Global project opportunities

GLOBAL PROJECT OPPORTUNITIES

OCTOBER: 2012

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These encompass long-distance freight routes including Saudi Arabia’s 2,750-kilometre SAR line, urban light rail systems such as the Doha and Riyadh metros, and high-speed passenger links such as Morocco’s electrified Tangier-Casablanca route.

The resurgence of rail projects in the Mena region signifies an economic evolution as countries such as Saudi Arabia and the UAE use freight routes to pursue economic diversification, enabling the movement of minerals and feedstock to processing plants, and easing export of the materials produced.

It also demonstrates a growing political collaboration. The UAE’s Etihad railway will eventually form part of a GCC-wide network, encouraging trade and travel between the member states. In addition, Iraq is rebuilding its venerable but decrepit system in a move that its government hopes will turn the country into a nexus for trade between Europe, Asia and the Middle East.

In cities across the region, including Doha, Riyadh, Mecca and Cairo, light rail networks are being developed, allowing affordable, efficient transport that can help ease traffic congestion and air pollution.

FROM “GPO” DESK

India is a country with large and diverse infrastructure sector. The Government of India recognized the imperative need for the infrastructure sector and takes several initiatives like Committee of Infrastructure, National Highway Development Project (NHDP), National Maritime Development Programme (NMDP), Tax Holidays etc for the development and promotion of the sector. In the recent years, there has been several improvements in sectors like roads & highways, ports, railways and airports, the policy and regulatory framework is already in place and investment in infrastructure has risen considerably however there are still significant gaps that need to be bridged.

With a view to create a platform for all the stakeholders and for the conclusive growth & development of the Infrastructure sector, PEPC works with the Central and Foreign Governments, National & International development organizations like World Bank, Asian Development Bank etc, Government Agencies, and various other stakeholders to promote the Project exports.

PEPC discusses policy, regulatory and procedural issues with its members, industry experts etc. and advice appropriate reforms to the government for the development of the project exports. For making conducive business environment PEPC highlights encumbrances being faced by the industry players in the process of development of the sector and interacts with various national / international agencies for making feasible measures to overcome those encumbrances.

PEPC supports the Government in its efforts towards projecting the project exports. It act as a reference point for investors (Domestic & International) interested in the sector and provide information related to government guidelines, investment opportunities, government & development agencies (which are involved in the development process of the sector).

For promotion of the sector PEPC works proactively and suggests necessary procedures during the process of policy formation, budgetary allocation, forming legal framework etc. by the government. To maintain smooth progress PEPC also insist government to make essential provision for timely upgradation of the policies on the basis of regular feedback from its members and industry players.

PEPC organizes several investment promotion programmes, conferences, seminars, workshops, etc on regular basis for facilitating interaction between various government agencies, international bodies, industry players and its members that provide prospects to raises issues pertaining to the sector and exchange ideas. These networking events provide a platform to share thoughts, explore business opportunities among the varied stakeholders of the project sector. These measures help to analyse the present developments and identifies the ways to overcome the constraint of the sector.

PROJECT EXPORTS

Project Exports from India commenced with a modest beginning in the late 1970s. Since then, project exports have evolved over the years, with Indian companies demonstrating capabilities and expertise spanning a wide range of sectors. The nature of Project Exports being undertaken reflects the technological maturity and industrial capabilities in the country. Project exports are broadly divided into four categories:

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  Civil construction
  
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  Turnkey modules
  
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  Consultancy services
  
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  Supplies, primarily of capital goods and industrial manufactures
  

Construction projects involve civil works, steel structural work, erection of utility equipment and include projects for building dams, bridges, airports, railway lines, roads and bridges, apartments, office complexes, hospitals, hotels, and desalination plants.

Turnkey projects involve supply of equipment along with related services and cover activities from the conception stage to the commissioning of a project. Typical examples of turnkey projects are: supply, erection and commissioning of boilers, power plants, transmission lines, sub-stations, plants for manufacture of cement, sugar, textiles and chemicals.

Services contracts, involving provision of know-how, skills, personnel and training are categorised as consultancy projects. Typical examples of services contracts are: project implementation services, management contracts for industrial plants, hospitals, hotels, oil exploration, charter hire of rigs and locomotives, supervision of erection of plants, CAD/ CAM solutions in software exports, finance and accounting systems.

Supply contracts involve primarily export of capital goods and industrial manufactures. Typical examples of supply contracts are: supply of stainless steel slabs and ferro-chrome manufacturing equipments, diesel generators, pumps and compressors.

Project export contracts are generally of high value and exporters undertaking them are required to offer competitive credit terms to be able to secure orders from foreign buyers in the face of stiff international competition. Exim Bank plays a pivotal role in promoting and financing Indian companies in the execution of projects. It has been closely associated with the growth of project exports from India by way of providing finance, information and business advisory services. The bank supports Indian companies at all stages of the project cycle from advance tender information, guidance in preparation of competitive bids to providing financial facilities, including loans and guarantees. It extends funded and non-funded facilities for overseas industrial turnkey projects, civil construction contracts, as well as technical and consultancy service contracts. Exim Bank has in place a specialised cell to provide advance information to Indian companies on projects being funded by multilateral funding agencies in various countries. Over the past two decades, increasing number of projects have been executed by Indian companies in North Africa, West Asia, South & South East Asia, CIS and Latin America.

The Reserve Bank of India has simplified the procedures for project and service exports, such as deployment of temporary cash surpluses and inter-project transfer of machinery and funds. These measures, first announced in the Mid-Term Review of Annual Policy Statement for 2006-07, will provide more flexibility to exporters. The RBI said that the measures were subject to monitoring by banks. Exporters will now be allowed to use the machinery or equipment used for a turnkey or construction abroad, for executing a contract in another country. Currently, exporters are required to dispose of the equipment, machinery, vehicles purchased abroad or arrange their import into India after completion of the contracts. If it has to be used for another overseas project, the market value should be recovered from the second project. Under the modified procedures, the RBI has permitted exporters to deploy their temporary cash surpluses, generated outside India, in instruments such as deposits with overseas branches or subsidiaries of a bank in India, a triple `A' rate short term paper abroad, including treasury bills and other monetary instruments with a maturity or remaining maturity of one year or less. Now, exporters are required to approach the RBI for overseas deployment of their temporary cash surpluses. The apex bank has also permitted exporters to open, maintain and operate one or more foreign currency account in a currency of their choice with inter-project transferability of funds in any currency or country.

 
SCREENING COMMITTEE

In accordance with the guidelines of Memorandum PEM (Project Export Manual) of the Reserve Bank of India, the Working Group considers proposals pertaining to civil construction contracts only from the Indian contractors who are on the approved list of the Ministry of Commerce & Industry(Govt. of India) on the basis of meeting the requisite criteria set by the screening committee as under: