invest oppurtunitiesin energy in south asia ppp spanco
TRANSCRIPT
-
8/2/2019 Invest Oppurtunitiesin Energy in South Asia PPP SPANCO
1/11
2011 Spanco Ltd, All rights reserved
19th September 2011,Rajinder KachrooBusiness Head
Investment Opportunities in Energy Sector in South Asia: Policy & Regulatory Enablers22 23 September 2011: Mumbai
-
8/2/2019 Invest Oppurtunitiesin Energy in South Asia PPP SPANCO
2/11
2011 Spanco Ltd, All rights reserved
Introduction1
Contents
Market condition2
Factors that enable Investment3
Private Public Partnership4
Constraints in PPP5
-
8/2/2019 Invest Oppurtunitiesin Energy in South Asia PPP SPANCO
3/11
2011 Spanco Ltd, All rights reserved
Introduction1
The demand for investment in the electricity sector in the world between 2000and 2030 is estimated to be USD9.8 trillion
Developing countries would require more than half of this investment.
Energy is the prime mover of economic growth and is vital to the sustenance ofa modern economy. Future economic growth crucially depends on the long-term availability of energy from sources that are affordable, accessible and
environmentally friendly. To meet the growing aspirations of the people and economies of South Asian,
each of the countries are under immense social and political pressure tosecure reliable, sustainable, and reasonably priced energy supplies to meetthe ever-increasing demand for commercial energy.
India ranks sixth in the world in total energy consumption and needs toaccelerate the development of the sector to meet its growth aspirations.
-
8/2/2019 Invest Oppurtunitiesin Energy in South Asia PPP SPANCO
4/11
2011 Spanco Ltd, All rights reserved
STATUS OF ELECTRICITY SECTOR IN SOUTH ASIAIn any assessment of the demand for energy within the region, electricity has to beconsidered separately as it is a secondary form of energy, obtained partly from the primaryenergy sources directly and by conversion of coal, gas, and oil. The rising demand forelectricity reflects the spread of electricity to larger areas to meet the basic need forlighting. The level of use of electricity is considered an indication of rising economicprosperity. Electricity usage is highly capital-intensive, and most of the countries find it
difficult to finance the capital requirements of the industry.
Market Condition2
-
8/2/2019 Invest Oppurtunitiesin Energy in South Asia PPP SPANCO
5/11
2011 Spanco Ltd, All rights reserved
Indias vs Global investment requirements - a large Growing Gap between demandand supply?
3
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
160.0
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
$2,300 Bn
$1,900 Bn
High Investment Demand
Demand Scenario (2%)
Historic Future
Private Capital Mobilized in Power Sector
Gap covered by public financing,
and rationing.
Total
PowerInvestment
($Billion)
Cumulative
Sum ($Bn)
Source:: World Bank, IEA, Deloitte Touche
Tohmatsu Emerging Markets Group
Financing required for the Power Sector in Emerging Markets 1990 - 2020
-
8/2/2019 Invest Oppurtunitiesin Energy in South Asia PPP SPANCO
6/11
2011 Spanco Ltd, All rights reserved
Investment Needs over 2007-12 period reasonably well established..3 a
Installed generation capacity to increase by about 60,000 MW
(from 125,000 MW to 185,000 MW) Of this about 20-30,000 MW hydro
Investment program estimated to cost US$100 billion
GenerationUS$60 billion (Rs. 2,70,000 crores)
Transmission & DistributionUS$40 billion (Rs. 1,80,000
crores) In addition:
About 20,000 MW of existing thermal capacity to berehabilitated and modernized
Distribution networks to be upgraded and MIS strengthened
Human resources to be revitalized
And:
A low carbon growth strategy to be followed withinternational support (Post G8+5 meeting at Gleaneagles in2005)
-
8/2/2019 Invest Oppurtunitiesin Energy in South Asia PPP SPANCO
7/11 2011 Spanco Ltd, All rights reserved
Public Private partnership4
Public-private partnership (PPP) or P3 or P3 model describes a government service or
private business venture which is funded and operated through a partnership of governmentand one or more private sector companiesThe traditional PPP model more often becomes Private Public Partnership instead of PublicPrivate Partnership
http://en.wikipedia.org/wiki/Private_sectorhttp://en.wikipedia.org/wiki/Private_sector -
8/2/2019 Invest Oppurtunitiesin Energy in South Asia PPP SPANCO
8/11 2011 Spanco Ltd, All rights reserved
Investment in Power Sector by Type of Private
Participation (1999-2005)
1.48 0.48 0.506.72
0.04 1.76
12.65 13.90
63.01
66.10
10.80
38.90
21.91
0.21
1.082.11
3.064.09
0.01
0
20
40
60
80
100
120
East Asia and
Pacific
Europe and
Central Asia
Latin America
and the
Caribbean
Middle East
and North
Africa
South Asia Sub-Saharan
Africa
In
vestment(USDBillion) Management and lease contract
Greenfield project
Divestiture
Concession
Source: World Bank PPI Database
Fig
Public Private partnership4 a
-
8/2/2019 Invest Oppurtunitiesin Energy in South Asia PPP SPANCO
9/11 2011 Spanco Ltd, All rights reserved
Importance of Business Environment for Country ; Factors that enable PPP5
Legal Protection of Investors' Rights
Minor
2.98
2.91
2.83
2.83
2.68
2.66
2.49
2.43
2.00
3.57
3.11
3.11
Major Critical
Deal-breaker
63% 1 Legal Protection of Investors
36% 2 Consumer Payment Discipline
40% 5 Govt/Multilateral Guarantee
13% 7 Government Efficiency
15% 3 Judiciary's Independence
19% 4 Clear Rules for Exit
19% 6 Investment Grade Debt Rating
8% 9 Transition to Competitive Market
10% 8 Corruption Index Ranking
4% 10 Domestic Borrowing
4% 11 Competitive Selection
13% 12 Possibility of Vertical Integration
RatedDealbreaker RelativeRank
-
8/2/2019 Invest Oppurtunitiesin Energy in South Asia PPP SPANCO
10/11 2011 Spanco Ltd, All rights reserved
Factors that enable and attract investment ; PPP5 a
Well-managed reform: Increasing ability of utility to generate internal
cash for investment through cost reductions
timely tariff adjustments to recover the cost of supply, and
efficient collection of posted tariffs
Keeping the financial house in order: Improving access to debt financing from domestic/international debt
markets by maintaining profitable operation + acceptable debtservice ratio
Reducing risk & maintaining a healthy regulatory environment:Attracting domestic & foreign equity funding -
creating and maintaining sector structure, regulatory and legalenvironment conducive to minimization of country/projectinvestment risk
-
8/2/2019 Invest Oppurtunitiesin Energy in South Asia PPP SPANCO
11/11 2011 Spanco Ltd, All rights reserved
Thanks