Strong interest in Indian highway project

December 28, 2015

Strong interest has been reported in a major highway project in India. PNC Infratech, Sadbhav Infrastructure, Ashoka Buildcon, and APCO Infratech have all been bidding to win the Meerut-Bulandshahr highway project. This is worth some US$105 million and involves the construction of a 62km highway link. The project will be carried out under the hybrid annuity model (HAM), with the builder and Indian Government splitting the construction cost 60:40. Under the HAM model, the Indian Government also has plans for 19 more national highway projects that will involve the construction of 1,300km of highways.

Sources: World Highways

Written by ITW Editor · Filed Under About, Highway

Country to Get Eight New World-class Highways

December 28, 2015

NEW DELHI: The Central Government is planning to build eight more world-class express highways in addition to already announced seven expressways.

The new expressways include Nagpur-Mumbai, Jaipur-Ajmer-Ahemadabad, Nagpur-Hyderabad, Pune-Hyderabad and Hyderabad-Bangalore.

Road Transport and Highways Minister Nitin Gadkari said that all express highways are going to be world class, matching the quality and specifications in advanced nations.

Sources: The New Indian Express

Written by ITW Editor · Filed Under About, Government (Govt), Highway

Gadkari Sanctions Rs 50,560 Crore National Highways to AP

December 28, 2015

AP Chief Minister N Chandrababu Naidu explaining the progress of development works to Union Road Transport and Highways minister Nitin Gadkari (2nd right), Union Urban Development minister M Venkaiah Naidu (right) before laying the foundation stone for Kanaka Durga flyover in Vijayawada on Saturday. Vijayawada MP Kesineni Nani is also seen | P Ravindra Babu | EPS

AP Chief Minister N Chandrababu Naidu explaining the progress of development works to Union Road Transport and Highways minister Nitin Gadkari (2nd right), Union Urban Development minister M Venkaiah Naidu (right) before laying the foundation stone for Kanaka Durga flyover in Vijayawada on Saturday. Vijayawada MP Kesineni Nani is also seen | P Ravindra Babu | EPS

VIJAYAWADA: Andhra Pradesh will get Rs 50,560 cr worth national highways (a total of 3,092 km in length) in addition to the Rs 15,000 cr worth NH projects already under progress in the state, with an assurance of more in the coming days.

This was announced by Union Minister for Road Transport Nitin Gadkari after laying the foundation stone for Kanka Durga Flyover to be constructed at an estimated cost of Rs 447.88 cr, along with upgradation of the Vijayawada-Machilipatnam section of NH 65, upgradation of NH 30 from Ibrahimpatnam Circle to Chandragudem and upgradation of NH 216 between Kathipudi and Kakinada.

Addressing a public gathering, Gadkari said roads are vital for development. He said when he took over the ministry, road construction was just 2 km a day which today is 18 km a day. He said that by March end he wanted it to be 30 km a day.

“In AP, Rs 15,000 cr worth projects are under progress this year and the state has many expectations from my department. I am now announcing new NH projects and it is for the state government which has to do the needed land acquisition and sumbit Detailed Project Reports. I promise to have the project online by end of December next year,” he said.

With regard to the proposed 180-km outer ring road for the new capital Amaravati, at an estimated cost of Rs 20,000 cr, the Union minister said that the ORR would be an eight-lane, access-controlled expressway. It would be similar to the under construction expressway between Delhi and Meerut.

Expressing concern over the increasing road accidents (5 lakh a year in the country with 1.5 lakh deaths) Gadkari said the proposed new Motor Vehicle Act would revolutionise the whole system. Stating 30 per cent of the driving licences were fake, he added that the government was planning to set up driver training institutes in every assembly constituency, which would help in issuing driving licences in a foolproof manner. Stressing the importance of using waterways for transportation of goods and people, Gadkari said that AP had a great potential in this regard. He said already a survey works of the waterways was under progress in the state and sought the cooperation of the state government in this regard.

Thanking Gadkari for the announcement of Rs 65,000 cr worth road projects, the CM said they were beyond his expectations and added that he was very happy. Stating that handholding by the Centre was still needed as the state was yet to develop a lot, he added that he would submit a blueprint and an action plan with regard to the Amaravati ORR project to Gadkari for approval within a month and wanted the projects to be completed expeditiously. He said new roads linking Rayalaseema with the new capital would reduce the travel time. He also requested for a new road along the lengthy coast of the state and wanted it to be done in a single stretch and not in a piecemeal manner. He said it would help in port-road connectivity and also give a boost to tourism.

Vijayawada MP Kesineni Srinivas presided over the meeting. Union Minister of State YS Chowdary, MPs, MLAs, MLCs and others were present.

Sources: The New Indian Express

Written by ITW Editor · Filed Under About, Government (Govt), Highway

Indian Government Launches Green Highways Policy

December 28, 2015

The Centre has launched the Green Highways (Plantation, Transplantation, Beautification and Maintenance) Policy 2015, Road Transport and Highways Minister Nitin Gadkari told Lok Sabha on Thursday. The policy aims to develop eco-friendly National Highways with the participation of the community, farmers, NGOs, the private sector, government agencies, and the forest department, Gadkari said during Lok Sabha’s Question Hour on Thursday.

Elaborating on the benefits, the minister said that this initiative would help around 10 lakh people get employment opportunities.

According to Gadkari, the key objectives of this policy are to evolve a framework for plantation along national highways, to reduce the impact of air pollution and dust as trees and shrubs are known to be a natural sink for air pollutants, to reduce the impact of the increasing noise pollution, to arrest soil erosion, to prevent glare from the headlights of incoming vehicles, etc.

The transport ministry has already decided that, henceforth, for the work related to making the highways more green, 1 per cent of civil work costs should be added separately while arriving at the total project cost of national highways being built, he added.

Gadkari also appealed to all MPs to come forward to help the Road Transport Ministry to implement the green initiative successfully.

During the Lok Sabha Question Hour session, the minister also highlighted the fact that around 1.5 lakh people die in road accidents every year in India. “Around 1.5 lakh people die in around 5 lakh road accidents every year in the country. This is a huge number,” Gadkari said.

He explained that due to such a large number of accidents, the country loses around 55,000 crore annually, which is 3 per cent of the GDP.

The minister also added that during the 12th Five Year Plan, private investment to the tune of approximately 1,78,000 crore is required for the development of National Highways out of the total requirement of 4,83,000 crore.

Gadkari went on to speak about the hurdles which are generally faced while dealing with the Road Transport and Highways Ministry and said that all problems related to execution of 95 per cent of highway projects were resolved and work on them will start very soon. In case of the remaining 5 per cent projects, efforts are on to resolve the pending issues, he said.

“Considering the importance of completing the projects, various steps have been taken by the government and the National Highways Authority of India (NHAI) to remove the hurdles affecting the construction of national highways that includes streamlining of land acquisition and regulatory clearances, close coordination with other ministries, revamped disputes resolution mechanism, etc.,” he said.

He added that the NHAI has also decided not to award projects till all major pre-construction approvals are in place for the projects to avoid post-bid delays and litigations.

Sources: carandbike(NDTV venture)

Written by ITW Editor · Filed Under About, Government (Govt), Highway

L&T leads the way to make Jaipur India’s first smart city

December 24, 2015

Larsen & Toubro’s Smart World & Communication business vertical is leading the way to make Jaipur India’s first smart city by creating a host of smart solutions like wi-fi hotspots, citizen interactive information kiosks, surveillance cameras, environmental sensors, parking information systems and remote kiosks with facility management services at select locations in the city.

L&T has received the mandate from Jaipur Development Authority (JDA), which is leading the initiative to equip Jaipur with world-class digital facilities targeted primarily at the heavy tourist traffic that the city attracts. All kind of information about the city, its rich heritage and history, locations, directions, distances, etc., will now be available at the click of a button to tourists and citizens.

“We are delighted to be involved in this farsighted programme to transform Jaipur into India’s first smart city,” said S N Subrahmanyan, deputy managing director and president, Larsen & Toubro, who also heads L&T Construction, the construction arm of L&T, where the smart world business vertical resides.

“The government’s announcement of creating 100 smart cities in the country will go a long way in making India future-ready and it is wonderful that we have an opportunity to participate in making that objective a reality.”

The Jaipur project has been planned in two phases with phase-1 aimed at transforming six major locations into smart zones in the next month-and-a-half and the remaining locations to be completed in a total of 120 days along with an operations & maintenance contract for 5 years. In phase 1, L&T is completing the work at six locations, including the famous Amer Fort.

Sources: dna

Written by ITW Editor · Filed Under About, Smart City

Government has to open purse-strings to get new highways off the road

December 24, 2015

7,500 km at completion risk, trend shifts to govt-funded format.

The road sector is being widely touted as the only glimmer of hope in a bleak core sector narrative, but the numbers tell a different story

On December 2, creditors of Hyderabad-based road developer IVRCL Ltd decided to convert their loans to the company worth Rs 7,500 crore into a majority equity holding. The lenders, led by State Bank of India and IDBI Bank Ltd, invoked the strategic debt restructuring (SDR) provision that allows banks to take over the management of a firm after converting debt into equity in cases where debt restructuring has failed or is near failure.

In August, Gammon Infrastructure Projects Ltd agreed to sell six roads among nine infrastructure projects to BIF India Holdings Pte Ltd for Rs 563 crore, taking advantage of a newly introduced regulation to ease the exit of developers of operational road projects. On November 23, Gammon India Ltd’s lenders decided to invoke the SDR norms and convert a part of its Rs 15,000-crore debt into majority equity.

The road sector is being widely touted as the only glimmer of hope in a bleak core sector narrative, but the numbers tell a different story. An estimated 7,500 km of highway projects have been deemed to be at high risk of not being completed, including 5,100 km under construction and 2,400 km of operational sections that were awarded mostly between fiscals 2010 and 2012 on the Build, Operate, Transfer (BOT) format.

Estimates prepared by the research arm of rating agency Crisil show that of the projects under construction that are at high risk, around 50 per cent are due to significant cost over-runs and weak wherewithal of sponsors.

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Finding it difficulty to award Highway sections to private developers, the roads ministry has resorted to a sharp shift from the BOT model to the government-funded Engineering Procurement Construction (EPC) format. The EPC model is less capital-intensive and the developer is largely insulated from the traffic risk — the government makes the payment and the developer’s responsibility ends with delivering the completed project.

Under the BOT model, where the developer funds the project and earns returns from toll collection for the duration of the concession, the capital is locked in for a long period with the risk of revenue not adequately covering for construction and debt servicing costs. Road Transport and Highways Secretary Vijay Chhibber told The Indian Express that about 80 per cent of road projects are being offered under the EPC route currently, with BOT and hybrid annuity accounting for the rest. “As the market changes, we will increasingly move away from EPC and in favour of hybrid annuity and BOT,” he said.

The hybrid annuity model is a mix of the EPC and BOT models, where the road authority will provide an initial grant of up to 40 per cent of the cost with the developer chipping in with the rest and completing the project. Data from India Ratings and Research — a unit of Fitch Ratings — shows that 21 highway projects worth Rs 26,000 crore failed to attract bids over the last two fiscal years.

As a result, the National Highways Authority of India (NHAI) had to fall back on EPC contracts to plug the gap — from nearly an all-BOT road model during 2008-09 and 2012-13, the share of BOT dipped below 15 per cent in 2013-14 and 2014-15. For instance, out of 7,980 km length of national highways awarded during the last year, just 700 km had gone on public private partnership mode and the rest were all EPC projects. But even if a large-scale shift to EPC were to happen, there are bound to be tremendous constraints on funding. A parliamentary panel review report in December flagged that NHAI was able to spend only Rs 6,208 crore out of Rs 23,691.8 crore, or about 26 per cent, allocated during 2014-15 at the Revised Estimate stage (in the budget for 2015-16).

The official contention of the roads ministry, though, is that during 2014-15, the NHAI recorded total cash outflow or expenditure amounting to Rs 23,696.19 crore and that the company actually used borrowings amounting to Rs 2,876.40 crore to bridge the gap between resources from the government and its cash outflows.

While there seems to be some pickup in project awards, the outlook for under-construction projects is turning more bleak. “Under-construction projects require equity and cost-overrun support of around Rs 28,500 crore over the next two years. Of this, about Rs 16,000 crore could be stumped up from internal accrual of sponsors and sale of stake at the special purpose vehicle level. That leaves a significant shortfall of Rs 12,500 crore,” said Sudip Sural, senior director, Crisil Ratings, who worked on the roads sector report.

On the issue of projects awarded between 2010 and 2012 being at a high risk of not being completed, Chhibber admitted that the government has worked hard to work a way around the legacy issues that were dogging progress of road projects. “The real gamechanger is the recognition within the government that we may have also contributed to the languishing projects, in terms of delays in clearances and land acquisition. So, we’ve taken a decision that to the extent that the delay is on account of such factors, we will compensate the developer. This is a major policy shift… the acceptance of the fact that the government has not met its side of the bargain,” he said. He also said that in some cases, the concessionaire may have taken out more money out of the project and is now not interested in its completion.

In such cases, Chhibber said the ministry will not stop short of taking action against developers, “even to the extent of cancellation of contracts”. Atul Punj, chairman, Punj Lloyd Ltd, a construction services player in the infrastructure sector, told The Indian Express that while there was an uptick in the highways and the power transmission sectors, most other infrastructure segments were still struggling. According to him, the clubbing of the construction sector within the overall infrastructure bracket for funding purposes was undermining the recovery. This is more so, he said, because banks were at the upper end of their limits on lending to the infrastructure sector, leaving the construction sector, which shoulders the primary load of setting projects into motion, badly hamstrung.

Pending disputes: Rs 25,000 crore Disputes are another issue that are hampering the completion of road projects. Data from the road ministry shows that 112 cases involving Rs 25,000 crore were pending under arbitration between the NHAI and developers till end-April 2015. The disputes are typically accompanied by lengthy arbitration, something that private players feel drains them badly. Added to this is the fact that an underdeveloped bond market has forced PPP road projects to mainly depend on debt from commercial banks, something highlighted by the Reserve Bank of India Governor Raghuram Rajan, who cautioned banks of their high exposure to the sector and underscored the need to deleverage.

By February 2015, the total deployment of gross bank credit in the road sector was Rs 1.67 lakh crore, 384 per cent up from FY08. The infrastructure sector was identified by RBI, in 2013, as one of the five sectors with a high level of stressed advances. Wooing investors Apart from the hybrid annuity model, introduced for projects granted from October 1, 2015, the government has been looking at other ways to boost investor appetite.

In August 2015, the Cabinet Committee on Economic Affairs cleared a proposal to allow infrastructure companies — essentially in the road sector — to divest 100 per cent of their equity after two years of completion of construction for all projects given as per the BOT model, irrespective of the year the contract was handed out. This was to allow companies to use the funds from the sale of equity to invest in other projects as well as repay their debts. But road developers say it’s tough to hold on to the asset for even two years after completion of construction, as the debt goes up because of cost escalations due to inordinate delays for land and other clearances, legal disputes and arbitration proceedings. The solutions, according to a Maharashtra-based private developer, are far from optimal.

Sources: Indian Express

Written by ITW Editor · Filed Under About, Gammon, Highway, NHAI