Developing Urban Transport Infrastructure in Ahmedabad: The Bus Rapid Transit System (B)

Abstract

Banks have an important role to play in infrastructure development in India through project financing. The case deals with the risks associated with a government led transport infrastructure project from lenders perspective. A large public bank has to decide on financing the bus rapid transit system (BRTS) proposed for Ahmedabad. The investment decision of the private lender will depend on the analysis of potentntal risks and their prioritization. The realizations of cash flows will be determined by factors like project are going to affect the estimated demand. The factors involved in a consumer shift from private to public transport were assessed. Along with revenue risk, an infrastructure project in particular also involves operational risk arising out of uncertainty of project execution or backing out of co-sponsors.