Sucheta Dalal :Road projects speed up 75% in H1
Sucheta Dalal

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Road projects speed up 75% in H1   

November 10, 2009


The country’s ongoing road projects seem to have been put on a fast track in the first half of the current fiscal. During April-September 2009, the National Highways Authority of India (NHAI) completed road projects of 2,014km, at an average rate of 11km per day, which is almost 75% higher compared to the same period last year. NHAI was able to complete only 2,205km during the whole of FY08-09.


Analysts believe the speed of implementation can increase further if key changes are made in the new model concession agreement (MCA) for build-operate-transfer (BOT) projects, expected to be announced later this week.


"The important thing (to speed up implementation)... is to increase the concession period and also change the pre-qualification criteria," said Omkar Vartak, research analyst, ULJK Securities.


Indian needs investment of around $70 billion for road projects over the next three years, of which the private sector is expected to contribute $40 billion.


As per NHAI’s annual work plan (2009-10), more than 100 projects worth about Rs98,000 crore will be available for bidding over the next three years, its chairman Brijeshwar Singh said.


As per the MCA for BOT projects, NHAI is required to hand over 80% of the land on the date of financial closure of these projects. To speed up the process of land acquisition, the government has established 178 special land acquisition units (SLAUs) in various states.


The new Cabinet Committee on Infrastructure, set up in July, has also started approving projects on a fast-track basis. It has accepted the recommendations of the Chaturvedi Committee which was appointed by the prime minister to resolve procedural impediments to the National Highways Development Programme.


Elaborating on some of the recommendations of the Chaturvedi Committee, Union road transport and highways minister Kamal Nath said changes have been made to the exit clause, termination clause and conflict of interest clause to address the concerns of the stakeholders.


"They (the government) are keen on changes in the model concession agreement, as the kind of investment they are looking for requires it. I think faster implementation of road projects will happen; however, pre-qualification issues, the gestation clause and the conflict of interest (clause) need to be addressed," said Vartak.


Vartak pointed out that issues like revenue limit, minimum equity holding, viability gap funding and the cap on the number of bidders need to be addressed. Also, the number of outstanding projects may be higher in the second half, he said.

– Amritha Pillay [email protected]

-- Sucheta Dalal