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Now that the Toll Industry has had a few years of maturity. What is the summary of expections from Toll Collection System from a concessionaire’s point of view.

(This needs an in-depth analysis on broad parameters. However I have tried to analyze few problems associated with toll roads.)

M S V Ramu
Profession – Contract Manager
Date: May 4, 2010
E-mail: msvramu@yahoo.com

Introduction: with a need a build good infrastructure and lack funds available to finance these Highway project government has undertaken to built highway on Public Private Partnership either toll based or annuity based.
The private developers who bids and undertake constructions of Highway on toll basis needs to implement a through pertinent “risk” management system with the help of the government to mitigate all the risks that come with development.

To understand the various consequence of “tolled” roads there needs to through study to undertaken which is not my purview at the moment. Hence I dwell over some of these consequences based my exposer these projects.

Toll based Highways:
The idea of “Toll based” highways was imported into India from experiences of others countries like Europe, Malaysia or North America. The model “Concession Agreement” was drafted by the Government to suit India needs.

The toll categories of roads are those wherein there are sufficient traffic which can be tolled by the Concessionaire and recoup the investment made him and also make profit. In the event there are not enough tollable traffic to recoup the investment made, it will be offered on annuity basis or with VGP (Viability gap funding) by the government.

The tolled based roads wherein the Government grants private developer specific rights to design, finance, construct operate and maintain the roads. The developer called “Concessionaire” develops covers the investment costs and carry commercial risks since he relays on operation revenue from the tolls remunerated. At the end of the concessional period the road reverted back to government at no extra charges. However if the estimated revenue does not materialize during Concession period the Concessionaire may have to negotiate the concession period (as in other countries) which is yet to happen in India as we are just starting!

In south America there is method of bidding known as “Least Present Value” wherein the winning bidder is the one who asks for “smallest Net Present Value” and period of the concession period ends when the present value of revenue equal to winning bid. This model has not been tried in India.

Risk management in “Toll based” Concession

In the present circumstances the Concessionaire undertakes risks to constructs road which is generally divides normally into three parts:

1. Certainty – decision maker know exactly the outcome
2. Uncertainty – here the decision maker does not know the risks due to non availability of any data
3. Risks – are those which can be determined by statistical terms and can be analyzed but it differs from uncertainty

In risk management all the risks are quantified and analyzed and decision taken by the Concessionaire to mitigate the same by way of disciplined approach to critical situation

Developmental risk involves “Land Acquisitions” needed for the project. This is one of the biggest risk faced by the Indian developers as most of the times project gets delayed due non-availability of Land. NHAI does not meet the contractual requirements specified in the Concession agreement thereby causing unnecessary hardship to concessionaire. This risk falls under “uncertainty” which can not be quantified

Financial Risk: Soon after award of Project, the Concessionaire needs to raise the necessary capital required for execution project

There are two major risks involved:

1. Ability to raise the finance and make financial close as required by the Concession agreement.
2. High interest rate during the currency of concession period (due to floating interest charged by lenders) – mitigation of this risk in extremely important).

Construction risks

Whether the construction undertaken by the Concessionaire himself or by other contractor there are many risk involved

1. Poor performance of the contractor
2. Different site condition which normally experience contractor many not have thought off which is problematic and end up in high cost due additional items of work to be executed.
3. High price escalation of all the inputs of construction – Example: steel pricing going through roof last year.

All above risk has to be born by the Concessionaire which needs proper approach in the initial stages itself

Operational risks

Operation risk involves mainly the following

State support agreement – needs to signed by the concerned state and they shall support the collection of tolls which important to the concessionaire. NHAI who are promoters of the project should take full responsibility in getting the agreement signed with Concessionaire as Concessionaire can not exert any pressure on the states

Toll Level: the estimated toll level uncertainty during pre-bidding stages can lead to inaccuracies in revenue estimation which the Concessionaire has based his bid. Hence this risk needs to shared by the NHAI

The traffic volume projected in financial model may not materialize as it completely depends on economic growth projected during pre-bidding stage

Any fall in traffic volume will automatically bring down the IRR value projected. Expert estimate that 10% drop in volume of traffic will result in reduction of 1-7% – 1.9% percent reduction in IRR.

Toll collection
The Concession agreement does give any standard specification for the installation of tolling equipment. This has resulted in haphazard manner the tolling equipment being installed by the different Concessionaire. This needs to change. For example a RFID card issued at New Delhi should also hold good down south. By such an arrangement the road user can travel effortlessly any ware in India.

The technology used by the Concessionaire needs to be streamlined on all India basis for all Concessionaire.

Toll fee: The price escalation of “toll/Fee” charged by the Concessionaire is based on all India WPI index. This is incorrect as in some states it may be very high. In my opinion there should be “Toll Regulator” on all India basis to regulate toll based on each state WPI or any other base model

HTMS: Here there is no comprehensive approach. For example the “variable message system” is limited to one project length only! This also needs an all India approach.

Suggestion: at the moment there are so many “Toll” based road are in operation and also on the horizon. All the toll based roads owners are “Special purposed vehicle” promoted by the concessionaire.

So why not a “over the counter” stock listing be arranged of these SPV and listed in Stock exchanges which can also traded in F&O section. I am sure this arrangement will automatically will mitigate many risks and also give scope for improvement in roads as the Concessionaire would like increase the traffic by enhancing the many amenities for road users.

Thanks for taking time for reading this articles.

Indian government has finally realized the importance of road sector

Huge opportunities are unfolding in the Indian road sector. This means most Indian infrastructure and construction companies will benefit from the announcement of new orders or projects in the long run.

Also, a large number of these projects are on Build Operate and Transfer (BOT) and annuity basis, which means the companies will have a steady flow of cash through annuity or toll. This development spells good news for investors who can make full use of this golden chance and earn high returns in the long run.

WHY NOW?

The question that may cross your mind is why now? Ever since Kamal Nath took over as the Union minister for roads and transport, the Indian road segment has taken a new turn. He created various milestones since he was given this portfolio.

The most important announcement he made was the construction of the national highway at the rate of 20 km per day to expedite the achievement of National Highway Development Programme (NHDP) targets. This is significantly higher than the current execution rate of about 6 km per day. The ministry has also been working towards faster clearances related to procedures, land acquisitions and other formalities.

CREATION OF FUNDING

Kamal Nath is aware of the fact that improved road network in the country would not just lead to better connectivity but would also lead to increased energy efficiency in transport operations. He also travelled across different countries on road shows to international investors to highlight opportunities and potential in the Indian road sector.

Through these measures, the government has and will be able to rope in huge investments needed for the sector from international and national long-term investors.

Earlier it was difficult to raise money for more than five years or so as money was available only for a short period. However, now that the corporate debt market is developing, long-term investors like pension funds, mutual fund houses, insurance companies and even banks are coming forward to provide long-term capital. Most road projects, particularly the BOT ones need huge long-term investments in the form of debt and equity to fund them.

INCREASING VIABILITY

In terms of the less viable projects, the government increased the viability gap funding (VGF) or grant to 40% from 25%. Formerly, the grant used to be given after the completion of the project. But now it is handed over at the beginning of the project. In this manner the construction of the project does not get delayed for want of funds.

The government is also working on creating innovative ways of structuring non-viable projects like allotment of land, which can be monetized by developers so that the returns on investments are reasonable.

Other aspects like increasing the role of private players through public private partnership (PPP) and awarding of projects on BOT basis would mean that private players now have a bigger role to play in the construction of viable road projects.

A LONG WAY TO GO

India currently has about 33 lakh km of road network spread across the country. This is the third largest network in the world. But, in terms of density and quality of roads, India still lags behind many developed and developing countries of the world.

In relation to our population, the country’s roads are about 3 km per 1,000 persons, which is significantly lower than the world average of about 7 km per person. In terms of quality, about 80% of our roads are in a poor condition and require huge investments for repair, renovation and increase in the number of lines.

Majority of India’s roads are single line in spite of increasing traffic and congestion. Even the conditions of our existing roads are so bad that India’s logistical cost as a percentage of total production cost is considered to be about twice the world average of 7%.

No wonder due to the poor road infrastructure, India is ranked 87th in the world on the basis of quality of roads, which is very low and considered to be the biggest hindrance for economic growth as envisaged by the government for the coming years.

Surprisingly, within this vast network of roads, only about 2% is accounted for by national highways and a very minuscule part is accounted for by express highways, which is very critical considering that about 40% of the total road traffic is handled by national highways.

The slow transportation of goods has also affected the movement of goods among states, delaying exports and imports of the country. Especially, in the case of transportation of perishable goods like milk, vegetables and flowers among other things, which are procured from the hinterland takes so much time that they become stale or get destroyed before they can actually reach the end consumer and the export market.

This leads to wastage of goods due to the delay in reaching the markets. Express road connectivity to the main ports of the country and to major cities is very important to improve trade volumes and discover better prices for farm goods.

WHAT IS CHANGING?

The government has realized the importance of better roads in the country so that it can support the growth of the economy in the coming years. Roads are critical for any economy, especially a growing economy like India with a large population and different topographies.

The role of roads is of paramount importance for commercial and economic activities in the country. In India, passenger traffic is growing at about 12% per annum, while cargo traffic is growing over 15%, which will continue to rise as economic activities improve along with the increase in foreign trade.

India’s foreign trade is growing at 10-12 % and there is an immediate need to connect all the major ports of the country. The government has taken the first step in this direction. Under the NHDP (phase II), the government will connect major ports and build freight corridors, which will connect many states from the eastern part of India to western India.

In phase III of the NHDP, all major capitals will be connected with highways. Also major cities and points that could not be connected in phase II will be connected with better road infrastructure. Besides, plans are afoot to improve and connect rural India to major cities of the country soon.

EASING HURDLES

Most of these plans are not just on paper. In fact the government has already awarded projects to achieve this goal. The government formed the BK Chaturvedi Committee, which presented its findings and suggestions to make progress in the sector.

Based on the findings of the committee report, several changes have been incorporated and more importantly, the government is seriously working on the recommendations, which are quite innovative and provide solutions to various problems that the companies have been facing.

Changes have been incorporated with regard to land acquisition, which is the biggest problem for construction of roads in the country.

Now, NHAI will work along with the state governments for facilitating land acquisition and all state governments have been directed to coordinate for the same. NHAI now awards road projects only after 80% of the land has been acquired.

FEW SPEED BREAKERS

Tackling delays in approvals, decision-making, faster resolution of disputes and coordination among different departments are few other highlights of the recommendations of the committee report.

Essentially, most of the changes are already in effect and new orders are awarded to interested parties. The flow of new road orders in the last few months was the highest in the last several years. This itself speaks volumes about the commitment of the government and its intention to put things on ground.

Also, the projects which were not viable and did not attract private participation were given extra focus and restructured within time frame along with consultations of private players while changing the terms and conditions of the project. There are other measures also which have attracted private participation in road projects.

Large projects will be built on a BOT basis, which are expected to have a higher return of about 18% to 20% on investments as compared to 14% to 16% earlier. Additionally, the new guidelines that have been framed are such that once a project is awarded for a particular road, the private player is given an assurance that there will not be any competition or construction of road, which will make sure that the cash flow in terms of the collection of the toll is protected.

What is more remarkable is that the government now has experts as representatives from development agencies like the World Bank, the Asian Development Bank, who make sure that the projects are not delayed and hurdles are resolved.

These representatives keep track of projects and act as a liaison between government agencies and private parties. They also bring their experience to structure the project in such a manner that it gets executed.

QUANTUM OF OPPORTUNITY

There are different estimates about the size of the opportunity. But there is little or no doubt that the opportunity is far bigger than what it used to be a few years ago.

When we talk about 20 km per day of the construction of roads, this in itself is self-explanatory. This means that the country will have to build about 7,300 km of roads every year. This is significant as the current run rate is just about 2,500-3,000 km of roads built every year.

One could also imagine the kind of work that will now flow. For the eleventh five year plan which will end in 2012-13, about Rs 3.14 trillion will be invested as compared to Rs 1.45 trillion invested in the tenth five year plan. This is still the tip of the iceberg. India’s investment in the roads segment is expected to be in the range of Rs 10.5-11 trillion over the next decade.

In the near term, about 5,000 km of new expressways will be built and the projects will be awarded for the same. Also, NHAI has plans to award work for about 37,000 km of roads over the next three years.

Besides, under the NHDP’s different phases, the government will award work relating to the upgradation of about 55,000 km of roads over the next 8-10 years.

WHO WILL BENEFIT?

Most construction and infrastructure companies are focusing on this particular segment and their exposure has gone up in the recent past. IRB Infrastructure and IL&FS Transport Network (ITNL) are popular in the roads segment having the highest exposure to the road segment. In the case of IL&FS, the company has recently come out with an IPO and was listed recently.

ITNL is amongst the largest private sector BOT road operators in the country having integrated business model providing service for projects, from conceptualization, construction to operating and maintenance of the road projects. The company has already bagged about 19 road projects.

Apart from roads, the company is also looking for opportunities in airport segments and plans to bid for more projects in this segment. The company’s advantage is its large portfolio of BOT assets and a long experience in the sector. The company has presence across different parts of the country and has about 9,397 lane km of road projects under its belt.

IRB Infra too is a leading player in the roads segment generating almost 100% of its revenue from this segment. The well-known Mumbai-Pune highway, one of its kind in India, is operated by IRB Infra.

The company has an integrated business model having large experience in toll roads and highways sector. The company has about 1,100 km of road projects in its kitty, which is the second largest among private players in the whole of India.

As opportunities are growing, the company should be able to procure more projects and increase its current portfolio. The company will not only benefit on account of the construction of these projects but also due to the collection of toll and annuity from these projects, providing stable future cash flow.

Also most of its projects are strategically located in major traffic areas like Mumbai-Pune, Mumbai-Surat, etc. The company also won projects in other states like Rajasthan and Punjab and is gradually focusing on becoming a pan-India player in the road segment.

Source: stockmarketsreview.com

TEXT-Fitch affirms SNBTPL ‘s bank loans at BBB-(ind)

April 16 – Fitch Ratings has today affirmed SEW-Navayuga Barwani Tollways Pvt Ltd.’s (SNBTPL) senior long-term project bank loans aggregating INR5,474m at ‘BBB-(ind)’, and subordinated bank loans of INR300m at ‘BB+(ind)’. The Outlook is Stable.

SNBTPL enjoys an 18-year concession from National Highways Authority of India [NHAI.UL] (NHAI, ‘AAA(ind)’/Stable) to design, engineer, build, finance, construct, operate and maintain on a Build, Operate and Transfer (BOT) basis an 82.8km road stretch on the National Highway 3 (NH-3) in the state of Madhya Pradesh. The estimated cost of the project is INR7.9bn, with the scheduled commercial operations date (COD) in May 2011.

The affirmations follow SNBTPL’s reasonable progress over the last year in achieving different project milestones during the critical construction phase. Fitch does note however that the company is slightly behind plans. The entire right of way (ROW) required for the project is reportedly in the company’s possession, with the exception of a three-km stretch of forest land; however, first-stage approvals have been received from the forest department.

As of March 2010, the project has received equity infusions (61.3%), and has been drawing down on term loans – 58% of senior debt and 57% of sub-debt – as per schedule.

The ratings are constrained by the residual completion risk, although a fixed-price construction contract with SEW, whose terms mirror those in the concession, offer protection. Base-case debt service coverage metrics are extremely modest and vulnerable to various deep stress tests Fitch performed. A three-year tail in the concession allows the banks to restructure the loans, if necessary. Some liquidity support is available in the form of a fully-funded debt service reserve account (DSRA), equivalent to three months’ principal and interest payment.

Fitch has factored into its rating the operational track record and financial strengths of the sponsors. This includes the credit enhancement value of their undertaking to finance the cost and time overruns, to replenish the senior and subordinated DSRA and to provide unconditional and irrevocable bank guarantees if event project cash flows are inadequate to create the DSRA. Additionally, SEW has executed a letter of undertaking to the senior to infuse INR100m, after the COD, to augment debt payment capacity and to inject additional funds in case operations and maintenance expenses exceed the base case projections submitted to the banks.

The agency believes that the road has long-term economic potential, and that its locational advantage should have a beneficial impact on tollable traffic. Also, it is situated on the highway that represents the shortest distance between Mumbai and Agra.

SNBTPL is a 74:26 JV between SEW infrastructure Ltd (SEW, ‘AA-(ind)’ / Stable) and Navayuga Engineering Constructions Ltd (NECL). Following inter-se adjustments among the sponsors, SEW has increased its equity stake in the project to 74% from the 51%, resulting in a reduction in NECL’s holding to 26%.

Applicable Criteria available on Fitch’s website at www.fitchratings.com: “Rating Criteria for Infrastructure and Project Finance”, dated September 29, 2009.

Source: in.reuters.com

NHAI brings down rent for wayside amenities

The National Highways Authority of India (NHAI) has brought down its annual rent to 1 per cent from 10 per cent for building wayside amenities on highways across the country.

The roads authority is now seeking rent at one per cent of the cost of the land per annum for the first year. Thereafter, an additional one per cent will be added every year with the rent being capped at 10 per cent.

NHAI plans to develop through private participation an amenity at every 50 km on highways. They would include parking lots, snack bars/restaurants, toilets, restrooms for short stay, first-aid centres, telephone booths, petrol pumps/minor repair shops (optional), kiosks for sale of miscellaneous/sundry items, landscaping and space for spreading awareness on government welfare programmes.

NHAI had earlier received three bids for 29 projects it had put up for tendering. The authority then decided to relax the criteria. The lease period for the projects has also been doubled to 30 years to make them more profitable and attract more bids.

Among other changes, NHAI has relaxed the pre-qualification norms. Any private participant with only a year of experience can apply for building the wayside amenities. Earlier, private participants required to have an experience of five years.

The authority had not found takers for 26 wayside amenity projects even after four-five attempts. To make the projects viable, NHAI has now hired consultants to find potential sites along the East-West and North-South corridors. The field officers of NHAI have also been directed to identify at least one site for development of comprehensive wayside amenities.

Source: business-standard.com

‘Continuous rule changes hit highway award schedule’

The roads and highways sector needs many more government initiatives, Virendra Mhaiskar, chairman and managing director of IRB Infrastructure Developers, tells Sanjay Jog. Edited excerpts:

The (Union) Ministry of Roads and Highways plans to award 18,581 km of road projects in 2010-11. Do you expect hectic bidding?
Yes, we do.

Another 33,130 km of NHAI (National Highways Authority of India) projects are yet to be awarded. How fast can this be done?
It may be possible to award these over 12 -18 months. However, environmental clearance to these projects may be an impediment. What needs to be done now is to concentrate on the actual award process, without bringing further regulatory changes. The continuous regulatory changes have badly affected the award schedule.

IRB has bagged all projects on tolls, with average grant at 36 per cent of the project cost (maximum permissible is 40 per cent).
IRB will continue to focus on toll-based BOT projects. However, we are not averse to bidding for annuity-based BOT projects. Depending on the viability of the projects, we will bid.

And, the challenges in project implementation?
The key challenge now appears to be getting environment clearance. We fear delays on this account. The Panaji to Goa-Karnataka border project, for which bids were opened in mid-June last year and for which LOA was issued in January this year, is yet to receive environment clearance. On our part, we are on the verge of achieving financial closure for the project.

Any comment on the government’s recent initiatives in this regard?
The recent initiatives are welcome and will go a long way in bringing investor confidence.

How will the norms to restrict players with more than three projects without financial closure from new bids be helpful?
Although the norms appear very strict, it will surely help to bring out the serious bidders and the non-serious ones. It will avoid hoarding of projects and result in improved implementation.

There have been delays in award of projects by NHAI. Will the recent reforms see action?
The recent reforms have surely resulted in improving the appetite to bid for the projects. However, execution capability in the country is finite and its building up will take some time. These capabilities, we believe, cannot be imported.

To complement the National Highways Development Programme, the government proposes to develop the Expressway Authority of India for implementation of expressway projects of 18,637 km, for completion in phases till 2022. What’s your opinion?
Work surely needs to start on the expressway programme. However, whether this needs a separate expressway authority is a question. It has the potential to create further red-tapism, because of multiplicity and connectivity issues concerning highways.

As a developer, what further initiatives are needed to make project implementation hassle-free?
State support is very important. The minister has been keen to have all the states signing the state support agreement for faster implementation of projects. But, some progressive states are yet to sign.

Do developers face problems in availability of finance for toll or annuity projects? There has been increasing opposition on toll recovery. How could this be tackled?
The liquidity in the market as of now is sound. However, the RBI will have a tough job on hand in the coming year, ensuring availability of liquidity for infra projects and managing the government borrowing programme. If a mechanism is devised by the government which would allow pension funds and insurance funds to participate in the debt programme for infra projects, this would take considerable pressure off the banking system.

On toll recovery, we have not seen any opposition where the facility is well-maintained and saving on operating cost to the user is visible. However, there is an intention of the government to go ahead and toll two-lane roads. This may trigger toll opposition, as these roads would offer very little cost-saving to the user.

What are IRB’s expansion plans?
We intend to concentrate on our core competence of highway development and will concentrate on growing our portfolio of 5,100 lane-kms. We will also concentrate on improving our execution capabilities.

Source: business-standard.com

NHAI nod to toll hike for Gurgaon e-way

NEW DELHI: From Thursday, commuters using the 27.7 km Delhi-Gurgaon expressway will have to pay Rs 4 more for each trip. The user charge for crossing the 32-lane toll plaza on the Delhi-Gurgaon border will increase by Rs 2, and there will be a similar hike for users crossing the Kherki Dhaula toll plaza. The hike will be steeper for heavy vehicles.

The expressway has three toll plazas and the two major plazas — the 32-lane plaza and the Kherki Dhaula plaza — process around 1.9 lakh vehicles a day.

The revised toll rate, which has been finalized by the National Highways Authority of India (NHAI), will be notified on Wednesday, said senior officials. On Tuesday, the authority notified the revision of toll rates for 23 four-laned national highway (NH) stretches owned by the government. Sources said that under ideal conditions, revised toll rates should be notified at least a week before they come into effect so that users have prior knowledge of the increase.

In the case of the four-laned NHs, the revised toll fee for 2010-11 has been fixed at 76 paise per km, whereas a commuter using the Delhi-Gurgaon expressway ends up paying Rs 1.6 per km (Rs 45 for a total of 27.7 km). Car users will pay Rs 20 at the 32-lane plaza and Rs 25 at the Kherki Dhaula plaza. Similarly, at the IGI plaza the toll will go up from the current Rs 12 to Rs 13 per trip.

NHAI sources said the toll rate for the two categories of roads is different. ‘‘The expressway is a Build, Operate and Transfer (BOT-toll) project and its base toll charge has been fixed on the crossing of every toll plaza, not on a per km basis as is the case with other stretches. People pay more for better facilities and driving comfort,’’ an official said. He added the base toll charge was fixed to make the project financially viable.

Commuters who use the expressway daily, however, disagreed with NHAI’s claim that users pay more for better facilities.

‘‘We pay more for the expressway’s comfort but one can find two and three-wheelers crowding the main carriageway, increasing the risk of accidents. Why can’t the NHAI and the developer fix the problem?’’ asked General Satbir Singh, who often travels to Gurgaon.

Source: timesofindia.indiatimes.com

Sadbhav Engineering Secures Road Project in Karnataka from NHAI

Sadbhav Engineering Ltd has announced that the Consortium led by the Company has been awarded the project “4 laning of Bijapur – Hungund Section of NH-13 from km 102.000 to km 202.000 in the state of Karnataka on Design, Build, Finance, Operate and Transfer (“DBFOT”), Toll basis under NHDP Phase-III (Package No. NHDP-III/BOT/KNT/05)” from The General Manager (Tech), National Highways Authority of India (Ministry of Road Transport and Highways) G-5&6, Sector-10, Dwarka, New Delhi-l10075 in the name of Joint Venture known as ‘SEL-MCL Consortium’ in the ratio of 77:23 respectively.

The proposed total cost of development of the said project stands at Rs. 1225.00 Crores. The Concession Period of the project is 20 (twenty) years including construction period of 910 Nine Hundred and Ten) days from the “Appointed Date”.

The stock was trading at Rs.1245, up by Rs.37.25 or 3.08%. The stock hit an intraday high of Rs.1294.80 and low of Rs.1215.

The total traded quantity was 5230 compared to 2 week average of 1222.

Source: Equity Bulls

By 2022, govt to lay 18,637km of expressways

NEW DELHI: The government has drawn up an ambitious target to lay 18,637km network of brand new expressways by 2022. These high-speed, access-controlled roads will be of the four-lane and six-lane variety with 3,530 km to come up in the next three years.

The highways ministry is ready with a Master Plan for the National Expressway Network. The new target of expressway length was projected after receiving observations from 11 states including Madhya Pradesh, Bihar, Gujarat, Karnataka and Uttar Pradesh. Earlier, the final draft report prepared by the highways ministry had proposed to develop 17,661 km of expressway network.

The expressways network will not be an upgraded national highway network but will be developed entirely as greenfield projects. These will preferably be built with three-metre high embankments and will have service roads along the stretches where there is a need. Officials said there was an urgent need to develop expressways network as road transport would remain the mainstay for sustaining the economic momentum of the country.

“The existing arterial network cannot meet the latent and the emerging demands for connectivity and accessibility while ensuring the desired level of safety,” said a senior ministry official.

As per estimates, the construction cost per km would be Rs 14 crore in case of 4-lane and Rs 20 crore in case of 6-lane expressways excluding land acquisition and other expenses. A recent presentation made before the top brass of National Highways Authority of India (NHAI) and the ministry also mentioned that while majority of identified stretches would be built on build-operate-transfer (BOT) mode, stretches which were unviable could be developed on annuity basis.

The Master Plan document has also phased the expressway development programme for 2012, 2017 and 2022 and this has been done on the basis of financial viability, relative traffic intensity along various corridor segments, network comprehensiveness, connectivity warrants and relative economic potential of each proposed project.

The ministry is already in the process of preparing a draft for creation of a National Expressways Authority of India (NEAI) on the lines of NHAI and the highway regulator has also got an exclusive wing for the expressway as a stop-gap arrangement.

Source: timesofindia.indiatimes.com

No state consent, NHAI goes ahead with four-laning of highway section

Without taking the state government on board, the National Highways Authority of India (NHAI) has already decided to go ahead with the four-laning of the 80-km Muzaffarnagar-Hardwar section of the Delhi-Dehradun corridor.

The state government has not yet given its consent to the State Support Agreement for a 21-km stretch, which falls within the state. The rest falls in Uttarakhand.

The bids for the project were invited in September and had to be opened on October 9. But the Highway Authority had later thought of abandoning the project as the state government had refused to sign the State Support Agreement. They have now decided to go ahead with the project.

“The 9 bids received for this project were opened on Wednesday. A contractor for the project will be finalised within a week,” said M K Jain, Project Director.

“The state government has not sent any letter of consent on the State Support Agreement. But the Highway Authority is going ahead with the project,” added Jain.

According to him, the four-laning of the highway will start from June next year. About 70-hectare would be required for 21-km stretch in the state.

“Land has been earmarked. A proposal has been sent to the authorities for approval on notification of land acquisition. The notification will be issued within a week,” said Jain.

The Muzaffaragar-Hardwar section will be four-laned on built, operate and transfer (BOT) basis under the National Highways Development Project (phase-III). The project will cost Rs 900 crore. The Detailed Project Report has also been prepared.

The state government had refused to sign the State Support Agreement as it wants to develop an expressway along the Upper Ganga Canal from Noida to Hardwar which will also open a passage for Uttarakhand from UP and Delhi. Jain said if the State Support Agreement was signed, the state government had to assure that no alternative expressway — Upper Ganga Canal Expressway — would be developed parallel to Highway Authority’s highway, leading to a competition.

“Since the agreement has not been signed, the state government is free to develop its own expressway,” said Jain.

The eight-lane Upper Ganga Canal expressway, popularly known as Hindon Expressway, will stretch from Noida to Hardwar through Muzaffarnagar and Roorkee. Mumbai-based firm called Infrastructure Leasing & Financial Services Limited (IL&FS) is conducting the feasibility study of the project and are likely to submit the report by next month.

Source: expressindia.com

Hazaribagh road clears Cabinet bump

Ranchi, July 31: The Union Cabinet has finally cleared the project to widen the Ranchi-Hazaribagh stretch of NH-33, considered the lifeline of the state, making it the first project in the region — including Bihar — to be executed under build, operate and transfer (BOT).

The Cabinet sanctioned Rs 688 crore yesterday for four-laning 71km of the highway which means that a consortium of IL&FS Transportation Networks Limited (ITNL) and Punj Lloyd would now be awarded a contract by the National Highway Authority of India (NHAI).

According to the terms of the BOT-annuity plan, the project will have to be completed in two and-a-half-years. The consortium would be paid Rs 64.08 crore every six months for the next 15-and-a- half years.

In all, the government would be paying the consortium approximately Rs 1,900 crore, the funds for which would be sanctioned in future. The consortium will, however, be responsible for maintaining the road for 18 years from the date of awarding of the contract.

“Now NHAI will issue a letter of intent following which a contract agreement will be signed with the consortium. This will be the first project in Jharkhand and Bihar to be executed under BOT-annuity basis,” Lt Col Chandan Vatsa, the NHAI general manager (BOT), told The Telegraph from Delhi, sounding relieved that the project had crossed its final hurdle.

Four-laning of the Ranchi-Hazaribagh stretch was in phase III of National Highway Development Programme’s (NHDP) which was cleared by the Centre in 2005. But it was held up as the past three attempts to invite bids did not yield results.

Vatsa, however, warned that the state, now under president’s rule, had a lot more to do so that land acquisition, forest clearances and other permissions were speeded up.

“Only about 48 per cent land required for widening the road is under NHAI’s possession. As per the Model Concession Agreement approved by government of India, at least 80 per cent possession of land is mandatory before a contract cab be awarded. So now the state administration must pull up its socks,” the NHAI official said.

NHAI has also provided for a 4.2km bypass in the Kujju area of the highway to avoid the fire zone that has already made commuting in the stretch dangerous. The by-pass, that would run on a new alignment, has been included in the proposed four-laning project.

The total length of the Ranchi-Hazaribagh stretch of NH33, including the bypass, would work out to be 71.16km.

“The new proposed alignment will avoid the existing fire zone in and around Kujju. It could well be the safest zone. But once the project starts we will need to conduct soil, bore hole and other geological tests to assess the exact magnitude of the underground fire,” Vatsa added.

M.K. Pandey, the manager (technical) of NHAI, said they have apprised Delhi about the situation at Kujju. “After conducting the geological tests, the authorities may even decide to alter the alignment of the Kujju bypass once work starts, ” he said.

Source:www.telegraphindia.com

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