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Discussion: Shyamala Shukla , Senior Consultant, PPP Group, The World Bank

Debt Financing Support to Public-Private Partnerships in India Policy and Instruments August 26, 2014 | 9 :00 AM EDT. Discussion: Shyamala Shukla , Senior Consultant, PPP Group, The World Bank Gajendra Haldea , Former Principal Advisor, Infrastructure & PPP, Planning Commission of India.

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Discussion: Shyamala Shukla , Senior Consultant, PPP Group, The World Bank

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  1. Debt Financing Support to Public-Private Partnerships in India Policy and InstrumentsAugust 26, 2014 | 9:00 AM EDT Discussion: Shyamala Shukla, Senior Consultant, PPP Group, The World Bank Gajendra Haldea, Former Principal Advisor, Infrastructure & PPP, Planning Commission of India

  2. APPROACH AND CONTENTS OF WEBINAR • PART I ( 30 minutes) • Government support to PPPs in India • Debt financing requirements • Introduction to the IIFCL • Challenges in debt financing • Outline of key questions on the above • Answers to key questions • PART II (10 minutes) • Introduction to IDF and discussion • PART III (20 minutes) • Q&A and concluding remarks

  3. GOVERNMENT SUPPORT MECHANISMS FOR PPPs IN INDIA

  4. FINANCING REQUIREMENTS FOR INFRASTRUCTURE IN INDIA • Resource requirements for infrastructure: US 600 billion for 2012-2017 • Public and Private share: 50:50 at US $ 300 billion each • Private sector debt requirement: more than US $ 300 billion in five years Investment in Infrastructure Source: Second Report of the High Level Committee on Financing Infrastructure, Planning Commission, Government of India Source: Planning Commission, Government of India, in Deloitte (2012), Indian Infrastructure – A Trillion Dollar Opportunity

  5. INDIA INFRASTRUCTURE FINANCE COMPANY LIMITED • IIFCL was formed in 2006 for long-term debt financing of infrastructure PPPs • IIFCL products: • Direct lending • Subordinated Debt • Cumulative performance: • Other activities: • IIFC (UK) Limited

  6. Extended Team • CHALLENGES IN DEBT FINANCING • Tenure of loans confined to 10-15 years • Sources of funds concentrated in state owned banks • Slow down in growth of commercial bank credit • Bank sector exposure limits • Company exposure limits • Bond financing –fewer issues, capital markets lack depth/volumes • Foreign currency borrowing – currency risk • Lack of affordable hedging mechanisms • Limits to refinancing through ECB Source: Economic Survey of India 2013-14, Chapter 11, p.209

  7. QUESTIONS OF FOCUS • Debt financing - key features of India’s concession framework • Bankability of concession framework • Indian infrastructure market - the shortfall in debt financing • Key features of India’s concession framework - does it provide comfort to lenders? • Role of IIFCL in debt financing • IIFCL’s role in debt financing • Impact during the last few years • Capital adequacy issues • Sector / company exposure issues • Direction of its debt financing portfolio

  8. INFRASTRUCTURE DEBT FUNDS • Policy: RBI and SEBI in 2011 • Objective: Sourcing long term debt for infrastructure projects • Potential investors: Pension/Insurance Funds and others • Institutional set-up: NBFC or Mutual Fund • Status: 5 IDFs formed so far • Further resources on IDFs: • http://rbi.org.in/scripts/NotificationUser.aspx?Id=6830&Mode=0 • http://www.sebi.gov.in/cms/sebi_data/boardmeeting/1360917875498-a.pdf

  9. INFRASTRUCTURE DEBT FUNDS • Role of IDFs • Status of IDFs that have started working • Early results

  10. Questions??

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