logistics and Corridor Based Manufacturing

21

Core Sectors for Port Led Development: Logistics Hubs

23

Strategic Location of Andhra Pradesh

23

Thrust Sectors

26

Sector Snapshots

27

Enablers Lifecycle Approach towards Infrastructure Development Resources

49 49 55

Resource Augmentation

55

Risk Optimization

57

Bibliography

58

Key Contacts

60

Exhibit 1: Sunrise State of Andhra Pradesh: Key Milestones Exhibit 2: Structure of the Andhra Pradesh Infrastructure Mission Exhibit 3: Per Capital Income (Comparative Scenarios) Exhibit 4: An Accelerated Growth Scenario Exhibit 5: Sectoral Share of Andhra Pradesh GSDP Exhibit 6: Integrated Functioning of the Transformational Catalysts Exhibit 7: Infrastructure in China – Driving Sustainable Growth Exhibit 8: Singapore - Asia's Global Logistics Hub Exhibit 9: Industrial Innovation in Taiwan – Asia's Silicon Island Exhibit 10: Integrated Approach towards Port Led Development Exhibit 11: Phased Strategy for Infrastructure Development Exhibit 12: Summary of Targets Exhibit 13: Performance Management and Delivery Unit (PEMANDU) – A Radical & Transformational Approach by Malaysia Exhibit 14: Sector-wise Investment Outlay Exhibit 15: Tamil Nadu Infrastructure Finance Company (TNIFMC) Exhibit 16: Growth of Private Sector in the Total Infrastructure Outlay Exhibit 17: Framework for Optimization of Risk Sharing

Preamble Andhra Pradesh has set its target to become one of the top three states in India by 2022 and achieve the status of a developed state in the country by 2029, and this vision is to lay the foundation of the Sunrise State of Andhra Pradesh. The Vision 2029 hopes to impact the lives of every citizen in the State, enriching and transforming it through well coordinated small, large and mega scale development programmes, executed as part of one of its seven development focused missions. Of the seven Missions, the Infrastructure Mission aims for the creation of a wellplanned and seamlessly integrated infrastructure within the State to realise the objectives of Vision 2029. The 'Infrastructure Mission' will be guided by the Hon'ble Chief Minister's vision to create world class infrastructure across the industrial and social sectors, provide excellent global and domestic connectivity and augment the State's power generation capacity. The Mission commits to carrying out the planned activities in an efficient and sustainable manner, according utmost respect and importance to environmental preservation and ecological balance. The Infrastructure Mission, along with the other six Missions, shall work harmoniously towards realising the single goal of enabling Andhra Pradesh to claim its destiny by 2029 and to foster a common identity among the people of the State, and endeavour to realise collective and individual aspirations, dreams and destinies, for its people, for the country, and for posterity.”

List of Abbreviations ADB AfDB AT&C AP APGDC APIM APMB APGENCO APDISCOMs APSEZ AH BPD Bn BCM BCM BU CBIC CGD CAGR DDG EPZ FSRU GAIL GIS Gbps GOI G2B G2C GDP GNI GSDP GIDB HDI IT ITIR INCAP ISLs ITDA ICAO JETRO JICA KSEZ kWh KG LNG LPG

Asian Development Bank African Development Board Aggregate Technical & Commercial Andhra Pradesh Andhra Pradesh Gas Distribu on Corpora on Andhra Pradesh Infrastructure Mission Andhra Pradesh Mari me Board Andhra Pradesh Power Genera on Company Limited Andhra Pradesh Power Distribu on Company Andhra Pradesh Special Economic zone Asian Highway Barrels per Day Billion Billion Cubic Meter Billion Cubic Meter Billion Units Chennai Bangalore Industrial Corridor City Gas Distribu on Compound Annual Growth Rate Decentralized Distributed Genera on Export Promo on Zone Floa ng Storage and Regasifica on Unit Gas Authority of India Limited Geographic Informa on System Gigabits per second Government of India Government to Business Government to Consumer Gross Domes c Product Gross Na onal Income Gross State Domes c Product Gujarat Infrastructure Development Board Human Development Index Informa on Technology Investment Region Informa on Technology Investment Region Infrastructure Corpora on of Andhra Pradesh Integrated Sanitary Latrines Integrated tribal Development Agency Interna onal Civil Avia on Organiza on Japan External Trade Organisa on Japan Interna onal Coopera on Agency Kakinada Special Economic Zone Kilowa -hour Krishna-Godavari Liquefied Natural Gas Liquefied Natural Gas

MRO MIS MSME MDG MMSCMD MT MTPA MU MSU NH NHDP NIMZ NOFN NTPC NTDPC NW PHP PEMANDU POL PCPIR PNG PERT PPP RVEP Rs. SHG SEZ SIR Sq. Km. SLDC TNIDB TMCFT T&D TEU UNDP USD USA VCIC WGC WAN WEF

Maintenance, Repair and Opera ons Management Informa on System Micro Small and Medium Enterprises Millennium Development Goals Million Metric Standard Cubic Feet per Day Million Tonnes Million Tonnes per Annum Million Units Mission Support Unit Na onal Highway Na onal Highways Development Programme Na onal Investment and Manufacturing Zone Na onal Op c Fibre Network Na onal Thermal Power Corpora on Na onal Transport Development Policy Commi ee Na onal Waterways Peak Hour Passenger Performance Management and Delivery Unit Petroleum Oil and Lubricants Petroleum, Chemicals and Petrochemicals Investment Region Pressurised Natural Gas Programme Evalua on and Review Technique Public Private Partnership Remote Village Electrifica on Programme Rupees Self Help Group Special Economic Zone Special Investment Regions Square Kilometer State Load Dispatch Centre Tamil Nadu Infrastructure Development Board Thousand Million Cubic Feet Transmission and Distribu on Twenty-foot Equivalent Unit United Na ons Development Programme United States Dollar United States of America Vizag Chennai Industrial Corridor Water Grid Corpora on Wide Area Network World Economic Forum

Chapter 1

Milestones for the State

Ÿ One of the three high-performing States in India

by 2022-23 Ÿ Best State in the country by 2029-30 Ÿ A leading investment destination in the world

by 2050-51 Andhra Pradesh Infrastructure Mission (APIM) would streamline the efforts of the government towards creation of infrastructural assets in a time bound manner with set targets and monitorable outcomes.

Mission (APIM) would streamline the efforts of the government towards creation of infrastructural assets in a time bound manner with set targets and measurable outcomes.

Andhra Pradesh Infrastructure Mission Under the leadership of the Hon'ble Chief Minister Shri Nara Chandra Babu Naidu, the Government of Andhra Pradesh has conceptualised a comprehensive long term vision to fulfill its goal of bringing about the State's socio-economic development in an accelerated and sustainable manner. The Sunrise State of Andhra Pradesh has set itself an ambitious and bold vision. The objective is to transform from the status quo to a dynamic and thriving Andhra Pradesh where the fulcrum of development is the people of Andhra Pradesh. The Government of Andhra Pradesh envisions a Sunshine State where opportunities to achieve prosperity and well being are abound with people enjoying a high quality of life and happiness. Laying the Foundation for the Sunrise State of Andhra Pradesh Vision 2029 charts out an ambitious path for Andhra Pradesh to be amongst the top three States in India by 2022 and a developed state measured in terms of citizen life satisfaction and Happiness Index by 2029. Come 2050, the Sunrise State of Andhra Pradesh aims to be among one of the most prominent investment destinations in the world. The Government is conscious of the challenges ahead and therefore has set measurable targets to achieve the vision outcomes. Further, the Hon'ble

07

Sunrise State of Andhra Pradesh: Infrastructure Mission

Chief Minister has charted out a multi-pronged strategy comprising seven Mission, five Grids, five Campaigns, Janmaboomi programme and the Smart Village programme to work towards the common vision. Exhibit 1: Sunrise State of Andhra Pradesh: Key Milestones

Year

Target

2022-23

One of the three highperforming States in India by 2022 Best State in the country by 2029 A leading investment des na on in the world

2029 2050

The 'Infrastructure Mission' will be guided by the Hon'ble Chief Minister's vision to create world class infrastructure across the industrial and social sectors, provide excellent global and domestic connectivity and augment the State's energy capacity. The Mission commits to carrying out the planned activities in an efficient and sustainable manner, according utmost respect and importance to environmental preservation and ecological balance. The Infrastructure Mission, along with the other six Missions, shall work harmoniously towards realising a single goal of enabling Andhra Pradesh claim its destiny as a top investment destination in the world and endeavour to realise collective and individual aspirations, dreams and destinies, for its people, for the country, and for posterity. In this context, the Andhra Pradesh Infrastructure

29

The APIM would assist Departments in speedy implementation of projects that require interdepartmental coordination. The APIM presupposes that the various Government Departments would continue to manage activities across the life-cycle of infrastructure projects that would include project identification, conceptualisation, preparation, development, operations and monitoring. The thrust of the APIM in consonance with the Vision 2029 is to assist the concerned Departments on pre-identified, specific, growth promoting, large social and economic infrastructure projects , which require interdepartmental synergy. Mission Objectives The Andhra Pradesh Infrastructure Mission has the following key objectives: Ÿ

Assist in achieving the strategic outcomes as enshrined in the Vision 2029

Ÿ

Accelerate the development of core physical and social infrastructure in the State

Ÿ

Ÿ

A dopt a l i fe- cycl e approach towards development of infrastructure project Manage externalities and address interdepartmental issues

Ÿ

Enhance inter-departmental synergies to multiply project outcomes and reduce time lag

Ÿ

Seamlessly coordinate with other missions, grids and programmes to enhance mission outcomes

Ÿ

Optimise public and private investments by providing effective planning and delivery mechanisms

Ÿ

To build a confident ecosystem for catalysing investments in infrastructure

Mission Functions Ÿ Facilitating inter-departmental coordination across the life-cycle of large infrastructure projects Ÿ

Identification, scrutiny and appraisal of projects

Ÿ

Creating a shelf of bankable projects

Ÿ

Institutional development and capacity building

Ÿ

Streamlining planning and delivery mechanisms

Andhra Pradesh Infrastructure Mission Structure Exhibit 2: Structure of the Andhra Pradesh Infrastructure Mission

Government Body Chairperson: Hon’ble Chief Minister Vice Chair Person: Hon’ble Minister, Roads & Buildings Mission Support Unit (MSU) Mission Coordinator: Secretary, Infrastructure and Investments Department Other Members: Principal Secretaries of Department concerned and Subject Matter Experts of national/international repute, Programme Management and Monitoring Expert, Remote Sensing, GIS, MIS Experts

Sub - Missions

Line Departments

Sunrise State of Andhra Pradesh: Infrastructure Mission

08

Chapter 2

Targets

Milestones Set by the State The State is poised to become a developed state by 2029-30 with a per capita nominal income in excess of USD 12,746. A double digit growth rate of 12 percent would be required to meet the target of per capita income of USD 16,500 by 2029-30.

09

Sunrise State of Andhra Pradesh: Infrastructure Mission

29

Sunrise State of Andhra Pradesh: Infrastructure Mission

10

Exhibit 3: Per Capita Income (Comparative Scenarios)

Parameter Per Capita Income (Current Prices)

GSDP(Current Price) 2012-13

GSDP (Constant Price) 2012-13

Annual GSDP (constant price) Growth Rate Sector contribu on (percentage of GSDP)

Shifting the Growth Trajectory To achieve the level of development envisioned in the Vision 2029, the State will have to shift from the current annual GSDP growth rate of 7 percent to a higher trajectory of double digit growth rate. The Government will stimulate growth in the keys sectors. Defining Developed Economies Development typically refers to a state of relatively high levels of economic growth and security. Some of the most common criteria for evaluating a country or region's degree of development are per capita income or Gross Domestic Product (GDP), level of industrialisation, general standard of living and the amount of widespread infrastructure. Increasingly, other non-economic factors are included in evaluating an economy or country's degree of development, such as the Human Development Index (HDI).

Popula on (2012-13)

75 percentile in the Human Development Index (HDI) Distribution ~ life expectancy + education + standard of living

11

Sunrise State of Andhra Pradesh: Infrastructure Mission

Sector

2012-13 (present)

2022-23 share

2029-30 share

CAGR

Agriculture

23.1%

15%

10%

6.6%

Industry Services

21.1% 55.3%

30% 55%

30% 60%

14.2% 12.6%

GSDP (Constant price)

INR 2.26 lakh crore

INR 7.34lakh crore

INR 16.26 lakh crore

12.02%

High Income Countries GNI Per Capita of USD 12,746

Economic Targets from Andhra Pradesh Vision 2029 In terms of economic performance, the indicator recognised globally to determine a developed economy is the per capita income in excess of USD 12,746. The per capita income in Andhra Pradesh would have to be in excess of INR 7.64 lakh (USD 1 = INR 60) for it to become a developed state.

Ÿ

High level of GDP Per Capita + significant deree of industrialisation

Tenta ve Target 2029-30 Scenario I: INR 5.4 lakh Scenario II: INR 7.64 lakh Scenario III: INR 9.9 lakh INR 4,19,391 crore Scenario I: INR 30.68 lakh crore Scenario II: INR 43.31 lakh crore Scenario III: INR 56.25 lakh crore INR 2,35,930 crore Scenario I: INR 8.86 lakh crore Scenario II: INR 12.56 lakh crore Scenario III: INR 16.24 lakh crore 5.8% Scenario I: 8.1 % Scenario II: 10.03% Scenario III: 12.1% Services Industry Agriculture Services Industry Agriculture INR INR1,30,469 50,724 54,499 (60%) (30%) (10%) (55.3%) (21.5%) (23.1%) 4.9 crore 5.68 crore Exhibit 4: An Accelerated Growth Scenario

Developed Countries

Three per capita income scenarios have been drawn for the State:

Advanced Countries

Year 2012-13 INR 84,000

Ÿ

Ÿ

Scenario I- A business as usual scenario: USD 9,000 Scenario II-PCI meets minimum threshold: USD 12,746 Scenario III- An accelerated growth scenario: USD 16,500

29

Structural Transformation of the Economy Given that achievement of the Andhra Pradesh Vision 2029 requires increasing the GDP from INR 2.96 lakh Crore (2014) to approximately INR16.25 lakh crore by 2029 (5.5 times increase over 15 years), the industrial sector is envisaged as a key growth driver for the State. It is estimated that the share of the industrial sector in total output would significantly increase to 30 percent, from the current level of around 23 percent. This translates to an annual growth rate of over 14 percent for the sector. Achievement of this target requires Andhra Pradesh to position itself as a highly competitive destination for industry, not only at the national level, but also at regional and global levels. The State has rich endowment of skilled labour, a long coastline with high potential for port driven

logistics, and strong hinterland access (both nationally, being connected to Central, East and South India, and regionally, being at a strategic position in the South Asian and South East Asian spatial map).

Exhibit 5: Sectoral Share of Andhra Pradesh GSDP Projected GSDP of Andhra Pradesh in 2029

16,24,714 Crore

Sector Share in GSDP (2029)

Agriculture

Industry

Service

10%

30%

60%

Corresponding Growth Rate Requirement (2029)

Agriculture

Industry

Service

6.6%

14.2%

12.6%

Sunrise State of Andhra Pradesh: Infrastructure Mission

12

Increased Investment in Infrastructure It is estimated that an Asset (net block) to GDP ratio of 70 percent is required for sustainable provision of services and facilitation of economic activities. For India, this is estimated to be approximately 60 percent, compared to 71percent in Germany, 76 percent in China and 87 percent in South Africa. Given the relatively higher contribution of agriculture to total GSDP in Andhra Pradesh, the net block of infrastructure is likely to be lesser than the national average. In order to bridge the investment gap and bring it to 70%, this expenditure needs to increase significantly. Applying this benchmark to Andhra Pradesh, with a total estimated infrastructure net block at INR 1.56 lakh crore, incremental investment in infrastructure to the tune of INR 12.4 lakh crore is required over the next fifteen years.

Transformation Catalysts Missions Mode - A Game Changing and Holistic Approach The Government realising the exigency for an intensive development approach has constituted seven Missions that would seamlessly work under the guidance of the Hon'ble Chief Minister to achieve vision outcomes with measurable targets. The seven Missions will ensure bottom-up planning and lay special emphasis on the backward areas of the State to achieve equitable growth and development. The Missions will act as catalysts for attaining optimum levels of performance in identified sectors with increased resource use efficiency.

Œ Ÿ

13

Infrastructure Mission Develop integrated vision for infrastructure in Andhra Pradesh to realise the objectives of Vision 2029

Ÿ

Develop fourteen ports that will compete with Singapore as a 'Logistics Hub'

Ÿ

Develop three Mega Cities, eleven smart cities and twenty eight SEZs to make Andhra Pradesh an Economic hub

Sunrise State of Andhra Pradesh: Infrastructure Mission

Ÿ

Build three International Airports and ten Domestic Airports

Ÿ

Create a network of inland waterways and a National Waterway connecting Kakinada with Ennore

 Urban Development Mission Ÿ

Ÿ

Ÿ

World class infrastructure in power (24*7 supply) roads and railways

Ÿ

Ÿ

Promote Andhra Pradesh as a Tourism Hub Ÿ



Primary Sector Mission

Ÿ

Make agriculture and allied activities profitable and sustainable

Ÿ

Mitigate drought through water conservation

Ÿ

Manage post harvest activities effectively

Ÿ

Enhance storage processing and value addition

Ž Ÿ

Ÿ

Ÿ

Score high on the MDGs and/or other global indicators Monitor service quality and improve citizens’ living standards

I m p rove t r a n s p o r t a t i o n , h o u s i n g a n d employment in urban areas Establish three cities

Improve urban planning based on migration patterns Improve solid waste and wastewater management Develop strategies for financial resource mobilisation

Ÿ

Develop ITIRs and electronic clusters

Ÿ

Stress on e-governance and m-governance

Ÿ

Introduce 100 percent fibre optic connectivity and high speed broadband connection to all households

Ÿ

Ensure growth with equity with specific focus on the disadvantaged sections of society

’ Knowledge and Skill Development Mission

Ÿ

Network with innovative organisations and implement their proven models

Ÿ

Ensure equitable growth with specific focus on the disadvantaged sections of society

Ÿ

Enhance student employability and boost entrepreneurship

Industry Sector Mission

Ÿ

Foster education and research

Ÿ

Enhance state-wide road connectivity

Ÿ

Improve industry-academia collaboration

Ÿ

Operationalise industrial corridors

Ÿ

Improve access to health and insurance support systems for the workforce

Ÿ

Create SEZs and two NIMZs

Ÿ

Enhance productivity of all sectors

Ÿ

Ÿ

mega and fourteen smart

‘ Service Sector Mission

Social Empowerment Mission

Ÿ

E n s u re q u a l i t y h i g h e r e d u c a t i o n a n d vocational education

Water grid that will provide water for domestic and industrial uses Power grid that will enable 24 * 7 power for industry and households and nine hours of quality, uninterrupted power supply to farms

Ÿ

Road grid that links every village or hamlet and,

Ÿ

Fibre-optic grid that will provide broadband services to every household

Janmabhoomi The Government has initiated the Janmabhoomi Maa Vooru (JBMV) focusing on five Campaigns, preparation of Micro Plan for each Gram Panchayat/ municipality and has three areas of interventions – enhanced pensions, health camp and veterinary camp. Five Campaigns As part of the Vision, the Government has launched a people centred development process that addresses all facets of socio economic development. The programmes will be implemented on a campaign mode to ensure active participation of all stakeholder(s) thereby achieving inclusive development 1.Pedarikam Pai Gelupu - Victory over Poverty Ÿ Objective: To reduce poverty levels through women inclusive growth Ÿ

2.Badi Pilustondi - School is Calling Ÿ Objective: To increase literacy rate to 100 percent and achieve zero drop-out rates Ÿ



Grids Ÿ

With a Vision of making the State 'Smart', the government has conceptualised setting up of five grids that will provide impetus to the growth of the economy. These include:

3.Polam Pilustondi – Revival of Agriculture Ÿ Objective: To integrate technology and agriculture to make it profitable and sustainable Ÿ

4.Neeru Chettu - Water and Trees Ÿ Objective: To harvest rainwater for meeting the challenges of growing water scarcity and achieving food and nutritional security Ÿ

Ÿ Ÿ

29

Gas grid for gas connection (through pipelines) to every household

5.Aarogyam Parisubhrata - Health and Sanitation Ÿ Objective: To ensure proper health and sanitation is our government's priority

Sunrise State of Andhra Pradesh: Infrastructure Mission

14

Smart Village – Smart Ward towards Smart Andhra Pradesh The Smart Village - Smart Ward initiative focuses on improved resource efficiency, empowered local selfgovernance, access to assured basic amenities and responsible individual and community behaviour to build a vibrant and happy society. It targets to achieve SMART infrastructure, SMART service delivery, SMART technology and innovation, SMART institutions along with optimal mobilisation and utilisation of available resources, leading to faster and more inclusive growth.

Exhibit 6: Integrated Functioning of the Transformational Catalysts

Primary Sector Mission § Mi gate drought through water conserva on

Hon’ble Chief Minister

§ Storage processing & value addi on

Knowledge & Skill Development Mission Social Empowerment Mission Smart Village Urban Infrastructure Mission

Infrastructure Mission

15

Industry Sector Mission

Service Sector Mission

§ Enhance state-wide road connec vity

§ Development of ITIRs and electronic clusters

§ Create SEZs and NIMZs

§ 100% fibre op c connec vity & high speed broadband

§ Create a pool of trained, knowledgeable and skilled human resources § Establish world class centres of excellences § Foster innova on and research § Ensure growth with equity § Enhance quality of life with a focus on health, sanita on § Promote healthy lifestyle § Create ameni es for absorbing migra on of labour from rural to urban areas § Enhance urban ameni es with inbuilt social safeguards § Improve transporta on, housing and employment in urban areas § Develop integrated infrastructure for primary, secondary and ter ary sectors § Facilitate development of industrial infrastructure including logis cs

Sunrise State of Andhra Pradesh: Infrastructure Mission

Janmabhoomi

Five Campaigns Badi Pilistondi /School is Calling Pedarikam Pai Gelupu / Victory over Poverty Aarogyam Parisubhrata /Health & Sanita on Neeru Che u / Water & Trees Polam Pilistondi / Revival of Agriculture Water Grid Gas Grid

Power Power Grid Grid

Roads Grid

Op c Fibre Grid

29

Sunrise State of Andhra Pradesh: Infrastructure Mission

16

Chapter 3

Approach and Strategy

Andhra Pradesh is embarking upon an infrastructure led development strategy to meet its target. It is estimated that an incremental investment of INR12.4 lakh crore in infrastructure over the next fifteen years would be required to ensure an Asset (net block) to GDP ratio of 70 percent by 2029-30. Ahead of port led development Integrated approach towards a port led development with phased infrastructure strategy to meet planned targets.

Further, this has been distributed more or less evenly across roads, rail, power, water and telecom, unlike India, where two sectors – power and telecom account for over 60% of the total investment.

Andhra Pradesh is embarking on an infrastructure led development strategy. The Government recognises the experience from several emerging m a r ke t s a n d d eve l o p i n g e c o n o m i e s t h a t bottlenecks and gaps in critical infrastructure in the State could hinder the potential rate of growth of the State's economy. To augment the infrastructure base of the State, the Government has set up the Infrastructure Mission.

Role of Infrastructure Historical infrastructure spending of 84 countries which account for over 90 percent of global GDP indicates that global investment on roads, rail, p o r t s , a i r p o r t s , p o w e r, w a t e r a n d telecommunications has averaged at about 3.8 percent of global GDP2. From this panel, it is estimated that an Asset (net block) to GDP ratio of 70 percent is required for sustainable provision of services and facilitation of economic activities. For India, this is estimated to be approximately 60 percent, compared to 71percent in Germany, 76 percent in China and 87 percent in South Africa. Over the past (1992 – 2011) actual expenditure in India (Private and Public aggregated) has been about 4.7%. In order to bridge the investment gap and even bring it to 70%, this expenditure needs to increase significantly. Applying this benchmark to Andhra Pradesh with an infrastructure net block of Rs. 1.56 lakh crore as on date, is estimated to make

incremental investment of Rs. 12.4 lakh crore in infrastructure over the next fifteen years.

Key Facts:

Multiplier Effects and Benefits of Infrastructure Investments Accelerated infrastructure spending will drive economic growth, provide jobs, and deliver vital services, such as a clean water supply. The World Economic Forum (WEF) estimates that every dollar spent on a capital project (in utilities, energy, transport, waste management, flood defence, telecommunications) generates an economic return between 5% and 25%. The multiplier effect accounts for the rapid economic growth of emerging markets that have made infrastructure

spending a priority. A significant number of micro and macro studies find a positive link between infrastructure investments and growth, which holds for both long-run economic growth as well as specific factor outputs. Connective infrastructure, such as roads, is likely to have the greatest impact on economic growth. Improved connectivity within a country and within a region increases firms' access to markets for their goods and for cheaper inputs; assists businesses in developing competitive advantages; and provides workers, particularly those in lagging areas, with greater job and income opportunities. Transport typically facilitates agglomerations, which in turn promotes economic growth. Core infrastructure investments also have a multiplier effect on social indicators. On the

Exhibit 7: Infrastructure in China – Driving Sustainable Growth

Ÿ Infrastructure accelerates annual growth convergence

rates by as much as 13% while increasing per capital annual growth rate by almost 1%. (AfDB) Ÿ Investments in core infrastructure generates economic

return of between 5% to 25% (WEF) Ÿ An additional 1% of GDP invested in transport and

communications on a sustained basis increases the GDP per capita growth rate by 0.6% (AfDB) Ÿ China's investment in infrastructure (as weighted

average percent of GDP) is 8.5 versus 4.7 for India. Further, this has been distributed more or less evenly across roads, rail, power, water and telecom, unlike in India, where two sectors – power and telecom account for over 60% of the total investment

China's economic growth has increased from an average of 7.5 percent during 1970 - 1999 to over 10 percent per annum during 1999-2008. China's sustained high economic growth and increased competitiveness by boosting the manufacturing sector has been underpinned by a massive development of physical infrastructure. This correlation has also been realised at the global front and is widely discussed. A study was conducted by Institute of Developing Economies (IDE), JETRO to estimate the impact of factors such as labour, public and private investments, expenditure on health and education and infrastructure on economic growth of China. The results indicate an output elasticity of infrastructure between 0.27 – 0.41; which is the highest as compared to other

factors. Investment in key infrastructure over the years has increased considerably as a share of total GDP; which has been the key driver. Since 2004, investment in infrastructure has accounted for between 25 and 35 percent of total fixed asset investment in China, and has grown in nominal terms by an average annual rate of 20 percent. Although the improvement in the scale and quality of infrastructure over the past two decades is evident across a variety of social and economic indicators, there is still some way to go before China achieves convergence with the provision of infrastructure seen in advanced economies, including Asian economies such as South Korea which are further along the path of economic development.

2

For details, please refer to 'Infrastructure Productivity: How to save $1 trillion a year' MGI (2013).

19

Sunrise State of Andhra Pradesh: Infrastructure Mission

29

Sunrise State of Andhra Pradesh: Infrastructure Mission

20

A Port Led Development is envisaged for the State where integration between infrastructure and industry would help accelerate industrial growth. Andhra Pradesh is at the pivot of two large

industrial corridors – the Vizag Chennai Industrial Corridor and the Chennai Bengaluru Industrial Corridor. These corridors have the potential to create a strong economic base with a globally competitive environment, state-of-the-art infrastructure, activate local commerce, enhance investments and promote sustainable development.

Exhibit 8: Singapore - Asia's Global Logistics Hub Singapore has always been a strong performer in the global logistics industry, with a World Bank ranking of 5 in 2014. The World Economic Forum ranks Singapore second for the 'Quality of Port Infrastructure'. Increased thrusts on developing port infrastructure, increased efficiency and production of innovative value added goods have contributed to its success.

sector produced 50.94 percent of manufacturing output in 2011. Moreover, the stock value of ICT firms accounted for around 50 percent of the market value of the Taiwan Stock Exchange in 2012. The ICT sector also contributes to 40.06 percent of its total exports. ICT firms compete well in the world market by utilising the cost-down business model. However, in the last few years, with rising wages in China, the cost-down business model encountered a

Transportation and logistics sector has continued to contribute between 7 to 9 percent to Singapore GDP in the last decade. As of today, the industry employs 2,05,000 people; thereby contributing to 12.3 percent of total employment in the country. A key factor driving this sector is the economy's ability to leverage upon the two ports of Singapore

A 'Logistics and Transportation Productivity Roadmap' was unveiled by Singapore Economic Development Board in 2012. The productivity plan had two focus areas which would help achieve the productivity target of S$ 130,000 for value-added products per worker by 2015.

Sunrise State of Andhra Pradesh: Infrastructure Mission

Since the 1950s, the Taiwanese economy has grown rapidly at an average rate of 7.3 percent per annum (1952-2012), starting from an agrarian economy to become a world player in the ICT (information and communications technology) sector. Industrial policy and its thrust on liberalisation and globalisation have played an important role in the economy's rapid growth. The industrial sector has undergone a revolutionary change since the 1950's. The

and Jurong, to cater to various services including freight forwarding, consolidation of goods, value – added re exports among others. Today, Singapore has the world's busiest transhipment hub, handling 32.6 million TEUs of containers in 2013 and has been ranked the world's busiest port in terms of shipping tonnage.

21

Exhibit 9: Industrial Innovation in Taiwan – Asia's Silicon Island

Industrial transi on from labour intensive to technology driven value added products

Infrastructure Development for Port led Logistics and Corridor Based Manufacturing

29

Ministry of Economic Affairs has played a key role in transforming Taiwan from being an agro exporter o f r i c e , s u g a r a n d b a n a n a s t h e t o p I CT manufacturer in the world. Below is a snapshot of the policies and the shift in the activities undertaken by the export promotion zones (EPZs) to industrialise the economy. The gradual shift over more than five decades has made the ICT sector as the most important component of Taiwan's manufacturing sector. The

bottleneck as the value-added as a percentage of final output value declined from 33.33 percent in 2003 to 29.20 percent in 2011. To boost the ICT sector further and for it to continue playing an important role in the industrial space, the government has developed six industrial innovation corridors that brings together the science parks, export promotion zones and the technology research institutes. These corridors focus on research and development of defence, agricultural biotechnology, software and aviation sectors.

Sunrise State of Andhra Pradesh: Infrastructure Mission

22

Core Sectors for Port Led Development: Logistics Hubs

Exhibit 11: Phased Strategy for Infrastructure Development

Exhibit 10: Integrated Approach towards Port Led Development Enhance manufacturing ac vi es catering to domes c and global demand

Industrial Corridors and Zones

Short Term

Mul -modal transport and support infrastructure

India’s gateway to the world especially East and South-East Asian Regions

Seamless and cost-effec ve connec vity for movement of cargo

Roads

Industrial Development

Industrial Corridors

Ÿ Optimising and

Ÿ Prioritise lane

Ÿ Build upon existing

Ÿ Industrial Nodes be

expanding of existing port capacity

to capitalise on capacity constraints of major ports along the east coast

draft ports to handle capesize vessels along the East Coast Ÿ Enhance port

connectivity to existing ports to be enhanced

Strategic Location of Andhra Pradesh Long Term

Port Led development: Capacity expansion of exis ng ports. Proposed development for 11 greenfield ports. Ports to act as pivot for industrial growth through integra on between infrastr ucture and industry.

Develop 3 mega ci es, 14 smart ci es across the State. The three mega ci es would be developed in Visakhapatnam, Vijayawada and Tirupa .

Airport Development – Up grada on of exis ng four airports to interna onal standards and addi on of 7 Greenfield nofrills airports. Development of MRO industry

ports to meet demand from industrial corridors

LNG terminals and Piped Gas Network connec ng all districts

multimodal connectivity and supply chain/logistics infrastructure Ÿ Lead containerisation

trend through improved supplychain and cargo agglomeration Ÿ Development of bulk

World Class Ins tu ons to provide for educated and skilled workforce

Two Industrial Corridors to trigger enormous growth in manufacturing output- Vizag Chennai Industrial Corridor (VCIC) and the Chennai Bangalore Industrial Corridor (CBIC). Four industrial nodes iden fied along VCIC at Visakhapatnam, Kakinada, Machilipatnam and Tirupa -Srikalahas and three industrial nodes iden fied along CBIC at Hindupur, Chi oo and Krishnapatnam.

23

Sunrise State of Andhra Pradesh: Infrastructure Mission

highways to national highways

connectivity to ports and industrial hubs

encourage industries specific to each region

linked with the nearby industrial cluster Ÿ Connectivity between

Industrial nodes and ports to be enhanced

Ÿ Focus on export led

growth Ÿ Develop trade and

Ÿ Integrate road

network with rail and shipping for a multi modal transit system

Ÿ Four/two lane

efficient hinterland connectivity to utilise the port development to its full potential

logistics centre to facilitate global trade

Ÿ Build upon high and

Ÿ Regions between the

large growth industries an create large scale employment

industrial clusters to be developed and nodes to become key growth drivers

Ÿ Development of

Andhra Pradesh Petroleum, Chemicals & Petrochemicals Investment Region (AP PCPIR) manufacturing and service facili es for domes c and export led produc on in petroleum, chemicals & petrochemicals.

Capital City- Development of a world class capital city in the Vijaywada, Guntur region with strong connec vity to the Rayalaseema

Ÿ Development of new

region specific industries Ÿ Agglomerate and

Ÿ Upgrade state

Ÿ Improve last mile Ÿ Capitalise on deep

Special Investment Regions (SIRs) - Promote development of Special Investment Regions which will a ract investment in the State and emergence of clusters with MSMEs

expansion of roads with high vehicular traffic

Ÿ Existing Minor ports

Facilitate development of Port linked Industries such as ship building, POL, refineries etc.

Ports

Ports

Ÿ four/six lane

connectivity from district headquarters to the State capital

Ÿ Build upon

opportunities created by global trade

Ÿ Village connectivity

through up gradation and new roads Ÿ Increased road

density of s and national highways

cargo ports to meet increased energy demands

Cross road of two major na onal highways. Towards providing World Class roads and last mile connec vity

Ÿ Development of

Coastal shipping Inland Waterways – Development of Na onal 8 4 as a mul modal transport system Waterway stretching between Srikakulum to Puducherry.

29

Sunrise State of Andhra Pradesh: Infrastructure Mission

24

Thrust Sectors

Exhibit 11: Phased Strategy for Infrastructure Development (continued...)

Short Term

Power

Gas Pipeline and Grids

Inland Waterway

Ÿ Reduction of

Ÿ Development of

Ÿ Upgrade NW 5

AT&C losses Ÿ 24x7 power to

industries, commercial and domestic utilities

LNG terminals and setting the foundation for transforming AP into a hub for Natural Gas

in and around industrial clusters Ÿ Improve

connectivity to roads and ports

Airports

Ÿ Expansion and

Railways

Ÿ Developing a

up-gradation of operational airports to meet demand from industrial development

addition through purchases Ÿ Augment power

demand through renewable sources Ÿ Up-gradation

Sector Power

multi-modal logistics hub i industrial clusters and nodes Ÿ

Ÿ Expedite setting Ÿ Capacity

Exhibit 12: Summary of Targets

up of gas pipelines connecting every district Ÿ Provide gas to

major industrial zones and cluster

Doubling and electrification of existing capacity as a short & medium term measure to enhance rail capacity

Ÿ Capacity

Addition through expansion of existing plant Ÿ Increase supply

of power to agriculture and feeder segregation Ÿ Strengthening

and expansion of transmission and distribution

Roads

Ÿ Set up of more

LNG terminals

25

Ÿ Develop the

entire stretch of NW 5

Ÿ Development of

Ÿ Increase the

green field airports

overall rail density in the region by augmenting capacity

Ÿ Develop AP as a

hub for Natural Gas. Ÿ Connect every

industry, domestic households, and commercial establishment with pipes gas network in the state.

Ÿ Network to meet

increased power consumption

Ports

Gas

and strengthening of key Transmission and Distribution corridors Long Term

Airports

Ÿ Gas pipelines to

connect AP with the rest of Indiaal highways

Sunrise State of Andhra Pradesh: Infrastructure Mission

Ÿ Enable industrial

development of the hinterland by providing IWT as an alternate to surface connectivity for logistics

Ÿ Develop AP as a

MRO hub in India Ÿ

Telecommunica on

Develop new railway lines and expand capacity of existing railway lines connecting to gateways – ports & airports to enhance cargo transportation by rail.

29

Railways

Inland waterways

Targets · Installed capacity of over 42,000 MW · Per capita electricity consump on to exceed 4500 units · Renewable energy capacity addi on of over 9000 MW · Reduc on of T&D losses to below 5% · 3 World-class Interna onal airports at Visakhapatnam, Vijayawada and Tirupa · 12 out of 13 districts of the state will have an Airport upon comple on of the envisaged plan (except Srikakulam District) · Andhra Pradesh to be developed into a MRO hub in India · Ports to handle cargo throughput of over 1000 MT a year · 18 ports to be opera onal (6 currently opera onal. 6 under development, 6 iden fied) · Andhra Pradesh to develop into a hub for ship building and repairs · Andhra Pradesh to become a gateways to import gas in the country · Piped gas for every industry, commercial opera on and domes c consump on in every district · Road density of 1.42 km per sq km · Four/six lane connec vity from district headquarters to the State capital · Road connec vity to every village, with paved all weather roads · Beach Road from Ichchapuram to Tada · Connec on on demand with a bandwidth of at le ast 10 Mbps through “Aerial Fibre Network” · Broadband connec vity to over 1.2 crore households · Tele-density of over 100% · Develop new railway lines and expand capacity of exis ng railway lines connec ng to gateways – ports & airports to enhance cargo transporta on by rail. Development of NW 4 as a major transporta on route for transport of cargo

Sunrise State of Andhra Pradesh: Infrastructure Mission

26

Sector Snapshots

Target The Mission envisages achieving the following targets:

Roads Road infrastructure comprises the National Highways, State Highways, Major District Roads, Panchayat Roads and Other Roads like project roads. Road network provides the arterial network to facilitate trade, transport, social integration and economic development. Andhra Pradesh has a total road length of about 1,23,334 km that crisscross the length and breadth of the State. The NH-5 with a length of about 1,000 km is the key highway in the State that runs parallel to the State coast

Road Category Na onal Highways cons tute State Highways cons tute Major District Roads cons tute Rural Roads

Ÿ

Increase the average road density across all road types above the national average and be among the top three States in the country

Ÿ

Modernise State Highways and conversion of other highways to two lane roads with paved shoulders

Ÿ

Provide ring road and radial roads in the new Capital City Region

Head

India

Road Density (km of road length per 100 sq. km.) Road Density (km of road length per 1000 popula on) Area density gap Popula on density gap

143 3.9

Andhra Pradesh

Gangavaram – Krishnapatnam.

Andhra Pradesh has the second longest coastline in India, covering a length of over 974 km stretching between Srikakulam and Nellore with deep draft coastal waters. A network of 14 notified non-major ports and one major port provides strong potential for the State to become India's gateway to the world, especially the Asian and South East Asian region. Andhra Pradesh has the unique advantage of having three deep draft ports – Visakhapatnam, Gangavaram and Krishnapatnam that is a critical enabler for attracting bulk cargo from East and South East Asian economies.

The Government has also encouraged private participation for port development. Currently there are six ports in the State that are operational and several others under various stages of development.

Operational and Upcoming Ports

To reap the potential benefits and position of Andhra Pradesh as the India's Gateway to the World, the Government is integrating the development of ports, industrial clusters and ,hinterland and efficient evacuation systems through road, rail, inland and coastal waterways under the Sagarmala Project of the Government of India. The project is aimed at making ports as the drivers of economic activity in coastal areas. The first phase of the project includes development of stretch comprising Visakhapatnam - Kakinada –

Length (km) 4,302 7,255 19,783 91,994

Ports

Source: Based on data available in AP Socio-economic Survey 2012-13 and B a s i c R o a d Statistics of India, MORTH 2012, GOI.

77 2.5 ~ 1,05,800 ~ 68,500 Cargo Handled by Ports in Andhra Pradesh

Non Major Ports

80

Ÿ

In terms of either area density (roads per 100 square kilometres of area), or population density (roads per 1000 population), it is clear that there is a significant gap in total road availability. This indicates an asset creation requirement of around 68,459 km, even to reach parity with the national average on kilometre per 1000 people basis.

Ÿ

Provide four/six lane connectivity from district headquarters to the new Capital City

Ÿ

Provide adequate road capacity to support the planned logistics hubs and Industrial Corridors (VCIC and CBIC)

Ÿ

Improve village connectivity by developing the required roads and improving the existing roads

27

Sunrise State of Andhra Pradesh: Infrastructure Mission

Provide four/two lane efficient hinterland connectivity to utilize the port development to its full potential

29

60

40 Million Tonnes

connecting the Northern and Southern Districts. It also forms part of Asian Highways AH-45 which comes under the Asian Highways Network.

20

0 2007

2008

2009

2010

2011

2012

2013

Source: Indian Ports Association

Sunrise State of Andhra Pradesh: Infrastructure Mission

28

Cargo Movement In 2013-14, the ports in Andhra Pradesh handled over 12.25% (117MT) of the total cargo moved through sea in India. Vishakhapatnam Port accounted for 59 MT, while the non-major ports accounted for over 58.94 MT of the total cargo movement. Andhra Pradesh is the second largest handler of cargo through non major ports in the country and Vishakhapatnam Port is the fourth largest major port in the country in terms of cargo handled. The current capacity of the operational ports in the state is over 180 MT with traffic of around 120 MT.

Demand Drivers

Economy and Cargo Movement The Planning Commission of India has estimated the elasticity between Gross Domestic Product (independent variable) and the total cargo (dependent variable) for data between 2001-02 and 2010-11 at 1.21. An elasticity of 1.2, indicates that for a 1% increase in GDP (factor cost at constant prices), the total cargo increases by 1.2%. Based on the elasticity of 1.2, the traffic projections for the year 2023-24 are estimated to range between 290 MT and 450 MT.

Petroleum Products

Oil consump on in India is expected to increase from 3.68 million barrels per day (bpd) in 2012 to 5.19 million bpd in 2025. Dependence on imports is expected to increase with ports as the entry points. Furthermore coastal movement of petroleum products is expected to increase with increased demand and development of refineries along the coastline.

Coal

Increased gap between demand and indigenous availability is projected to be more than 200 MT by 2016-17 and to further increase to 423 MT by the end of 2022-23.

Iron Ore

Increase in the export of iron ore and pellet traffic.

Fertilizers

Of the total demand for fer lizers in the country, about 38% of the total fer lizer consump on is met through imports. Total demand for fer lizers (products and nutrients) is expected to increase from the current demand of 96 MT to over 140 MT by 2024-25 resul ng in greater imports.

Containers

Increasing share of Containeriza on- Share of container cargo in total other cargo ( other than POL, Iron ore & pellets, Coal and Fer lizer) has increased from 44.59% in 2001 -02 to 54.2% in 2013-14.Container traffic would account for over 850 MT by 2023 -24 compared to about 200 MT in 2013-14.

Growth Scenario and Elasticity

GSDP Growth Cargo Growth

8% 9.68%

10% 12.12%

12% 14.52%

Cargo Movement Estimated for Ports in Andhra Pradesh GSDP @ 8%

GSDP @ 10%

Potential for Ports in Andhra Pradesh Endowed with a strong industrial base, coupled with natural endowments of mineral reserves the potential for a port lead development is certain. With the establishment of a network of ports and land transport, Andhra Pradesh would serve as the gateway to Eastern and Central India.

GSDP @ 12%

1200

1031

Million Tonnes

1000

800

733

600

517

370

400

297 Ÿ

200

117 0

Ÿ 2013

29

- 14

Sunrise State of Andhra Pradesh: Infrastructure Mission

2023

- 24

2029

Ÿ

Expansion of existing deep draft ports into mega container terminals with the ability to handle ships of over 12,000 TEU

Ÿ

Develop multimodal connectivity and supply chain andlogistics infrastructure for efficient usage

Ÿ

Containerisation through improved supplychain efficiency and cargo agglomeration

Ÿ

Balance the mix of exports and imports in the container trade

Ÿ

Develop of need-based new bulk cargo ports at different locations, especially to cater to the demand from VCIC and BCIC

However, for a port led development of the State, it is essential that; Ÿ

457

increasing power demands of the state and neighbouring states

- 30

29

Last mile connectivity through road and rail and other supporting infrastructure is available for the movement of cargo to and from ports Capture traffic from neighbouring ports and Eastern and Central India Capacity creation and prioritising energy cargo (Thermal coal, LNG) movement to meet the

Sunrise State of Andhra Pradesh: Infrastructure Mission

30

Expansion Plans for Existing Airports For increased air connectivity and passenger traffic in the State, the government has proposed for expansion of existing airports and development of greenfield airports in the state. The proposed development plan aims at not only increasing passenger growth, but as a result seeks to create direct and indirect employment opportunities for millions in the State.

Airports There are six operational airports in the State, of which five are managed and operated by the Airport Authority of India and one managed by a private spiritual trust. Of these, four are currently operational for commercial traffic. The State has one international airport located at Vishakhapatnam and three domestic airports located at Rajamundry, Vijayawada and Tirupati. The erstwhile State of Andhra Pradesh accounted for over 6% of the total passenger movement in the country with Hyderabad airport accounting for 8 0 % o f t h e s t a t e's t r a f fi c . H o w e v e r, t h e reorganisation of the State in 2014 has resulted in considerable imbalance in the air connectivity of the new Andhra Pradesh.

Sectoral Plan

Currently, Visakhapatnam airport is the largest airport in the state and handles over 60% of the domestic traffic of the state and also the only airport which handles cargo traffic. The total passenger traffic in the state stood at 1.48 million

Ÿ

Green Field International Aerotropolis near Visakhapatnam

Ÿ

Modernization & upgradation of 5 existing airports (Vijayawada, Tirupati, Rajahmundry, Kadapa, Puttaparthi)

Ÿ

Ÿ

5 Green Field No Frills Airports (Kuppam, Dagadarthi, Oravakallu, Ongoleand Tadepallegudem) 2 Brown Field No Frills Airports (Donakonda, NagarjunaSagar)

Energy a. Power Sector The power sector is one of the most critical components of infrastructure impacting economic growth and well being of any developing economy. An efficient and financially healthy power sector is critical for growth and poverty reduction. Andhra Pradesh currently has an energy requirement of 54,800 MU (Million Units) of electricity annually with an annual peak load of over 6500 MW. However, to meet the additional two

Total Connections in Andhra Pradesh in 2013-14: 15 million

1% 7%

10% 1%

Visakhapatnam

Status

Opera onal

Type

Peak Hour (Passengers)

Aircraft Movement

Customs

300 (Int'l)

1120 (Int'l)

Passenger Traffic (in Lacs) 0.72 (Int'l)

9888(Dom) 2970

9.4 (Dom) 2.72

Tirupa

Opera onal

Domes c

400 (Dom) 300

Vijayawada

Opera onal

Domes c

90

4280

1.94

Rajahmundry

Opera onal

Domes c

225

7492

1.12

Kadapa

Non Opera onal Opera onal

Domes c

100

-

-

Pu aparthi

Private

-

-

-

Power in the State is supplied through a mix of conventional and renewable sources. The total installed capacity in the state stands at over 10,600 MW.

Total Installed Capacity of Andhra Pradesh as on 2014-15: 10,628 MW

1668.6

Air Traffic in Andhra Pradesh 2013-14 Airport

hours of power supply to agriculture, the total energy requirement stands at 56,535 MU. The per capita consumption of electricity in the state is over 1,050 units a year. Two distribution utilities in the state supply power to over 15 million consumers through transmission and distribution network of over 50,600 ctk km spread across the State.

2810

2766.7 1747.6 81%

Source: Airport Authority of India

1633.22 2

Domestic

State Thermal

Commercial

State Hydel

Industrial

State Renewable

Agriculture

Central Generating Stations

Others

IPPs

in 2013-14. This comprises of 1.21 % of the total domestic passenger traffic and 0.15% of the total international traffic in the country.

31

Sunrise State of Andhra Pradesh: Infrastructure Mission

Ÿ

Establishment of an Aviation Academy and develop Andhra Pradesh as an MRO hub for India by setting up maintenance Repair and Overhaul (MRO) facilities in Visakhapatnam

29

Renewables

Sunrise State of Andhra Pradesh: Infrastructure Mission

32

Power Sector and the Economy It is estimated that the elasticity between GDP growth and power sector growth in the country ranges between 0.8 and 0.9. Assuming similar relation between the GSDP of the State and the power sector growth, it implies that the power sector would have to grow between 8% and 9% if the GSDP grows at 10% per annum. Assuming a continued GSDP growth between 8% and 12% for the State, the demand for electricity in the state is expected to range between 95 BU to 124 BU by 2022-23 or would require an installed capacity of around 25,000 MW. This would translate into a per capita consumption of ranging between 1,766 units to 2,299 units during the same time period.

1. Reliable 24X7 supply to the consumers (except agriculture) in a phased manner within a period of three years. 2. Increase duration of supply of electricity to agriculture consumers from seven hours per day at present to nine hours per day in a phased manner 3. All unconnected households to be provided access to electricity in a time bound manner by FY 2016-17 4. Ensure adequate capacity addition planning & tie ups for power from various sources at affordable price to meet the

Projected Per Capita Power Consumption and Demand for Power GSDP @ 8%

GSDP @ 10%

GSDP @ 12%

Present Demand

250000

4496

3500

3517 2739

2299 2017 1766

2500 1083

Million Units

Units Per Capita

4500

500

Power Genera uon 31.02% Others 2.10%

Non Energy Process, 13.78 Bn CM

Fer liser Industry 32.56%

Petrochemicals 4.11% Cap ve Use/LPG 13.96% Domes c Fuel 8.60%

Industrial Fuel Tea Planta on3.17%

Others 3.90%

0.58%

indicate existence of large unexplored resources in the Pranahita-Godavari and Kadapa basin with an estimated 39,000 sq. km. of potential area. Although the availability of gas has been explored around the State, the supply of the natural gas has not been able to meet the growing requirements.

GSDP @ 12%

255496

200000

199841

150000

124625

100000

109320

50000

95685

54864

155672

Demand Drivers for Gas Based Power Plants

0

2014-15

2022-23

2029-30

The demand for power in the State is expected to be driven mainly through industrial users coupled with increased demand from domestic consumers resulting from increased disposable income and rural electrification. Way Forward To meet the power requirement of the State, Government of Andhra Pradesh and Government of India have taken a joint initiative to provide uninterrupted 24x7 power supply to the State of Andhra Pradesh(except agriculture consumers). This mainly includes the following:

33

GSDP @ 10%

Andhra Pradesh has an estimated onshore balance recoverable reserve of about 48.2 BCM of Natural Gas and the offshore reserve along the East Coast of India, which comprise mainly around Andhra Pradesh stands at over 531.4 BCM. The state has tremendous natural gas wealth in the KG basin both on and off-shore, which stretches to over 50,000 sq. km. of potential area, studies also

Industry wise off take of Natural Gas in India (2013-14)

300000

5500

1500

GSDP @ 8%

b. Gas The total Natural Gas consumption in India was around 34 Billion Cubic Meter (BCM) for the year 2013-14, while the erstwhile state of Andhra Pradesh consumed about 1.16 BCM of natural Gas during the same year. The fertilizer sector accounted for the largest share in consumption in the country at over 32.5 % followed by the power sector with over 31% of the total consumption. This is mainly due the limited availability of natural gas in the country and provision for priority allocation of natural gas for fertiliser sector.

Sunrise State of Andhra Pradesh: Infrastructure Mission

2014-15

2022-23

2029-30

projected increase in power demand in the future. 5. Strengthen the Transmission and Distribution network to cater to the expected growth in demand of existing as well as forthcoming consumers. 6. Monitoring the timely commissioning of various generating plants, transmission and distribution infrastructure to meet the expected growth in demand.

29

Power Sector

Over 3,790 MW of gas based power plants proposed for development in the future and exis ng power plants.

Fertilizer Sector

A major consumer of natural gas is the fer lizer sector. The Government of India accords the highest priority for the fer lizer sector when it comes to the alloca on/supply of natural gas.

Industrial and CGD Sector

CNG sale for automobiles, piped natural gas for households and commercial establishments and industrial customers are expected to drive up demand for natural gas in the State.

Refineries Sector

The refinery sector is also a major consumer of natural gas in the state. Over 30 MTPA addi onal refinery capaci y is planned in the Kakinada and Vizag region.

Switching Demand

The switching demand arises from automobiles segment, households and commercial establishments - switching from alternate fuels such as LPG, Diesel and Petrol to CNG .

Sunrise State of Andhra Pradesh: Infrastructure Mission

34

Inland Waterways Inland Waterways is the cheapest mode of surface transport. The cost of moving one tone of cargo through inland water transport is barely 50 paise/km in comparison to Re 1/km by railways and Rs 1.5/km through roads. It also has the advantage of low capital cost and low maintenance cost. Given that India has one of the highest logistics cost as percentage of output (~ 15% of GDP), usage of inland waterways as a key logistics channel can provide significant cost savings at relatively lower investment. Andhra Pradesh is bestowed with two major rivers – Krishna and Godavari that can be developed into waterways for speedy and cost effective movement of goods and passenger traffic. The National Waterways – 4 is designed to leverage this advantage to provide a reliable and cost optimal logistics channel spanning three states (Andhra Pradesh, Tamil Nadu and Puducherry)

NW – 4 runs through urban and rural centres including Vijayawad, Rajahmundry, Kakinada, Eluru, Bhadrachalam, Wazirabad and Chennai and therefore serves as a vital link between the urban areas and rural hinterland. NW-4 is connected to the most number of ports in the country compared to other national waterways. These include Kakinada, Krishnapatnam, Ennore and Chennai ports and would facilitate cargo movement and promote trade in the region. The development of this waterway will provide social benefits such as employment generation, reduction in pollution, providing port- hinterland connectivity, reduction in road maintenance and road accidents, increase in economic activities etc. Given that the overall project cost is estimated at about INR 3,426 crore, the segment of the facility within Andhra Pradesh (888 km) is estimated to cost INR. 2,800 crore . Terminals Proposed: Ÿ Kakinada

I.Target The National Waterways - 4 (NW -4) from Kakinada to Puducherry Canal System along with River Godavari and River Krishna is the second longest NW with a length of 1,078 kms after the NW 1. The NW 4 comprises of the following:

Ÿ

Rajahmundry

Ÿ

Eluru

Ÿ

Kottapatnam

Ÿ

Maipadu

Ÿ

Durgarajupatnam

Ÿ

Vijayawada

Ÿ

Tadepaligudam

Logistics There is a clear symbiotic relationship between efficient transportation and logistics systems and industrial growth. Growth of the logistics sector has an elasticity of 1 to 1.2 on output. Given that the Government of Andhra Pradesh envisages industrial growth as a key driver of GDP growth in the State especially during the 2015–2029 period high quality logistics infrastructure is imperative for effective implementation of Vision 2029. The State already has good rail and road linkages to North, South, West and East. It also has a long coastline and a planned parallel inland waterway network. It has natural advantages such as a long coastline and deep drafts to enable ports which can provide linkages to major markets. Direct shipping from South East Asian economies to ports in the States compared to West Coast will save transit time of around 2–3 days. Additionally, accelerated industrialisation in the region, cargo agglomeration from distant hinterlands and increased connectivity through the envisaged industrial corridors creates a large window of opportunity for logistics. The logistics sector theme is essentially an interplay of the other infrastructure components of roads, rail, ports, airports, inland waterways and industrial corridors, which are efficiently integrated with the objective of reducing the total cost of transportation to enhance competitiveness.

Stretch

Km

Godavari river from Bhadrachalam to Rajahmundry Krishna river from Wazirabad to Vijayawada Kakinada canal from Kakinada to Rajahmundry Eluru canal from Rajahmundry to Vijayawada Commamur canal from Vijayawada to Peddaganjam lock North Buckingham canal in A.P. upto Tada

171 157 50 139 113 258

The NTDPC Report 2014 projects total infrastructure investment to the tune of INR 40 trillion in the 12th plan, and INR 70 trillion, INR 100 trillion and INR 155 trillion in the 13th, 14th and 15th Plan periods respectively. Further it suggests that total investment in transport will need to increase to about 3.3% of the GDP in the 12th plan, and increase to 3.7% of the GDP subsequently. I.Target Andhra Pradesh seeks to emerge as the Logistics Hub of the East Coast in the South Asian region, by efficient integration of multi modal transportation networks, with the objective of optimizing total cost

35

Sunrise State of Andhra Pradesh: Infrastructure Mission

29

of logistics. The following targets are envisaged: Ÿ

Creation of multi-modal transport and logistics infrastructure

Ÿ

Reduction in the cost of logistic as percentage of output comparable to the best performing states in the region

Ÿ

Creation of an information system integrating multiple players in the logistics value chain across sectors for efficient coordination. This will be set up for the two industrial corridor planned in the State

Industrial Corridors Contribution of the manufacturing sector to the State's GDP is currently around 10%. This is lower than the national average of 15%. Globally, there is evidence of Corridor based development strategies increasing business competitiveness and attracting investments. Hence, in order to bring about all round development of the industrial sector, the Government of Andhra Pradesh will lay thrust on development of industrial corridors in the State. Andhra Pradesh is at the pivot of two major industrial corridors – the Vizag Chennai Industrial Corridor, and the Chennai Bengaluru Industrial Corridor. Target The Vizag Chennai Industrial Corridor (VCIC) will be India's first Coastal industrial Corridor and serve as a 'Gateway to East.' The Vizag – Chennai Industrial Corridor is a part of the larger East Coast Economic Corridor that is proposed to run from Chennai to Kolkata. The corridor covers an area of about 1,14,765 sq. km., and will pass through 11 districts across two states – 9 in Andhra Pradesh and 2 in Tamil Nadu. It will house 3 major ports and several non-major ports. The project is expected to create more than 50,000 jobs, both directly and indirectly, in the first phase alone. The corridor is expected to enhance the manufacturing output in the region of INR 3,000 billion by 2025, and INR 7,825 billon by

Sunrise State of Andhra Pradesh: Infrastructure Mission

36

2035. VCIC would host industries across a number of sectors, including food processing, textiles, m e t a l l u r g y, c h e m i c a l s , p h a r m a c e u t i c a l s , electronics and automotive, to leverage the factor advantage of its various catchments. At present four nodes have been identified in the Corridor: 1.Atchutapuram node – Visakhapatnam District

Railways

Grids

Andhra Pradesh has a total rail network of 2,660 km with a rail density of 16.59 km of rail route per 1000 kilometers compared to the national average of 20. In terms of rail route per 1000 population, the State's rail density is about 0.0538 which is close to the national average. 0.0533. The Mission would coordinate with the Government of India for identification and construction of new rail lines in the State.

The Government of Andhra Pradesh has launched five grids for water, power, gas, optic fibre and roads to improve the access and availability of these services across the State.

2.Kakinada – East Godavari District 3.Gannavaram – Kankipadu Krishna District 4.Yerpedu – Srikalahasti – Chittoor District

Targets: Ÿ Doubling and electrification of existing capacity to enhance rail capacity in the region Ÿ

The Chennai Bengaluru Industrial Corridor (CBIC) covers an area of ~ 80,359 sq. km, and a population of over 47.5 mn. Three of the eight nodes identified in CBIC are in Andhra Pradesh – Krishnapatnam, Hindupur and Chittor. In Phase I of the project, the Krishnapatnam node will be developed. Japan Investment Corporation Agency (JICA) is supporting the Government of Andhra Pradesh by funding the master planning and development of the Krishnapatnam node. About 4,801 ha of land is planned to be developed in this node. Krishnapatnam has strong presence of food processing, metallurgy, electrical equipment, chemicals and petrochemicals, textiles and pharmaceuticals. The CBIC corridor will help in the promotion of automobiles, machinery, electronics and medical equipment in this node. Development of these Corridors will entail creation of high quality trunk infrastructure across transport (road, rail), power, water and communication networks. Most of projects require substantial capital expenditure and an active facilitation by the State, Central and Local Government. The Mission would encourage private sector involvement in these projects wherever possible.

37

Sunrise State of Andhra Pradesh: Infrastructure Mission

Develop new railway lines and expand capacity of existing railway lines connecting to gateways – ports & airports to enhance cargo transportation by rail.

Ÿ

Increase modal shift of cargo transportation from roads to rail over medium and long term

Ÿ

Developing a multi-modal logistics hub in the region shall act as a contributing factor for growth of cargo movement by rail.

Ÿ

Assess feasibility of development of various upcoming projects due to external factors such as land availability, soil erosion, environment pollution, etc.

A total length of 3,301 kms. has been planned in the State (including new lines and doubling) by the Ministry of Railways of which about 2,100 is entirely within the State.

1. Water Grid The Government of Andhra Pradesh is committed to provide assured water supply to its people for drinking, irrigation and industrial use. The State needs 156 tmcft of water to cater to the drinking water needs of people in 13 districts and also meet the requirements of commercial and industrial consumers. Of the total 156 tmcft water, 20 tmcft is for industries and 136 tmcft is for domestic sector drinking purposes. In order to ensure this, the Government is in the process of setting up a Water Grid Corporation (WGC) that would oversee the development of a state-wide smart water grid. The WGC would also monitor, supply and maintain the water grid. The mega grid would be built at a cost of about Rs. 40,000 crore would have about four or five sub grids. About 156 tmcft of water would be drawn from Godavari, Krishna, Penna and other sub-rivers in the states by reserving river water which flows into the ocean. Separate pipelines would be constructed for industrial, irrigation and drinking purpose requirements. Project Components:

29

Ÿ

4-5 sub grids

Ÿ

New storage reservoirs

Ÿ

Intake points, pumping stations and laying of pipeline

Ÿ

Capital improvements to existing storage and transmission infrastructure

Project Funding: Ÿ

50% of the project cost would be funded by Government of Andhra Pradesh

Ÿ

Remaining 50% to be funded through external sources

Project Outcomes: Ÿ Assured round the year water supply to all areas in the State for drinking, irrigation and industrial purposes Ÿ

Make Rayalaseema drought free by effective channnelisation of flood water

Timeline Ÿ Supply of water to select towns and villages in next two years Ÿ

Overall project completion by 2019

Sunrise State of Andhra Pradesh: Infrastructure Mission

38

2. Gas Grid To contribute towards economic growth and efficient energy distribution, a state wide Gas Grid is being developed. The Gas Grid consists of a State wide Natural Gas Pipeline Grid and City Gas Distribution system. The Gas Grid would provide natural gas through a network of pipelines to industrial, transport commercial and domestic sectors and thereby encouraging major indigenous and global players of the Industry. Through the gas grid, the KG-basin and other gas resources would be brought to "every industry and every household.

Ÿ

Ÿ

Ÿ

AP Natural Gas Grid: East-West Pipeline: East-West Pipeline is starts from Gadimaga on the East coast of Andhra Pradesh near Kakinada and terminates at Baruch in the State of Gujarat. The source for this pipeline is D6 in KG basin in the East Coast and it traverses through East Godavari, West Godavari, Krishna and Nalgonda in Andhra Pradesh. Ÿ

Ÿ

39

Ÿ

Mallavaram-Bhilvara-Bhaopal-Vijaypur Pipeline: This 1,440 kms pipeline will pass through East-Gadavari and Krishna in Andhra Pradesh, Khammam, Warangal and Ramagundam in Telangana before reaching to Bhopal and Vijaypur. Kakinada-Srikakulam Pipeline: This pipeline would traverse through East Godavari, Visakhapatnam, Srikakulam and Vizianagaram Districts of Andhra Pradesh and has a length of 275 kms.

Sunrise State of Andhra Pradesh: Infrastructure Mission

Ÿ

Ennore – Nellore Pipeline: This 200 kms long proposed pipeline would traverse through Tiruvallur district in Tamil Nadu, Chittoor district and Sri Potti Sriramulu Nellore district in Andhra Pradesh. K.G. Basin Pipeline Network (GAIL): The pipeline network covers East, West and Krishna District in Andhra Pradesh and has a length of about 800 kms from K.G. Basin (onshore gas fields of ONGC) to cater to the industrial needs in the three districts of Andhra Pradesh. Vijayawada Nellore Pipeline: This pipeline bridges the gap between KSPL and ENPL and will cover the entire East Coast of Andhra Pradesh. This proposed pipeline would traverse through Sri Potti Sriramulu Dist., Prakasam, Guntur and Krishna Districts with a length of about 350 kms. Tumkur to Nellore Natural Gas Pipeline: The pipeline will cover Anantapur, Kurnool, YSR Kadapa and Nellore districts. This will also ensure the availability of gas to Andhra Pradesh from Dhabol LNG Terminal of GAIL through Dhabol-Bangalore Natural Gas Pipeline as an alternative source and also form a local gas grid covering Karnataka, Andhra Pradesh and Telangana

3. Optic Fibre Grid

Ÿ

Redesigning the service delivery infrastructure

The Government of Andhra Pradesh has pioneered the usage of information technology for good governance in the country. The Government has identified e-governance and provision of access to information technology to its citizens as a key to inclusive and sustainable development of the State. The Gover nment of A ndhr a Pr ades h has envisioned 'Digital Andhra Pradesh' that is aimed at bridging the digital divide, and enabling skill development, to increase economic growth of the State. The Government has targeted to make Andhra Pradesh as one of the top three states in the country in the Information Technology (IT) and electronics sector.

Ÿ

Take Fibre to Village initiative

In its endeavour to make people a part in the overall development process and enhance the quality of delivery of public services the government has envisioned achieving the following among others through a mission mode: Ÿ

Establish a new State Data Centre

Ÿ

To reach gigabit to all gram panchayats by 2017

Ÿ

Last mile connectivity – all G2C and G2B services to be made available online and on mobile

Under the 'Take Fibre to Village' initiative the Government has fast tracked the development a state wide optic fibre grid that would criss-cross the length and breadth of the State. Project features: Ÿ

One of the longest optic fibre grid in the country with a length of 65,000 km under the National Optic Fibre Network (NOFN) with an end-to-end network right from the State to the gram panchayats

Ÿ

Aims to make available at least 10-15 Mbps broadband connections to the 12 million households in the State at a cost of Rs. 150 per month

Ÿ

On-demand availability of 100 Mbps to one Gbps connection to every business enterprise

Ÿ

The total cost of the project is estimated to be about Rs. 6,000 crore with a capital expenditure of Rs. 3,843 crore and operation cost of Rs. 2,140 crore over the next ten years

Ÿ

PPP/private sector participation to be explored wherever possible

City gas distribution in major cities (municipalities and Class I Cities) of the State to improve PNG and CNG supply for domestic, commercial and industrial use

29

Sunrise State of Andhra Pradesh: Infrastructure Mission

40

4. Roads Grid The Government of Andhra Pradesh is planning to create a Road Grid with the network of R&B /PR roads that would provide smooth access to district headquarters and to the National highways nearby from all parts of the district besides facilitating effective movement of Cargo to and from the sea ports. The Government of Andhra Pradesh is making endeavors to make this road grid a reality within the next 5 years i.e., by 2019. The targets of the Roads grid include the following: Ÿ

Ÿ

41

Connecting all habitations with at least a single lane all weather black topped road with the nearest Mandal headquarters Mandal headquarters in every district to be connected the district headquarters and the nearest National Highways with a properly developed Black topped road of having a minimum of 2 lane carriageway of 7 m width.

Sunrise State of Andhra Pradesh: Infrastructure Mission

Ÿ

Ÿ

Ÿ

Ÿ

All the major National Highways carrying substantial commercial traffic are to be developed as 4 lane divided roads. Separate 2/4 lane roads connecting the villages/ towns/ cities with 4 lane National Highways. Other National Highways are to be developed at least as 2 lane roads with 1.5 m wide paved shoulders on either side (total 10 m width). National Highways to be developed as 4 lane divided roads

In order to bring the long coastline available for Andhra Pradesh to effective use, large scale development of all the sea ports is being planned. To facilitate quick movement of Cargo, all the seaports are to be connected to the nearest 4 lane National Highway with 4 lane divided roads

29

5. Power Grid Andhra Pradesh has total 127.53 lakh households (Rural - 88.59 lakh, Urban - 38.94 lakh), out of which around 5.84 lakh are un-electrified. Other than Households, Andhra Pradesh has 14.54 lakh Agricultural connections and 1.53 lakh industrial consumers. The Government has planned a robust grid for transmission and distribution of power in the State. At present the power grid in the state is manage by APTRANSCO for transmission and by APEPDCL & APSPDCL for distribution. The present transmission infrastructure consists of 6 Nos. of 400 kV Substations, 72 Nos. 220 kV substations, 167 Nos. 132 kV substations and 18,907 Ckm of EHT lines. The Distribution Network consists of 2,524 Nos. of 33/11 kV Substations, 9,264 Nos. of Feeders (Urban - 2,114, Rural/Mixed – 5,375, Dedicated / Express Industrial – 706, Others- 1069) & 5.62 lakh of DTRs in the two DISCOMs. Ÿ

Under the grid the following is planned to be taken up:

Ÿ

Enable supply of excess energy into the grid with the net-metering solar policy

Ÿ

Providing parallel/ alternative sources of power supply

Ÿ

Alternative supply to 33 kV, 11 kV and LT consumers

Ÿ

Laying covered conductors for 33 KV & 11 KV voltage levels

Ÿ

Wedge connectors,

Ÿ

Maintenance free earthing pits,

Ÿ

Installation of substation monitoring software

Ÿ

re-conductoring of existing lines

In addition, for coastal areas prone to cyclones and religious towns, breakdown mitigation activities to prevent outages such as replacement of overheadlines with Under-Ground cables are planned at a total capital expenditure of Rs. 3,019 crore. APTRANSCO has planned 400 kV transmission ring network around the cities of Vijayawada & Guntur with three 400 kV substations and 440 km of Quadmoose transmission lines to improve the reliability of supply and minimize power disruptions with an investment of Rs. 975 crore. The above schemes / initiatives of APDISCOMs / APTRANSCO have been included under the 'Power for All' scheme.

Sunrise State of Andhra Pradesh: Infrastructure Mission

42

Andhra Pradesh Capital City The Government of Andhra Pradesh has proposed to develop a world class capital city in the Vijayawada-Guntur region. The Government has enacted the Andhra Pradesh Capital Region Development Authority Act 2014 for development of the Capital Region.

of approximately 8 sq. km as the first section of the capital city Core Components: Ÿ World's largest Outer Ring Road with 12 lane and a length of about 200 km. at an estimated project cost of USD 5,000 million Ÿ

World class urban infrastructure facilities for solid waste management, water supply, street lighting, storm water drainage, etc.

Ÿ

Four Lane Highway connecting the New Capital Region with the Rayalaseema Region

Geographical Layout: Ÿ The new capital will have a core city with a peripheral capital region Ÿ

Core Region: 125 sq. km.

Ÿ

Capital Region: 7,325 sq. km. within the Vijayawada – Guntur – Tenali – Mangalagiri boundary

43

The Government is in the process of preparing the Capital Region Plan for the Capital Region, a Master Plan for the Capital City and a Seed Development Master Plan for the construction

Sunrise State of Andhra Pradesh: Infrastructure Mission

Andhra Pradesh is recognized for its legendary dynasties, its most revered temples, lacquer toys and beautiful weaves, rich literature and vibrant arts of Kuchipudi dance. The State is home to more than 300 tourist locations including holy pilgrim centres, attractive palaces, museums, ports, rivers, beaches and hill stations. Tourism is a key contributor to the State's economy and Andhra Pradesh ranked 3rd in India in terms of domestic tourist footfalls in 2013.

one crore that is invested in tourism sector creates 475 jobs compared to 126 jobs from manufacturing sector. Realising the potential of the sector, the Government has undertaken integrated development approach for the sector to embolden the State's stature as a major tourism hub in the country. The Government's vision is "To maintain its current position as the most sought-after tourism destination for an authentic, luxurious, and personalized feel and experience of Andhra Pradesh for travelers from all regions.”

According to Government of India estimates, every

Investments: Ÿ USD 30 billion in the next ten years Ÿ

Ÿ

Tourism

Massive potential for Public Private Partnerships

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Sunrise State of Andhra Pradesh: Infrastructure Mission

44

Social Infrastructure The Mission would coordinate with Urban Development Mission and other missions for speedy development of a few signature projects that would enhance the overall quality of life in the State: Signature Tower Ÿ Development of a Signature Tower at Madhurawada with one million sq. ft. of incubation space Convention Centres Ÿ Large Convention Centres with a capacity of 10,000 people to be developed at Visakhapatnam, Viajayawada and Tirupati Ÿ

Vijayawada and Tirupati Ÿ

Minor Sports Stadium in all district headquarters

International Schools Ÿ Establishment of world-class educational institutions at Visakhapatnam, Nellore and Guntur Golf Course Ÿ Development of Golf Courses at Visakhapatnam, Vijayawada and Nellore Healthcare Ÿ Set up a world class healthcare centre and promote medical tourism in the State

Minor Convention Centres with a capacity of 4,000 people to be developed in all district headquarters

Sports Stadium Ÿ Large Sports Stadium at Vishakhapatnam,

45

Sunrise State of Andhra Pradesh: Infrastructure Mission

29

Sunrise State of Andhra Pradesh: Infrastructure Mission

46

Chapter 4

Enablers

Given long gestation periods and lagged realisation of investment for infrastructure, enablers in the form of project implementation, project management, enabling policy and institutional mechanisms would be created to support investment strategies to meet the set targets.

The Mission will have a robust monitoring framework and will track the progress of the projects on a periodic basis. All the line departments and concerned public agencies will be

involved from the project conceptualisation phase f o r i m b i b i n g a c u l t u re o f o w n e r s h i p a n d accountability towards achieving project outcomes.

Exhibit 13: Performance Management and Delivery Unit (PEMANDU) – A Radical and Transformational Approach by Malaysia

Lifecycle Approach towards Infrastructure Development Laying the Foundation for the Sunrise State of Andhra Pradesh Given that infrastructure investments have significant gestation periods and long life cycles,

the returns on investment are realised over an extended period. In order to provide such stability over the life cycle of a project, a holistic approach is required. The Infrastructure Mission will follow an integrated approach across the life cycle of project as illustrated below:

In 2009, the Government of Malaysia integrated the Tenth Plan with two additional components – (1) Economic Transformation Programme and (2) Government Transformation Program. A new methodology of initiating and managing 'labs' was unveiled to serve as a catalyst by working in partnership with the community to ensure continued growth. Since its inception, this lab methodology has spurred economic development and social upliftment. This mechanism came to be known as the Performance Management and Delivery Unit (PEMANDU). Below is a snapshot of

the objectives of this institution, the process adopted and its achievements in last three years. PEMANDU's methodology has gained international recognition with adoption from Tanzania, South Africa and Maharashtra in India. Their India program titled 'Water for All – Drought Free Maharashtra' Lab was conducted from February to June 2014. The lab was estimated to impact 115 million people through thirty two detailed initiatives that were identified and developed by the lab.

Life cycle approach towards implementing infrastructure projects

Op ons Analysis

1

2 3

Project Iden fica on and Priori za on

Need Analysis

Project Scoping

Conceptualisa on

Project Prepara on Project Appraisal and Approval

Studies

DPRs

Project Scoping

Feasibility Report

Project Structuring

EIAs

Evalua on Criteria

Project Award

4 5

6

Value for Money

Mode of Implementa on Bid Documents

Project Implementa on Project Monitoring

29 Bid Process Management

Contract Documenta on

Resource Alloca on & Mi ga on

Monitoring & Evalua on Framework

7

49

Claims Management

Project Closure

Sunrise State of Andhra Pradesh: Infrastructure Mission

Project Closure & Handover Formali es

Exit Strategy and Transfer of Assets

29

Sunrise State of Andhra Pradesh: Infrastructure Mission

50

Across the project life cycle, the Infrastructure Mission will create well defined interventions to: Ÿ

Enhance the operating environment of the sector through policy and regulatory streamlining

Ÿ

Enable better procurement by supporting Departments on the procurement process

Ÿ

Provide optimal structures and risk mitigation support for enhancing project sustainability

Policies Ÿ Formulate the Andhra Pradesh Public Private Partnership Policy including the Swiss Challenge Route to encourage PPPs as a mechanism for creation of Infrastructure Ÿ

Ÿ

Inter departmental coordination for quick turnaround

Ÿ

Monitoring of both processes and outcomes to provide feedback into policies, institutions and processes

The Infrastructure Mission will help enable each of these phases of the life cycle through calibrated interventions in the form of policies, institutions and processes. The Government of Andhra Pradesh under the leadership of the Hon'ble Chief Minister has already undertaken several initiatives towards building an enabling framework for facilitating infrastructure development in the State. The key policy initiatives include formulation of: Ÿ

Industrial Water Policy

Ÿ

Electronics Policy

Ÿ

Innovation and Start-Up Policy

Ÿ

IT Policy

The Government will further strengthen the institutional mechanisms for augmenting and catalysing investments in the infrastructure sectors. The initiatives will address policy and process related issues pertaining to infrastructure development. Some of the proposed interventions to strengthen the ecosystem are:

Ÿ

Sunrise State of Andhra Pradesh: Infrastructure Mission

Formulation of Andhra Pradesh Port Policy and enactment of Andhra Pradesh Maritime Board Act

Ÿ

Enactment of a Special Investment Region Act for development of the industrial corridors

Ÿ

Review of the Cabotage Law to address bottlenecks in cargo movement through ports

Institutions Ÿ Restructuring of the Infrastructure Corporation of Andhra Pradesh (INCAP) along the lines of Gujarat Infrastructure Development Board (GIDB) and Tamil Nadu Infrastructure Development Board (TNIDB) Ÿ

Establishment of the Andhra Pradesh Economic Development Board as the apex board to shape policy issues, undertake overall macroeconomic planning and investment- related aspects

Ÿ

Sector-wise infrastructure development and operations regulators

Ÿ

Long term financing institutions

Ÿ

The Government would set up a land bank with an initial stock of 0.4 million hectares. An appropriate entity shall be established for managing the land bank

Ÿ

Empanelment of consultants for various sectors - Roads, Port, Airports, Railways Power Gas, Urban Infrastructure urban transport, tourism, Water, Environment, Legal, Financial Advisor y, Education, health Infrastructure etc.

Ÿ

Formulation of guidelines for Stakeholder Engagement and Communication for early addressing of issues

Ÿ

A comprehensive capacity building program to train a pool of government officials across line Departments and levels on critical aspects relating to infrastructure projects

Ÿ

Streamlining proposal processing including multi-department projects, setting turnaround times and designing of an online/automated processing system

Ÿ

Development of an IT enabled post award monitoring and governance system for projects across their lifecycle

Processes Ÿ Create a framework for identification, appraisal and prioritisation of a shelf of credible and bankable infrastructure projects Ÿ

51

Promote cargo development through formulation of an integrated industrial policy (industrial and transportation, logistics) and linkages to hinterland

assessment for the identified shelf of projects

A process for undertaking of Value for Money

29

Sunrise State of Andhra Pradesh: Infrastructure Mission

52

Chapter 5

Resources

To meet the investment outlay of INR 12.4 lakh crore, resources beyond available public funding would be required to fund infrastructure investment in the State.

financial support to PPP concessionaires to facilitate design, development and implementation of PPP projects. The nature of support is envisioned to include: Ÿ

In order to achieve ambitious infrastructure development targets set under this Mission, it is estimated that investments to the tune of INR 12.4 l a k h c ro re i s re q u i re d f o r i n f r a s t r u c t u re development between FY 2015 – 2029. This is estimated as investment in core infrastructure and is expected to trigger secondary and ancillary investments in other infrastructure and related services, manifold in value. This investment will be spread across the identified sectors as follows:

non-traditional funding sources that are proposed to be tapped for investment in the Infrastructure Mission projects:

Œ Ÿ Ÿ

Ÿ

Sector Roads Power Ports Rail Telcommunica ons Inland Waterways Water Airports Gas Total

Ÿ

Investment (Rs Cr) 2,69,776 2,69,691 84,000 39,095 2,42,251 2,757 2,82,540 20,184 34,200 12,44,494

Ÿ

Resource Augmentation The quantum of investment envisaged under the Andhra Pradesh Infrastructure Mission is substantial and unprecedented. Given the national and regional macro economic conditions, traditional models of funding alone will not suffice. The following is a list of various traditional and

55

Sunrise State of Andhra Pradesh: Infrastructure Mission

Budgetary Support from the State Government: a.Land Acquisition Fund: A budgetary allocation will be made to meet land acquisition costs for key infrastructure projects. b.Project Development Fund: The Government has identified a total of 122 projects to be implemented in the State as a part of Infrastructure Action Plan. To facilitate the development of these projects, it is proposed to constitute a Project Development Fund with adequate budgetary support. The Project Development Fund shall be utilised to provide financial support for conducting project preparatory studies, obtaining the services of subject matter experts and consultants, preparing project reports (such as Feasibility Studies, Detailed Project R e p o r t s , e t c . ) , a n d c o n d u c t i n g research and knowledge management activities (such as capacity building).

c.Project Investment Fund: Ÿ To facilitate the development of PPP projects envisioned under the Infrastructure Action Plan, it is proposed to constitute a Project Investment Fund. This Fund shall be utilised to provide Ÿ

29

a. Subsidy/capital grant (with appropriate ceilings as per applicable provisions)

Ÿ

b. Equity

Ÿ

c. Loans

Ÿ

d. Government guarantees

Ÿ

e. Annuities

Ÿ

f. Other innovative modes



TNIFMC will establish and manage new Infrastructure Finance Vehicles (IFVs) to augment the resource base for infrastructure financing in the State by accessing different pools of investible funds: Ÿ

An Infrastructure Debt Fund (IDF)

Ÿ

An Alternative Investment Fund (AIF) (Category I)

Ÿ

An Infrastructure Investment Trust (InvIT)

Budgetary Support from the Central Government:

Government of Andhra Pradesh will seek requisite support from the Central Government through statutory and other channels for development of critical infrastructure projects including the Capital City Development.

Ž

Exhibit 15: Tamil Nadu Infrastructure Finance Company (TNIFMC)

Non-Budgetary Sources:

Ÿ

To mobilise the investments required for the Infrastructure Mission's targets without adding to the fiscal burden of the State or Central Government, it is proposed to generate investments through the following nonbudgetary channels.

Ÿ

Infrastructure Financing Vehicles: It is proposed to mobilise resources for infrastructure projects by launching Infrastructure Financing Ve h i c l e s w h i c h s e r ve a s s p e c i a l i s e d investment mechanisms operating without government guarantees. These Infrastructure Financing Vehicles could be in the form of Alternative Investment Funds and /or Infrastructure Development Fund – Mutual Fund, formed in accordance with SEBI guidelines.

TNIFMC is the first of its kind infrastructure financing initiative by any State Government in India. The TNIFMC is proposed to be promoted in partnership with highly reputed banks and financial Institutions, preferably in the public sector. The financing role envisaged is larger, covering both loan and equity to both public and private sector entities. TNIFMC will extend to all the 21 infrastructure sectors enumerated in TNIDB

Ÿ Ÿ



c. Corridor Development Fund: It is proposed to mobilise resources through a Corridor Development Fund along the lines of the Delhi Mumbai Industrial Corridor Project Development Fund for developing the trunk and link infrastructure for the two Industrial Corridors, viz., Vizag Chennai Industrial Corridor and the Chennai-Bengaluru Industrial Corridor. State and Central Public Sector Units:

Suitable models for raising funds for infrastructure development will be explored in collaboration with State and Central Public Sector Corporations especially in sectors such as transportation, mining, power etc.

Sunrise State of Andhra Pradesh: Infrastructure Mission

56



Funding from External Agencies:

Funding support for key projects would be sought from multi-lateral and bi-lateral agencies such as ADB, World Bank, JICA, KfW etc.

‘

Private Sector Participation:

has increased substantially over the last two decades. Twelfth Plan estimates about 50 percent of the total investment in Infrastructure at the national level is expected to come from the private sector. Andhra Pradesh seeks to proactively tap into private sector funding through the PPP mode for all projects feasible for private participation.

Private sector role in infrastructure development

Bibliography Airport Authority of India Andhra Pradesh “The Sunrise State”, Aero India 2015 Bengaluru Andhra Pradesh State Profile, Government of Andhra Pradesh (2014) Annual Report 2013-14, Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, GoI (2014)

Exhibit 16: Growth of Private Sector in the Total Infrastructure Outlay

APGDC, GDF SUEZ, Shell and GAIL sign MOUs for the floating LNG terminal in Kakinada, Andhra Pradesh, Press Release-Corporate Communication Dept, GAIL Association of Private Airport Operators Basic Road Statistics of India 2008-09, 2009-10 & 2010-11, Government of India, Ministry of Road Transport and Highways (2012) China 2015: Transportation and Logistics Strategies, A.T. Kearney (2010) China 2015: Transportation and Logistics Strategies, A.T. Kearney (2010) China's Development Strategy: The Knowledge and Innovation Perspective, World Bank (2000) China's Development Strategy: The Knowledge and Innovation Perspective, World Bank (2000)

Risk Optimisation The inherent characteristics of well planned infrastructure in generating stable cash flows in the lower risk, operational phase makes it globally a popular vehicle for private investment. However, in the face of continuing market inefficiency, poor forecasting abilities and inadequate tariffs that cannot be sufficiently addressed by regulation, new models are now needed for economic

Developing Singapore into a Global Integrated Logistics Hub, Report of the Working Group on Logistics, Government of Singapore (2002) infrastructure to attract market appetite for private sector investment,under which the government shares or retains demand risk are now needed for economic infrastructure to attract market appetite for private sector investment. In the 2015 Union Budget speech the Finance Minister mentioned that the Government shall evaluate existing policies and consider taking more risk on PPP projects.

Developing Singapore into a Global Integrated Logistics Hub, Report of the Working Group on Logistics, Government of Singapore (2002) Development of Integrated National Waterways Transportation Grid, Inland Waterways Authority of India, Ministry of Shipping (2013) HSBC Taiwan Manufacturing Purchasing Managers' Index, HSBC – Markit (2015) HSBC Taiwan Manufacturing Purchasing Managers' Index, HSBC – Markit (2015) Indian Petroleum And Natural Gas Statistics 2013-14, Ministry of Petroleum and Natural Gas Indian Private Ports & Terminals Association Industry, Infrastructure and Employment, Industries and Commerce Department, Government of Andhra Pradesh (2014) Infrastructure Action Plan Presentation, Government of Andhra Pradesh (2014) Infrastructure Development and Economic Growth in China, Institute of Developing Economies (2010) Infrastructure Development and Economic Growth in China, Institute of Developing Economies (2010) Infrastructure for Supporting Inclusive Growth and Poverty Reduction in Asia, Asian Development Bank (2012) Infrastructure for Supporting Inclusive Growth and Poverty Reduction in Asia, Asian Development Bank (2012) Infrastructure Investment in China, Quarterly Bulletin, Reserve Bank of Australia (June 2014)

In cognisance of the above risk sharing framework, Government of Andhra Pradesh will evaluate suitable models for different categories of projects for infrastructure creation, operation and maintenance.

57

Sunrise State of Andhra Pradesh: Infrastructure Mission

29

Infrastructure Investment in China, Quarterly Bulletin, Reserve Bank of Australia (June 2014)

Sunrise State of Andhra Pradesh: Infrastructure Mission

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Key Contacts

Invest in Taiwan, Government of Taiwan (2014) Invest in Taiwan, Government of Taiwan (2014) Logistics Industry Singapore, Belgian Foreign Trade Agency (2014) Logistics Industry Singapore, Belgian Foreign Trade Agency (2014) Mission Approach for Growth Critical Projects, G.O. Ms. No. Government of Andhra Pradesh (2014) Mission Approach for Growth Critical Projects, MGI (2013) Multimodal Logistics in India: An Assessment, PHD Chamber of Commerce and Industry (2012)

Principal Secretary

Vice Chairman & Managing Director

Chief Minister’s Office

Infrastructure Corporation of AP

Phone: 91-40-23476623

Phone: 91-40-23321771

Email: [email protected]

Email: [email protected]

[email protected]

Petroleum and Natural Gas regulatory Body

Commissioner of Industries

Port Statistics, Vishakhapatnam Port Trust

Spl. Chief Secretary to Government

Commmissionerate of Industries

Ports in Andhra Pradesh, Department of Ports, Government of Andhra Pradesh

Planning Department

Phone: 91-40-23441666

Phone: 91-40- 23456026

Email: [email protected]

Power for All, A Joint Imitative of the Government of Andhra Pradesh and Government of India, 2014 Prioritized Projects identified in the Preliminary Study by JICA , Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, GoI

Email: [email protected] [email protected]

Vice Chairman and Managing Director AP Industrial Infrastructure Corporation

Report of the National Transport Development Policy Committee, GoI (2014) Report of The Working Group on Coal & Lignite , Planning Commission of India Report of the Working Group on Petroleum & Natural Gas Sector for the 12th Five Year Plan(2012-17), Planning Commission of India

Secretary

Phone: 91-40-23212798

Energy, Infrastructure & Investment Department

Email: [email protected]

Phone: 91-40-23452499 Email: [email protected]

Report of the Working Group on Power for Twelfth Plan (2012-17), Planning Commission of India, 2012 Salient Features of A.P.Transco / A.P.Genco / Discoms, APTRANSCO

Principal Secretary

Statute for Industrial Innovation, Ministry of Economic Affairs, Government of Taiwan ( May 12, 2010)

Industries and Commerce Department

Statute for Industrial Innovation, Ministry of Economic Affairs, Government of Taiwan ( May 12, 2010)

Phone: 91-40-23450456 Email: [email protected]

Study on the Bangalore – Chennai Expressway Construction Project in India, Nippon Koei Co., Ltd. (2012) Tamil Nadu Vision 2023 Tamil Nadu Vision 2023 The ITRI Experience: Innovative Engine of Taiwan's High Tech Industry, Industrial Technology Research Institute The ITRI Experience: Innovative Engine of Taiwan's High Tech Industry, Industrial Technology Research Institute Traffic Handled at Major Ports, Ports Association of India, 2014 Vision 2020- Swarna Andhra Pradesh, Government of Andhra Pradesh (1999)

Knowledge Partners Athena Infonomics www.athenainfonomics.in

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Sunrise State of Andhra Pradesh: Infrastructure Mission

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Capital Fortunes Private Limited www.capitalfortunes.com

Sunrise State of Andhra Pradesh: Infrastructure Mission

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