Infrastructure, energy firms wait for NIP fine print to firm up capex plan

Infrastructure and energy companies are banking on the Budget announcements to take forward the recently announced National Infrastructure Pipeline (NIP). This could help them firm up their corporate growth strategy for the next three to five years.

On December 31, Union Finance Minister Nirmala Sitharaman spelt out a plan for Rs 102-trillion investments in various infrastructure projects till 2025. The minister said the Centre and states are expected to equally contribute 39 per cent each to the capital expenditure, while the remaining 22 per cent will come from the private sector.

The roadmap, companies like JSW Energy and Adani Transport say, helps them decidedly lay down their own multi-year investment plans. “The pipeline definitely gives companies more visibility to firm up their three- to five-year business and capacity augmentation plans and is a much-needed step in the right direction,” said K P Maheshwari, chief executive officer for Adani Transport, which is executing a significant chunk of highway projects in the country.

A CARE Ratings report on NIP noted the private sector is expected to have active participation in road construction with a 39 per cent investment share.

A top executive of a leading road developer company said he expects higher private participation in sectors like digital infrastructure and telecom. The rest, he said, may largely be driven by government spending.

Others like MEP Infrastructure Developers expect the Budget speech and document to shed more light on this infrastructure plan. “More than the plan, details on the year-wise break up for every sector and the share of  private-public investment in the same will help companies firm up their three- to five-years corporate strategies,” said Jayant Mhaiskar, chairman and managing director of the company.

Source: CARE Ratings report

Executives from KEC International, a company that looks at engineering, procurement and construction opportunities in railways and power transmission, are also seeking more details. “NIP plan needs to share more project-specific details like if projects are new or those which are already on the drawing board. However, our three- to five-year growth strategy is aligned to the fact that India’s infrastructure sector will grow,” said Vimal Kejriwal, managing director and chief executive officer of KEC International.

Roads, railways, power, irrigation, and urban infrastructure, the CARE report highlights, will together account for 79 per cent of the proposed investments in this period.

Mhaiskar of MEP said: “What is crucial is whether lenders will finance and facilitate timely financial closure of the planned projects. We will look forward to more clarity on these points in the Budget document and Budget speech."

Others like JSW Energy are confident about finance options and see NIP as a further boost to its investment plans. “We as a company. and with our balance sheet, do not see finance as a challenge. Going forward with better availability of funds and in this (NIP) direction gives us extra confidence in making new investments,” said Sharad Mahendra, director and chief operating officer for JSW Energy.