NHAI hits a dead end in building highways

Tags: News
India’s highway construction policy has reached a dead end. Far from meeting the targeted 20 km of road a day, the National Highways Authority of India has drawn a blank in auctions of road stretches this year.

Not a single bidder has come forward for the 20 toll and annuity projects on offer this year. Last year NHAI managed to award about 1,093 km of roads when the target was 9,500 km.

NHAI officials say the government needs to be less greedy and premium payments for projects rescheduled. “However, we are awarding EPC contracts for about 2,000 km by the year end. We have already awarded 600 km,” one of the officials told Financial Chronicle. One BOT project may also materialise in Maharashtra. But that is nothing compared with the target for awarding 4,000 km during the year.

“The approval from the cabinet committee on economic affairs for rescheduling premium payments will help infrastructure companies,” said a senior official of GMR, a firm that had earlier terminated its mega Kishangarh highway project.

It had to pay a Rs 600 crore premium, though the project could not start as land was not provided by the government for two years.

The report of the committee on rescheduling of premiums is expected soon. A total of 23 projects with a cumulative premium of Rs 98,000 crore will be considered for the rescheduling.

In the 12th plan, the government hopes to add 14,000 km to the highways network, which now covers 71,000 km. According to a draft of the road transport & highways ministry, the 12th plan outlay for highways will be Rs 4,83,000 crore and private participation will be about Rs 2,00,000 crore.

Manish Agarwal, infrastructure leader at PwC, says that unless capital already stuck in projects is freed, financing new projects will be extremely difficult. “There are no bidders for the projects and then there is no funding where the bids do happen. A serious rethink is required about the government’s PPP approach. Private participation is required for timely delivery, efficient maintenance and operations and not for gauging maximum traffic, which is the nemesis for the sector,” Agarwal said.

The clearance of the land acquisition bill and formation of the cabinet committee on infrastructure have raised hopes of a turnaround but the initiative has led to any thing. The approval of the Planning Commission proposal for speedy resolution of PPP disputes placed before the cabinet will help, say experts.

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