Within NHAI’s portfolio of projects, many suffer from poor selection of projects, bad design and planning, worse execution and worst monetisation.
Poor selection of projects is attributed to political influence, ministerial pet projects taking precedence, disregarding financial viability and necessity of the projects. Thus, wrong projects get prioritised. There arises a mismatch between the intention of project (connectivity projects with not much revenue scope) and actual infrastructure provided (rest stop infrastructure, etc.). Thus, electronic tolling, which should have been undertaken on war-footing is still languishing. Electronic automated weigh bridge should be installed at regular intervals across the highway network. Yet these have been installed only at the 300 toll plazas.
Bad design and planning are pervasive across all projects of NHAI. Even the golden quadrilateral (GQ) roads (particularly the east-west and north south corridors) have so many abrupt lane droppings and lane additions that it makes the flow of traffic problematic. The supporting infrastructure – rest stops and facilities on these roads is not quite up to the mark. There is no provision for building logistic parks near major exits and cities.
Hardly any highway allows for one-entry-one-exit design. Consequently, using the highways and expressways portends no substantial advantage over using non-tolled roads.
I hope the connection between eastern peripheral expressway and Yamuna Expressway is seamless allowing traffic to move from Haryana side without exiting into the outskirts of the National Capital Region (NCR).
Bad execution is of two types – one, quality control is bad and second, the necessary planned infrastructure is not constructed. The World Economic Forum reports rank India below 50 in quality of road survey. If actual quality is tested, we will fare far worse. State roads have fared worse in terms of quality primarily because of selection of construction contractors.
Corruption in land acquisition, construction contract award and tolling contract awarding, are not unique to NHAI. This problem is prevalent across all state and central infrastructure development.
Corruption for land acquisition takes a nuanced form. Front running, i.e. buying the affected land by netas and babus is common. This land is later sold to NHAI by private negotiations. Other adjoining lands are appreciating in value and benefit the same parties. The Mumbai Pune Expressway was slightly curved to protect the interest of certain land owners.
Construction contracts award corruption is well known and the modus operandi has in fact shamefully become a standard operating procedure for procurement process by government bodies.
Lack of coordination between the state and Centre has been a crucial failure of Indian infrastructure story. For example, when Maharashtra government announced MIHAN, the multimodal transportation hub in Nagpur, it was not connected by any transportation links. It needed a high-speed-high-capacity links to ports and consumption centres to make it successful. While Samruddhi Marg intends to connect it with a port, connectivity with GQ and EW and NS corridors is difficult. Similar is the case with state highways and national highways competing with each other. In a country that is deficient on infrastructure, it is hard to understand creating competing capacity to the detriment of both governments.
Lack of exit options for NHAI is also a policy choice. It is necessitated by choices of random project selections without regard to investment-return matrix. Recently, the minister for transportation shared the intention to divest the projects to Infrastructure Investment Trusts (InvIT), similar to REITs. This should have been the first choice and should have been functional by now. Even today there is no information as to the structure of InvIT.
As of now the plan is to make government entities like LIC and others hold assets under different names. This is poor execution of the concept. Ideally, the projects should be made saleable by completing the necessary infrastructure and sold publicly with predictable revenue streams.
The lack of proper financial and operating information makes exit almost impossible. NHAI being a government agency, does not report financials in the same way as a listed company does. That needs to change. In fact, we need a government financial reporting standard similar to GAAP or IFRS and all government entities including governments, local bodies and agencies like NHAI should report their financial performance. For government agencies, it should also be mandatory to report operational details like vehicular traffic at each tolled section etc.
The problems with NHAI exist at every level. These reduce the purchase of investment capital with NHAI. It means tax money is being misallocated in the economy only for the benefit of the corrupt. There is no concerted effort to rectify these problems and set in motion the performance improvement strategies. But if the government wants to improve, our next article should give them a starting set of suggestions.
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(Rahul Prakash Deodhar is a private investor and Advocate, Bombay High Court. He can be reached at [email protected], on twitter at @rahuldeodhar or at his website www.rahuldeodhar.com