GLOBAL SUMMARY INFRASTRUCTURE - Week Commencing 21st October OCT 2019 - Fitch ...
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
OCT 2019 GLOBAL SUMMARY INFRASTRUCTURE Week Commencing 21st October
Global Summary Infrastructure | 20191021
Contents
Global ................................................................................................................................................................................................. 4
Global Infrastructure Projects Round-Up ........................................................................................................................................................................... 4
Africa................................................................................................................................................................................................11
Zimbabwe, Botswana To Become Key Regional Transport Gateways ...................................................................................................................11
Asia...................................................................................................................................................................................................17
Infrastructure Friendly Policies To Aid Indonesian Construction Sector Expansion .......................................................................................17
Renewables And Transmissions To Drive Australia's Power Sector........................................................................................................................21
Challenges To Myanmar's Gas, LNG Plan, Despite Dire Needs .................................................................................................................................26
Latin America................................................................................................................................................................................29
Quick View: Successful Power Auction Cements Renewable Energy Drive In Colombia..............................................................................29
Slowing Growth For Peruvian Construction Industry With Risks From Political Uncertainty.......................................................................31
North America ..............................................................................................................................................................................33
Infrastructure For E-Scooters An Untapped Opportunity For Cities ......................................................................................................................33
© 20
2019
19 Fit
Fitch
ch Solutions Gr
Group
oup Limit
Limited.
ed. All rights rreserv
eserved.
ed.
All information, analysis, forecasts and data provided by Fitch Solutions Group Limited is for the exclusive use of subscribing persons or organisations (including those
using the service on a trial basis). All such content is copyrighted in the name of Fitch Solutions Group Limited and as such no part of this content may be reproduced,
repackaged, copied or redistributed without the express consent of Fitch Solutions Group Limited.
All content, including forecasts, analysis and opinion, has been based on information and sources believed to be accurate and reliable at the time of publishing. Fitch
Solutions Group Limited makes no representation of warranty of any kind as to the accuracy or completeness of any information provided, and accepts no liability
whatsoever for any loss or damage resulting from opinion, errors, inaccuracies or omissions affecting any part of the content.
This report from Fitch Solutions Macro Research is a product of Fitch Solutions Group Ltd, UK Company registration number 08789939 ('FSG'). FSG is an affiliate of Fitch
Ratings Inc. ('Fitch Ratings'). FSG is solely responsible for the content of this report, without any input from Fitch Ratings. Copyright © 2019 Fitch Solutions Group Limited.
THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS MACRO RESEARCH and is NOT a comment on Fitch Ratings' credit ratings. Any comments or data included in the report are solely derived from Fitch
Solutions Macro Research and independent sources. Fitch Ratings' analysts do not share data or information with Fitch Solutions Macro Research.
fitchsolutions.com 3Global Summary Infrastructure | 20191021 Global Global Infrastructure Projects Round-Up Energy & Utilities garnered an impressive 40 updates. Renewables accounted for 27 of these, with solar and wind being the most popular sources of energy. This week's announcements included Uzbekistan launching tender for 900MW of solar capacity, Spain approving financing for 55 photovoltaic (PV) projects, and agreements being signed for wind farms in Brazil and Russia. Rail schemes accounted for 10 of Transport's 22 announcements. The Brazilian government committing to providing financing for Line 2 of the Belo Horizonte Metro and Australia seeking expressions of interest (EoIs) for construction works at Sydney Metro West were among the category's updates. Road sector projects included approval being granted for a highway modernisation proposal in Costa Rica. Construction comprised 22 schemes, which included the UK approving funds for an upcoming hospital. Plans were also unveiled for a resort in Egypt and a concert complex in South Korea. TRANSPORT • Financing Brazil - The Brazilian government has committed to providing BRL1.2bn (USD290mn) for Line 2 of the Belo Horizonte Metro. Djibouti - The Japan International Cooperation Agency (JICA) has signed a grant agreement with the Djibouti government to provide JPY4.1bn (USD37.6mn) to the Project for the Reinforcement of Maritime Transport Capacity at the Gulf of Tadjourah. Djibouti's Ministry for the Equipment and Transport will execute the project. Germany - The municipal council of Munich has approved the pre-planning cost for underground Metro Line U9 in Bavaria, Germany. The planning requires an investment of EUR100mn (USD111.4mn). The entire line is expected to cost EUR3.5bn (USD3.9bn). India - Indian Railways plans to invest INR180bn (USD2.54bn) in upgrading infrastructure to run trains at 160km/h on theDelhi- Kolkata and Delhi-Mumbai routes in India. United States - The US state of Illinois released the USD23.5bn Multi-Year Plan, which is being supported by the Rebuild Illinois plan. The plan earmarks USD19.4bn for state roads and bridges. • Tenders Australia - The government of New South Wales is seeking EoIs for the design and construction of tunnels, stations and excavation works for Sydney Metro West in Australia. The state government has committed to providing AUD6.4bn (USD4.38bn) for the AUD20bn (USD13.68bn) project. Interested bidders can submit applications by November 4 2019. • Contracts Canada - Mobilinx Hurontario General Partnership (Mobilinx) has secured a CAD4.6bn (USD3.5bn) contract from THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS MACRO RESEARCH and is NOT a comment on Fitch Ratings' credit ratings. Any comments or data included in the report are solely derived from Fitch Solutions Macro Research and independent sources. Fitch Ratings' analysts do not share data or information with Fitch Solutions Macro Research. fitchsolutions.com 4
Global Summary Infrastructure | 20191021 Infrastructure Ontario and Metrolinx for the Hurontario Light Railway transit project in Canada. The Mobilinx team includes John Laing Investments, Astaldi Canada Design & Construction, Hitachi Rail, Salini Impregilo, HSBC and Amico Infrastructures, among others. Colombia - A consortium led by Xi'An Metro Company and China Harbour Engineering Company has won a contract to build the first metro line in Bogota, Colombia. The USD4.3bn project is being backed by the World Bank, European Investment Bank (EIB) and Inter-American Development Bank, among others. Greece - Omega Consulting Engineers has secured a EUR2.2mn (USD2.9mn) contract from Hellenic Railways Organisation to carry out preliminary design work for the EUR250mn (USD278.2mn) Thessaloniki-Amfipolis-Nea Karvali railway project in Greece. The European Union (EU) will provide 50% of the project's cost. Laos - The government of Laos has signed a memorandum of understanding (MoU) with Petroleum Trading Lao to complete a detailed design and carry out a feasibility study on the Laos-Vietnam Railway Project. Serbia - The government of Serbia has signed three agreements with Russian Railways to modernise the Belgrade-Vrbnica-Bar Railway Line. The EUR230mn (USD255.62mn) projects will receive a EUR172.5mn (USD192.6mn) loan from Russian Railways and EUR57.5mn (USD63.9mn) grant from the Serbian government. United States - Denver International Airport has appointed Stantec as lead design firm and Hensel Phelps as its preferred construction manager/general contractor for the USD770mn Great Hall Project in the US state of Colorado. • Project Updates Bahrain - A new passenger terminal building at Bahrain International Airport is slated to open in March 2020. The BHD414.1mn (USD1.1bn) project is being built by a joint venture (JV) between Arabtec and TAV Construction. Bangladesh - The National Economic Council of Bangladesh has approved two mass rapid transit projects worth BDT938bn (USD10.8bn) in the capital city of Dhaka. The JICA has provided BDT685.7bn (USD8.1bn) as a soft loan for the projects, while the Bangladesh government will finance the rest with BDT252.3bn (USD3.0bn). Costa Rica - Costa Rica's National Concessions Council has approved MECO's proposal to modernise the Florencio del Castillo highway. The project is expected to cost USD407mn. Kenya - Construction has started on the Nairobi Expressway in the Kenyan capital city. The USD599mn dual carriageway will be built and financed by China Roads and Bridge Corporation. Mexico - Construction has started on the MXN75bn (USD3.9bn) General Felipe Ángeles International Airport in Mexico. Myanmar - Construction has started on the USD322mn No 3 Thanlyin Bridge in Myanmar. Japanese contractors are building the bridge, which is being financed by the JICA with USD282mn. Myanmar's government is also providing USD40mn for the scheme. Nauru - Work has started on the Nauru Sustainable and Climate-Resilient Connectivity Project (formerly Port Development Project). The Asian Development Bank (ADB) is providing USD21.3mn in financing. Funding is also coming from Green Climate Fund (USD26.91mn), the Australian government (USD14.08mn) and the government of Nauru (USD17.3mn). Nepal - Foundation stone has been laid for the construction of the Nagdhunga-Naubise tunnel road project in Nepal. Hazama Ando Corporation will build the USD188.2mn scheme, which is being backed by a USD141.41mn loan from the JICA, as well as THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS MACRO RESEARCH and is NOT a comment on Fitch Ratings' credit ratings. Any comments or data included in the report are solely derived from Fitch Solutions Macro Research and independent sources. Fitch Ratings' analysts do not share data or information with Fitch Solutions Macro Research. fitchsolutions.com 5
Global Summary Infrastructure | 20191021 NPR6.27bn (USD54.9mn) from the Nepalese government. United States - Houston Airport System has started demolishing the old Terminal C North to make way for the USD1.2bn Mickey Leland International Terminal at George Bush Intercontinental Airport in Texas, the US. United States - The Federal Railroad Administration and the Georgia Department of Transportation sought public comments on a draft environmental impact statement for the Atlanta-Charlotte section of the Southeast High-Speed Rail in the US. ENERGY & UTILITIES • New Projects Chile - OPDEnergy plans to build the 50MW La Estrella onshore wind farm in Chile's O'Higgins region. Myanmar - Yoma Strategic Holdings plans to collaborate with AC Energy to establish a JV for exploring the development of 200MW of renewable power projects in Myanmar. • Financing Egypt - Smart Engineering Solutions and the Egyptian Ministry of Defence and Military Production plan to invest USD1.25bn in five concentrated solar thermal power plants in Egypt. About 70% of the project's cost will be financed by international institutions, while local banks will provide 10-15%. Germany - Energie Baden-Württemberg has made a final investment decision on the Weesow-Willmersdorf solar PV park in the German state of Brandenburg. Jordan - The EIB has signed a EUR16.3mn (USD18.16mn) grant agreement with Jordan's government for a water supply project in the Deir Alla and Al-Karamah districts. Moldova - The EIB has provided EUR25mn (USD27.8mn) for supporting the execution of the 2013-2027 Waste Management Strategy of Moldova. The financing will cover up to 50% of its costs. Montenegro - Elektroprivreda Crne Gore plans to invest EUR700mn (USD779mn) in supporting the development of 500MW of renewables power projects in Montenegro by 2022. Serbia - The EIB has sanctioned a EUR35mn (USD39mn) loan to develop a sewerage system and build a wastewater treatment plant on the Danube River in Serbia. The scheme will receive a EUR1.1m (USD1.2mn) technical assistance grant from the EU and EUR15.9mn (USD17.7mn) from Palilula Municipality's budget. Spain - Spain has approved a financial package of EUR39.85mn (USD44.4mn) for 55 solar PV projects on the Balearic Islands. The grant will be provided under the SLOBAL subsidy scheme, which is being co-financed by the European Regional Development Fund. The projects will require an investment of EUR260.47mn (USD290.25mn). Sudan - The African Development Bank (AfDB) has approved a USD31.3mn grant for upgrading water and sanitation facilities in Sudan's North Kordofan and South Kordofan states. Tunisia - Société Tunisienne de l'Electricité et du Gaz (STEG) has received a loan of EUR108mn (USD120mn) from the AfDB for executing a grid improvement project in Tunisia. The financing includes EUR30mn (USD33.4mn) from the Africa Growing THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS MACRO RESEARCH and is NOT a comment on Fitch Ratings' credit ratings. Any comments or data included in the report are solely derived from Fitch Solutions Macro Research and independent sources. Fitch Ratings' analysts do not share data or information with Fitch Solutions Macro Research. fitchsolutions.com 6
Global Summary Infrastructure | 20191021 Together Fund. The EUR290mn (USD322.5mn) project is also being co-financed by the Islamic Development Bank and STEG with EUR121mn (USD134.6mn) and EUR31mn (USD34.5mn), respectively. United States - Cubico Sustainable Investments has reached a financial close on the ongoing Wagyu solar PV project in Brazoria County, Texas, the US. The project finance debt was provided by HSBC, Norddeutsche Landesbank and Rabobank, with and tax equity coming from U.S. Bank. Renewable Energy Systems (RES) is the engineering, procurement and construction (EPC) contractor. • Tenders Afghanistan - Afghanistan's Ministry of Energy and Water has extended the deadline for a pre-qualification tender for a 40MW solar park in Nangarhar's Hisar-e-Shahi Industrial Park from October 16 to October 30 2019. The pre-qualified bidders are expected to be named in December of the same year. India - National Thermal Power Corporation has launched a tender for 1GW of grid-connected solar projects in India. Bids are due by November 18 2019. Israel - Israel has opened a pre-qualification tender to design, finance, construct and operate a ILS1bn (USD282.7mn) waste-to- energy facility in Jerusalem. Japan - Canadian Solar has won a 30MW solar PV project in a Japanese tender. The power plant will come up in Maniwa City. United Arab Emirates - Emirates Water and Electricity Company has received six proposals for its Fujairah F3 independent power plant project in the UAE. Uzbekistan - The Uzbekistan government plans to launch public-private partnership tenders for awarding up to 900 MW of solar projects in the country, which will be supported by the International Finance Corporation (IFC). The tenders are expected to attract around USD1bn of private investment. • Contracts Australia - Downer Group has secured contracts worth AUD165mn (USD113mn) from Alinta Energy Transmission to build a solar farm and to develop power infrastructure as part of Chichester Solar Gas Hybrid Project in Pilbara, Australia. Bangladesh - Saudi Aramco and ACWA Power have signed an MoU with the Bangladesh Power Development Board for the Natural Gas/R-LNG Based Combined Cycle Power Plant in Bangladesh. Under the scheme, ACWA will invest USD2.5bn in the power plant and USD500mn in the regasification terminal. Brazil - Statkraft Energias Renovaeis has signed a 20-year power purchase agreement (PPA) with local distribution companies for the Santa Eugênia and Serra de Mangabeira winds projects in Brazil. Canada - Bessac and Pomerleau have secured a CAD184mn (USD140.6mn) contract to build tunnelled pipelines for a wastewater treatment plant near Vancouver in Canada. The project is being financed by Metro Vancouver. Chile - ENGIE Energía Chile has awarded a contract to GES for the Calama wind farm and the Capricorn solar PV plant in Chile. THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS MACRO RESEARCH and is NOT a comment on Fitch Ratings' credit ratings. Any comments or data included in the report are solely derived from Fitch Solutions Macro Research and independent sources. Fitch Ratings' analysts do not share data or information with Fitch Solutions Macro Research. fitchsolutions.com 7
Global Summary Infrastructure | 20191021 Finland - Neste has signed a 12-year PPA with Fortum to buy around 70% of output from the 90MW Kalax wind farm in Närpes, Finland. India - Energy Efficiency Services has awarded a INR1.94bn (USD27mn) EPC contract to Hild Energy for 40MW of solar capacity in the Indian state of Maharashtra. Peru - Petroperú has finalised a USD202mn agreement with Técnicas Reunidas and a USD24mn contract with Cobra-SCL Consortium for the ongoing USD4.7bn modernisation and expansion of Talara Refinery in Peru. Petroperú is also seeking up to USD1.5bn in state funding for the project. Russia - The Fortum-Rusnano wind investment fund has signed a non-binding cooperation agreement with the government of Orenburg in Russia for up to 200MW of wind capacity in the region in 2021-2023. Taiwan - Vestas has won contract from wpd to equip the Chuangwei and Leadway wind farms in Taiwan. Turkey - A consortium of SOCAR AQS, China CAMC Engineering Co and IC Içtas Construction Industries & Trade has won a multimillion-dollar contract for the expansion of the Lake Tuz underground natural gas storage facility in Turkey. Ukraine - NBT has signed two EPC contracts with China Electric Power Equipment and Technology Co for the second and third stages of Zophia Wind Park in Ukraine. NBT will receive EUR500mn (USD556.71mn) of senior debt from Industrial Commercial Bank of China, Export-Import Bank of China and China Construction Bank, and will also seek EUR250mn (USD278.36mn) from international lenders for the projects. United States - ACCIONA has signed an agreement to acquire around 3GW of solar PV projects and a 1GW battery storage project from Tenaska in the US. ACCIONA will develop the schemes along with Tenaska Solar Ventures. United States - Infrastructure and Energy Alternatives has secured a USD67mn contract for the construction of the Richland wind farm in Sac County, Iowa, the US. Alliant Energy is developing the project. United States - The Commonwealth of Virginia in the US has signed a PPA with Dominion Energy for supplying 420MW of renewable projects to power state-owned buildings and facilities. • Project Updates Angola - The first turbine of the Caculo Cabaça hydroelectric dam in Angola is expected to start operating in 2024. Brazil - Companhia Hidrelétrica do São Francisco has resumed work on the Casa Nova I wind park in the Brazilian state of Bahia. The project requires an investment of BRL400mn (USD96.1mn). Canada - Berkshire Hathaway Energy Canada (BHE Canada) will break ground on the CAD200mn (USD152.2mn) Rattlesnake Ridge wind project in the Canadian province of Alberta in 2020. RES is developing the project, which is partly being funded by BHE Canada via a combination of equity and debt. China - A JV between China National Nuclear Corporation and China Guodian Corporation has started construction on Zhangzhou Nuclear Power Plant's first unit in the Chinese province of Fujian. The first phase of the project will cost CNY40bn (USD5.6bn). Ireland - Innogy has applied to the Irish Department of Housing, Planning and Local Government for a foreshore licence to carry THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS MACRO RESEARCH and is NOT a comment on Fitch Ratings' credit ratings. Any comments or data included in the report are solely derived from Fitch Solutions Macro Research and independent sources. Fitch Ratings' analysts do not share data or information with Fitch Solutions Macro Research. fitchsolutions.com 8
Global Summary Infrastructure | 20191021 out a seabed survey for the Dublin Array wind project in Irish waters. The wind farm, which is expected to cost more than EUR1bn (USD1.1bn), will be developed in partnership with Saorgus Energy. Japan - Japan Renewable Energy Corporation and two local companies have broken ground on the Shirakawa solar PV park in Japan's Fukushima Prefecture. South Korea - WindPower Korea, EDP Renewables and Aker Solutions have formed the Korea Floating Wind Power consortium to install an a 500MW floating wind farm off the coast of Ulsan in South Korea. CONSTRUCTION • New Projects Egypt - IWAN Developments has unveiled plans for the EGP5bn (USD308.7mn) Majada El Sokhna resort development in Egypt. Kenya - The government of Muranga County in Kenya has unveiled plans for building approximately 2,000 affordable housing units. Saudi Arabia - The Diriyah Gate Development Authority unveiled the masterplan for the Diriyah Gate project in Saudi Arabia. South Korea - The government of South Korean city Seoul has unveiled plans to build Seoul Arena, a concert complex in the Dobong District. Negotiations for construction and funding of the project are currently under way with several companies, including KDB, Future Assets, NH Investors, Daewoo Engineering & Construction and Jaeil Construction. • Financing Benin - Germany has committed to providing CAF52bn (USD88.34mn) in financing to support drinking water and sanitation, agriculture and good governance schemes in Benin. Georgia - Pioneer Cement plans to invest USD200mn in an integrated cement plant in Georgia. The company is currently finalising debt and equity arrangements for the project. Mexico - Holcim Mexico plans to invest USD40mn in a new cement-grinding plant in Yucátan, Mexico. Mongolia - The ADB has approved a USD158.34mn multitranche financing facility for a healthcare programme in Mongolia. United Kingdom - The UK government has agreed to provide GBP350mn (USD440mn) of financing to resume construction on Midland Metropolitan Hospital in Smethwick. Balfour Beatty is the preferred bidder for the GBP475mn (USD611.98mn) project. • Tenders Australia - The Victoria state government in Australia has shortlisted the Advance West, Examplar Health and Plenary Health consortia for the AUD1.5bn (USD1.03bn) Footscray Hospital in Melbourne. Kenya - Kenyatta National Hospital Board has launched a request for qualifications for a KES15bn (USD144.61mn) private hospital in Kenya. THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS MACRO RESEARCH and is NOT a comment on Fitch Ratings' credit ratings. Any comments or data included in the report are solely derived from Fitch Solutions Macro Research and independent sources. Fitch Ratings' analysts do not share data or information with Fitch Solutions Macro Research. fitchsolutions.com 9
Global Summary Infrastructure | 20191021 • Contracts India - Abu Dhabi National Oil Company, Adani Group, BASF and Borealis have signed an MoU to carry out a joint feasibility study on a USD4bn chemical complex at the Port of Mundra in Gujarat, India. Mongolia - The ADB, IFC and Ulaanbaatar Municipality have signed an MoU for the construction of 10,000 energy-efficient houses in the capital city of Mongolia. The USD570.2mn project will be financed by grants and USD350mn from private lenders. Sweden - Skanska has secured a SEK1.1bn (USD114mn) contract from Västfastigheter to build a new specialist hospital in Högsbo, Sweden. • Project Updates Cambodia - Cambodia's National Institute of Posts, Telecommunications and Information Communication Technology has started constructing a technology centre in Phnom Penh. The building, which is being developed in partnership with Viettel, will be financed using the Capacity Building and Research and Development Fund. Canada - HEC Montréal has started construction on a CAD235.2mn (USD179.77mn) building in downtown Montréal, Canada. The Quebec provincial government will provide around 50% of the project's cost, while HEC Montréal and HEC Montréal Foundation will provide CAD87.4mn (USD66.79mn) and CAD39.3mn (USD30.03mn), respectively. Cyprus - Construction on the EUR83mn (USD92.3mn) archaeological museum in Nicosia, Cyprus, is scheduled to start in May 2021. India - Dalmia Bharat Cement has started the land acquisition process for a new cement plant in the state of Rajasthan, as part of its pan-India expansion plans. Kuwait - Kuwait Municipal Council has approved the construction and development of the Entertainment City in Kuwait city. United Kingdom - JRL Group has started foundation work on developer Far East Consortium International's GBP470mn (USD603.67mn) Consort Place mixed-use project in the Isle of Dogs, London, the UK. United Kingdom - Veolia has gained planning approval from Lancashire County Council for the GBP200mn (USD257.1mn) Energy Recovery Facility in Heysham, the UK. United States - Ground has been broken on the new headquarters for the Professional Golfers' Association in Texas, the US. THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS MACRO RESEARCH and is NOT a comment on Fitch Ratings' credit ratings. Any comments or data included in the report are solely derived from Fitch Solutions Macro Research and independent sources. Fitch Ratings' analysts do not share data or information with Fitch Solutions Macro Research. fitchsolutions.com 10
Global Summary Infrastructure | 20191021
Africa
Zimbabwe, Botswana To Become Key Regional Transport Gateways
Key View
• Zimbabwe and Botswana will emerge as major transportation gateways on the regional North-South corridor that will help to
support overall trade growth in Southern Africa in the medium-to-long term.
• These countries are poised to be key land-links that will underpin intra-regional trade, particularly once the African Continental
Free Trade Agreement enters operation from mid-2020.
• While both states lack direct access to the sea, their relatively central geographic location makes them some of the
best connected countries regionally for overland supply chains, linking the Southern African states with each other and to other
states in Central and East Africa.
• Though Botswana has a higher score of 37.6 out of 100 relative to Zimbabwe's score of 31.8 for the Transport Network pillar of
the Fitch Solutions Logistics Risk Index, both countries are middling regional performers ranking in sixth and seventh
position respectively out of the 13 states in the Southern African region.
• Consequently, both countries will need to invest heavily in their road and rail networks connecting key border crossings, in order
to enhance their competitiveness in the region and some key large-scale projects are underway.
Stronger Overland Linkages In Landlocked States Key To Boosting Trade
Southern Africa - Transport Network
Note: 100 = Lowest risk; 0 = highest risk. Source: Fitch Solutions Logistics Risk Index
On the Fitch Solutions Transport Network Risk Index, that measures the extent and quality of a country's overall transport network,
Botswana and Zimbabwe are middling performers ranking in sixth and seventh place out of 13 countries in Southern Africa. On a
global scale, Zimbabwe ranks 145th out of 201 states worldwide, while Botswana ranks 127th. The rankings of both countries are
weighed down by the lack of direct sea access and deficiencies in the quality and extent of internal transport links. This is particularly
clear when weighed against the region's major transport hub, South Africa that ranks second regionally and 54th globally.
Infrastructure Investment Will Be Pivotal To Unlocking Intra-regional Trade
THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS MACRO RESEARCH and is NOT a comment on Fitch Ratings' credit ratings. Any comments or data included in the report are solely derived from Fitch
Solutions Macro Research and independent sources. Fitch Ratings' analysts do not share data or information with Fitch Solutions Macro Research.
fitchsolutions.com 11Global Summary Infrastructure | 20191021 Zimbabwe and Botswana have plans in place to expand their transport infrastructure to enhance their role in regional trade. In Zimbabwe's case, the Beitbridge- Chirundu road upgrade project will be key to boosting regional freight logistics and strengthening regional trade. For Botswana, the Kazungula Bridge at the border with Zambia is one of the main transport infrastructure projects in the pipeline that will provide an alternative to Zimbabwe's routes once complete. Although there are environmental concerns regarding the developments and higher traffic volumes once they are completed, we do not believe that these will be limiting factor to developing support infrastructure along the Kazungula and Beitbridge routes. That said, fiscal constraints may slow the pace of regional infrastructure developments, particularly in the case of Zimbabwe. THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS MACRO RESEARCH and is NOT a comment on Fitch Ratings' credit ratings. Any comments or data included in the report are solely derived from Fitch Solutions Macro Research and independent sources. Fitch Ratings' analysts do not share data or information with Fitch Solutions Macro Research. fitchsolutions.com 12
Global Summary Infrastructure | 20191021
BOTSWANA AND ZIMBABWE: KEY TRANSPORT PROJECTS
Country Project Name Sector Project Type Size (in km) Status
Trans-Kalahari Railway Line
Botswana Project, Mamabula Coalfields Rail At planning stage
(Botswana) - Walvis Bay (Namibia)
Tonota (Central District) -
Botswana Francistown (North East District) Roads & Bridges Upgrade/Maintenance 30 Completed
Road Upgrade Project
Okavango River Bridge, Under
Botswana Roads & Bridges Bridge 1.2
Mohembo construction
Port Techobanine Heavy Haul
Botswana Railway Project (Botswana - Rail 100 At planning stage
Zimbabwe - Mozambique)
Motlopi - Makalamabedi Road Project finance
Botswana Roads & Bridges Upgrade/Maintenance 28
Upgrade Project closure
Radisele - Pilikwe Road Upgrade Project finance
Botswana Roads & Bridges Upgrade/Maintenance Unconfirmed
Project closure
Kazungula Bridge - Zambezi River Under
Botswana Roads & Bridges Bridge Unconfirmed
(Botswana - Zambia) construction
Waterberg, Limpopo (South
Botswana Africa) - Mmamabula Coalfield Rail Unconfirmed At planning stage
(Botswana) Rail Link
Beitbridge (Matabeleland) -
Contract
Zimbabwe Harare - Chirundu (Mashonaland) Roads & Bridges Upgrade/Maintenance 971
Awarded
Highway Dualisation
Port Techobanine Heavy Haul
Zimbabwe Railway Project (Botswana - Rail 1500 At planning stage
Zimbabwe - Mozambique)
Beitbridge (Matabeleland) -
Harare - Chirundu (Mashonaland) Contract
Zimbabwe Roads & Bridges Upgrade/Maintenance 570
Highway Dualisation, Beitbridge - Awarded
Harare Section
Beitbridge (Matabeleland) -
Harare - Chirundu (Mashonaland)
Zimbabwe Roads & Bridges Upgrade/Maintenance 342 At planning stage
Highway Dualisation, Harare -
Chirundu Section
Trans-Zambezi Rail Line,
Zimbabwe Rail Unconfirmed At planning stage
Mozambique - Zimbabwe
Nacala (Mozambique) - Binga
Zimbabwe Rail Unconfirmed At planning stage
(Zimbabwe) Railway Line
Harare - Nyamapanda Highway
Zimbabwe Roads & Bridges Upgrade/Maintenance 238 At planning stage
Dualisation Project
THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS MACRO RESEARCH and is NOT a comment on Fitch Ratings' credit ratings. Any comments or data included in the report are solely derived from Fitch
Solutions Macro Research and independent sources. Fitch Ratings' analysts do not share data or information with Fitch Solutions Macro Research.
fitchsolutions.com 13Global Summary Infrastructure | 20191021
Country Project Name Sector Project Type Size (in km) Status
Makuti - Chirundu Road Under
Zimbabwe Roads & Bridges Upgrade/Maintenance 21
Improvement Project construction
Beitbridge (Matabeleland) -
Harare - Chirundu (Mashonaland)
Zimbabwe Roads & Bridges 59 At planning stage
Highway Dualisation, Harare Ring
Road
Plumtree (Matabeleland South) -
Zimbabwe Mutare (Manicaland) Highway Roads & Bridges Upgrade/Maintenance 828 Completed
Rehabilitation Project
Source: Fitch Solutions Key Projects Database
Beitbridge To Remain The Major Regional Border Crossing
The Beitbridge border crossing between South Africa and Zimbabwe will remain the major trade gateway on the
North-South trade corridor in Sub-Saharan Africa (SSA) ahead of Kazungula. This is due to the fact that logistics support
infrastructure, such as service and refuelling stations, is more developed along the Beitbridge route. On the South African side, the
capacity of the road network and border crossings, such as Grobler’s Bridge that provides a link to Kazungula, is too small to handle
higher traffic volumes and will need massive upgrades. Currently, there is no information on whether South Africa will be expanding
or upgrading these border crossings. Moreover, in contrast to the Beitbridge border crossing that operates continuously, small
border posts between South Africa and Botswana are usually closed between 22:00-06:00, which lengthens the time that
transporters will spend at the border and reduces the attractiveness of Kazungula as the preferred regional border crossing for
businesses.
This means that the Beitbridge border will remain one of the busiest border crossings in SSA and will handle significantly larger
traffic flows than Kazungula over the short-to-medium term. That said, the Kazungula border crossing will provide more efficient
options for tourism, especially during the holiday times when Beitbridge becomes heavily congested. Its importance for freight
shipping will likely increase only in the medium-to-long term as more supporting infrastructure becomes available along this route.
THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS MACRO RESEARCH and is NOT a comment on Fitch Ratings' credit ratings. Any comments or data included in the report are solely derived from Fitch
Solutions Macro Research and independent sources. Fitch Ratings' analysts do not share data or information with Fitch Solutions Macro Research.
fitchsolutions.com 14Global Summary Infrastructure | 20191021
One Of The Best Land-linked Countries In The Region
Zimbabwe - Road Network
Source: d-maps.com, Fitch Solutions
Poor Quality Of Zimbabwe Transport Infrastructure Makes Botswana A Key Alternative
Zimbabwe plays a major role in regional supply chains, boosted by a large road network and strong road and rail connections with
other members of the Southern African Development Community (SADC). There are two major trans-African highways running
through Zimbabwe, which form the main regional transport routes and allow for cross-border road transit. Zimbabwe also has a
railway network that is well interconnected with other national networks along the North-South Corridor, such as Zambia, Tanzania,
Botswana, Mozambique and South Africa. The availability of various classes of wagons and extensive connections joining major
cities with agricultural and mining hubs mean that Zimbabwe's railway is able to cater for most forms of cargo, particularly minerals,
agricultural produce and industrial products. There is also a fleet that caters for perishables and other weather-sensitive products as
well as 24-hour security, mitigating risks of theft.
However, the quality of the transport network has deteriorated in Zimbabwe as expansion works and maintenance have not been
forthcoming over the past three decades. Consequently, regional supply chains going through the country experience significant
delays as the lack of alternative transport routes, inefficiency and high traffic volumes cause massive congestion at the main
Beitbridge border crossing between Zimbabwe and South Africa. Zimbabwe's roads rank among the most dangerous to drive along
with the country having 34.7 road deaths per 100,000 population, which is the third highest globally based on data from the World
Health Organization. The high occurrence of accidents, especially along the existing Beitbridge-Harare-Chirundu highway, due to
the poor state of the road infrastructure compounded by high usage and weak enforcement of traffic laws in the country, exposes
businesses to significant risks such as delays, damage to cargo and injury or death of their employees.
THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS MACRO RESEARCH and is NOT a comment on Fitch Ratings' credit ratings. Any comments or data included in the report are solely derived from Fitch
Solutions Macro Research and independent sources. Fitch Ratings' analysts do not share data or information with Fitch Solutions Macro Research.
fitchsolutions.com 15Global Summary Infrastructure | 20191021
Deteriorating Quality Of Transport Infrastructure Raises Transit Times Via Zimbabwe
Southern Africa - Road And Railway Infrastructure Quality
Note: 7 = Highest score; 1 = lowest score. Source: World Economic Forum's Global Competitiveness Index, 2018-2019
Though Zimbabwe has a functional railway network, the quality is poor and currently operates at less than 50% below its capacity.
The National Railways of Zimbabwe is not functioning effectively as part of the regional transport corridor due to years of
maladministration, economic weakness and state interference in the sector hindering market-related pricing and denting private
sector interest. With greater investor interest, the fortunes of the rail sector may benefit with increasing funding and regional
demand in the medium term. Consequently, going through Botswana can become an increasingly attractive alternative for rail-
based supply chains in the medium term in order to minimise their exposure to high transport-related risks in Zimbabwe.
THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS MACRO RESEARCH and is NOT a comment on Fitch Ratings' credit ratings. Any comments or data included in the report are solely derived from Fitch
Solutions Macro Research and independent sources. Fitch Ratings' analysts do not share data or information with Fitch Solutions Macro Research.
fitchsolutions.com 16Global Summary Infrastructure | 20191021
Asia
Infrastructure Friendly Policies To Aid Indonesian Construction Sector
Expansion
Key View:
• We forecast strong growth in Indonesia’s construction industry over our ten-year forecast period. Expansion is expected to
average, in real terms, 6.7% from 2019 to 2028.
• President Joko Widodo’s infrastructure friendly policies will support various transport and power projects, implemented through
the National Strategic Project initiative (NSP).
• China’s Belt and Road Initiative (BRI) is also expected to play an important role in growth of the sector.
Growth of the Indonesian construction industry is expected to remain robust over our ten-year forecast period,
primarily driven by infrastructure works. We maintain our bullish outlook for the sector, and we forecast growth in 2019 to hit
6.7% in real terms, higher than most emerging South-East Asian construction markets (Malaysia: 1.1%, Thailand: 3.6%). We expect
growth to pick up in 2020, with the construction of a number of large projects expected to commence. Over the long-term, we
expect the Indonesian construction sector to expand by an average of 6.9% annually, in real terms, through 2028.
Robust Construction Sector Growth Expected
Indonesia – Construction Sector Value and Real Growth Forecast
e/f = Fitch Solutions estimate/forecast. Source: National Sources, Fitch Solutions
The National Strategic Project Initiative (NSP), launched by President Joko ‘Jokowi’ Widodo during his first term, will
remain an important driver of infrastructure development in Indonesia. The NSP covers a broad range of infrastructure
projects, from public transportation in metropolitan areas to dam and irrigation infrastructure in rural areas for farming and
electricity generation. Common issues resulting in delays include lengthy project preparation timelines and land acquisition
challenges, which has not shown signs of improvement over few years. Nevertheless, the NSP has been progressing and as of 2018,
62 projects have been completed, with a further 17 expected to be completed by Q3 2019 based on estimates provided by the
Committee for Acceleration of Priority Infrastructure. Although the NSP has been scaled down slightly from 245 projects and 2
THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS MACRO RESEARCH and is NOT a comment on Fitch Ratings' credit ratings. Any comments or data included in the report are solely derived from Fitch
Solutions Macro Research and independent sources. Fitch Ratings' analysts do not share data or information with Fitch Solutions Macro Research.
fitchsolutions.com 17Global Summary Infrastructure | 20191021
programs to 223 projects and 3 programs, there are still a handful of projects that are still at the planning stages, which we believe
will be executed throughout Jokowi’s second term in office with strong support from the government.
Slow But Steady Progression Of NSP
Indonesia – No. of NSP Projects, by Stage
Source: Committee for Acceleration of Priority Infrastructure
Another important component of the NSP is Jokowi’s 35,000MW program, which aims to increase the country’s electricity
generation capacity and to improve national electrification rate. However, progress has been slow as many projects suffered from
delays, but the government remains positive that the program can be completed by the end of Jokowi’s second term, in 2024. By
mid-2019, state-owned electricity company PT Perusahaan Listrik Negara Persero ("PLN") announced that only 10% of the
35,000MW target has been reached, with 20,120MW of plants still under construction and a further 9,516MW of projects receiving
purchase and sales agreements but have yet to break ground. The implementation of these projects will provide numerous
opportunities in Indonesia’s power sector, and will be an important contributor to growth of the country’s construction sector.
Medium to long term construction activity will be further boosted by Indonesia’s decision to shift its capital away
from Jakarta to East Kalimantan. The location chosen currently sits on 180,000ha of undeveloped government owned land,
which will certainly require substantial investments in buildings and infrastructure to construct a functioning city. Initial estimates by
the government puts the cost of the project at USD33bn, which we believe is a conservative estimate. In October 2019, McKinsey
Indonesia was chosen to conduct a feasibility study on the planned move, and will focus on the important areas such as social and
economic impact. Nevertheless, we believe that the government’s target for its first residents to move in by 2024 is optimistic, and
we expect delays to occur, possibly as a result of longer feasibility studies and project preparation timelines.
THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS MACRO RESEARCH and is NOT a comment on Fitch Ratings' credit ratings. Any comments or data included in the report are solely derived from Fitch
Solutions Macro Research and independent sources. Fitch Ratings' analysts do not share data or information with Fitch Solutions Macro Research.
fitchsolutions.com 18Global Summary Infrastructure | 20191021
Indonesia’s Capital Relocation Plan
Indonesia –Map Of Location of Planned Capital
Source: AFP, Fitch Solutions
China’s Belt and Road Initiative (BRI) is expected to play an important role in the expansion of Indonesia’s
construction sector over the next decade. As there currently exists a massive infrastructure deficit in Indonesia, which is only
expanding given economic and population growth, the government will not be able to bridge the deficit with its own funds but
instead, will have to rely on private capital and foreign direct investments. China has demonstrated through the BRI, that it is keen to
invest in Indonesia, and has since already funded several large projects, including the Jakarta-Bandung High Speed Rail. The
Indonesian government has also expressed interest in accepting Chinese investments – in July 2019, Indonesia requested China to
establish a special fund as part of the BRI to fund projects in Indonesia. The government had reportedly offered to China around 30
projects worth USD91bn during the second Belt and Road Forum in April 2019.
Transport Infrastructure Dominating Project Pipeline
Indonesia – Value of Project Pipeline, by Sector
Source: Fitch Solutions Key Projects Database
According to our Infrastructure Key Projects Database (KPD), transport projects currently dominate the project pipeline, with roads,
port and rail projects accounting for almost three-quarters of the total value of projects. With the completion of the North-South
THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS MACRO RESEARCH and is NOT a comment on Fitch Ratings' credit ratings. Any comments or data included in the report are solely derived from Fitch
Solutions Macro Research and independent sources. Fitch Ratings' analysts do not share data or information with Fitch Solutions Macro Research.
fitchsolutions.com 19Global Summary Infrastructure | 20191021 Line Phase I of the Jakarta MRT, we expect the system to be continually expanded in the long-term to cater to Jakarta’s huge and increasing population, and to alleviate traffic woes faced by everyday commuters. Besides this, a deal has been reached between the Japan International Cooperation Agency (JICA) and the Indonesian government to construct a 715km rail line from Jakarta to Surabaya. In the power sector, the construction of the 9,000MW Kayan Hydropower Station will be one of the largest, but controversial projects. Divided into five phases, construction will involve the construction of five dams ranging from 90 to 160m, and will require a considerable amount of deforestation. We highlight environmental risks to be the main downside risk for the implementation of this project. THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS MACRO RESEARCH and is NOT a comment on Fitch Ratings' credit ratings. Any comments or data included in the report are solely derived from Fitch Solutions Macro Research and independent sources. Fitch Ratings' analysts do not share data or information with Fitch Solutions Macro Research. fitchsolutions.com 20
Global Summary Infrastructure | 20191021 Renewables And Transmissions To Drive Australia's Power Sector Key View • We believe that there will be an increasing number of projects related to renewable energy over the next decade as Australia seeks to tap on its geographical advantage to produce more clean energy. • As for thermal energy, we are more positive on gas projects vis-à-vis coal projects, given the planned shutdowns of several ageing coal plants and the absence of projects aimed at replacing the fall in capacity. • Transmissions will remain an important driver of growth of Australia’s power sector. Growth will mainly be spearheaded by the replacement of ageing transmissions infrastructure. Expansion of the Australian power sector is expected to be reliant on the renewables sector over the next decade, in spite of the Federal government’s support for thermal energy. Our Infrastructure Key Projects Database (KPD) currently tracks 202 major power projects across Australia, of which 168 are related to the construction of new power plants and the rest being projects related to transmissions infrastructure. In terms of project count, renewables overwhelmingly dominate the pipeline with 146 projects mostly in the solar and wind sectors. Such an observation supports our Power team’s view that state level support for renewables remain strong despite the lack of enthusiasm for renewables at the federal level. Renewables, as a proportion of total electricity generation, is expected to climb from the current 12.7% to 18.7% by 2028, with a fall in coal reliance from 58.6% to 50% within the same period. Plans are also in place to transform the country into an exporter of renewable energy. Its vast geography provides certain locations with ideal conditions to harness wind and solar power, and with the rapid advance of ultra-high voltage direct current transmissions technology, commercial viability of renewable energy production and export has been increasing. In 2019, Sun Cable announced that it would be constructing a 10GW solar farm across a 15,000 hectares plot of land near Tennant Creek, Northern Territory. A portion of power generated by the plant will be exported, transmitted to Singapore via a 3,800km subsea cable. We have yet to factor this project into our forecasts as we believe there are still technology, political and financial hurdles to cross before it can proceed to its next stage of development . While we highlight the country’s potential as an exporter of renewable energy, especially to neighbouring Indonesia where rapid economic growth has fuelled energy consumption over the past decade, the cost and complexity of long distance sub-sea transmission cables will remain pertinent obstacles to unlocking this potential. THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS MACRO RESEARCH and is NOT a comment on Fitch Ratings' credit ratings. Any comments or data included in the report are solely derived from Fitch Solutions Macro Research and independent sources. Fitch Ratings' analysts do not share data or information with Fitch Solutions Macro Research. fitchsolutions.com 21
Global Summary Infrastructure | 20191021
Project Pipeline Dominated By Renewables
Australia – Power Sector Project Pipeline, USDmn
Source: Fitch Solutions Key Projects Database
Hydropower currently plays a relatively small role in Australia’s power sector, and we do not expect its role to expand significantly in
the short to medium term. The country currently has more than 100 operating hydroelectric power stations with approximately
8,800MW of capacity. However, as reflected by our KPD, pipeline for hydropower is small, with USD3.4bn Snowy 2.0 Hydroelectric
Project being the sole representative for the sector. The controversial project, initiated by former Prime Minister Malcolm Turnbull,
was approved by Prime Minister Scott Morrison in February 2019, but continues to face strong resistance from environmental
groups. Barring a sudden change in political regime, we believe the project will proceed given strong support from the government,
boosting hydropower output over the longer term.
Reliance On Coal To Fall
Australia – Electricity Generation By Fuel Type Forecast
e/f = Fitch Solutions estimate/forecast. Source: National Sources, Fitch Solutions
THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS MACRO RESEARCH and is NOT a comment on Fitch Ratings' credit ratings. Any comments or data included in the report are solely derived from Fitch
Solutions Macro Research and independent sources. Fitch Ratings' analysts do not share data or information with Fitch Solutions Macro Research.
fitchsolutions.com 22Global Summary Infrastructure | 20191021 The usage of coal and, to a lesser extent, natural gas as fuels for power generation continues to be a divisive agenda within the country. Nonetheless, we are in the view that opportunities in the coal power sector will dry up over the next decade, given the state governments' strong push for renewables. Growth of the sector will be limited to the upgrade and replacement of ageing facilities, although even in this aspect, we expect opportunities to shrink in the long term given the planned closure of several old coal-fuelled power stations. Despite this, as mentioned above, reliance on coal for electricity generation will remain high, given the country’s abundant reserves of coal and an established and active mining sector. Reduced capacity from plant closures will likely be replaced by renewables and gas projects. We currently track three major gas projects in our infrastructure KPD, all of which are initiated and undertaken by the private sector. AUSTRALIA'S PLANNED COAL PLANT CLOSURES Power Plant State Company Planned Closure Liddell New South Wales AGL Energy 2023 Vales Point New South Wales Sunset Power 2028-29 Callide B Queensland Queensland Govt. 2028 Gladstone Queensland Queensland Govt. 2035 Yallourn Victoria EnergyAust 2029-2032 Eraring New South Wales Origin 2032 Bayswater New South Wales AGL Energy 2035 Tarong Queensland Queensland Govt. 2036-2037 Source: News Sources, Fitch Solutions We believe transmissions infrastructure will be another strong area of growth within the power sector over the next decade, with the expected expansion of the country’s renewable sector. The 2018 National Transmission Network Development Plan (NTNDP) highlights several plans to upgrade the existing grid infrastructure. A study by the Australia Energy Market Operator (AEMO) shows the need replace ageing transmissions infrastructure across the country, particularly in South Australia, Victoria and Queensland. The study also reveals that certain locations which was believed to have strong grid coverage are beginning to show reduced fault level headroom for new connections, mainly due to the more proposals to connect new generators to the grid. Other important projects in the short-term include the Queensland to New South Wales and Victoria to New South Wales interconnector upgrade, which are investments needed to boost the capacity and reliability of the inter-state grid connections following the planned closure of the Liddell Power Station in 2022. THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS MACRO RESEARCH and is NOT a comment on Fitch Ratings' credit ratings. Any comments or data included in the report are solely derived from Fitch Solutions Macro Research and independent sources. Fitch Ratings' analysts do not share data or information with Fitch Solutions Macro Research. fitchsolutions.com 23
Global Summary Infrastructure | 20191021
Transmissions CAPEX Falling But Trend Reversal Expected
Australia – Total CAPEX by Network Operators, Forecast vs Actual
Source: Australian Energy Regulator, Fitch Solutions
Investments are likely to be made through the five network operators, namely Powerlink, Transgrid, AusNet, ElectraNet and
TasNetworks. These companies currently dominate the market and have the mandate to provide reliable electricity supply and are
overseen by the Australian Energy Regulator. Combined CAPEX has been falling over the past seven years but we expect a trend
reversal in the short term as the need to upgrade existing networks grows.
THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS MACRO RESEARCH and is NOT a comment on Fitch Ratings' credit ratings. Any comments or data included in the report are solely derived from Fitch
Solutions Macro Research and independent sources. Fitch Ratings' analysts do not share data or information with Fitch Solutions Macro Research.
fitchsolutions.com 24Global Summary Infrastructure | 20191021
Weakening Grid Infrastructure In Need Of Upgrades
Eastern Australia – Strength of Grid Network
Source: AEMO, Fitch Solutions
THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS MACRO RESEARCH and is NOT a comment on Fitch Ratings' credit ratings. Any comments or data included in the report are solely derived from Fitch
Solutions Macro Research and independent sources. Fitch Ratings' analysts do not share data or information with Fitch Solutions Macro Research.
fitchsolutions.com 25You can also read
