Nearly $40 million to be poured into highway projects

HUNTSVILLE — Huntsville and parts of Walker County will see nearly $40 million in highway improvements over the next few years.

The Texas Department of Transportation has several projects in the works that will improve the safety of Huntsville roadways.

Highway 19 construction has been ongoing for months and is running smoothly, according to David Stephens, area engineer for Walker, Madison, Leon and Freestone counties.

“I’m tickled to death,” he said. “These are a lot of necessary projects.”

TxDOT partnered with the city of Huntsville on the Highway 19 project, with the city giving $150,000 for aesthetics and a signal on Highway 75 and Boettcher Drive. That project is expected to cost $15.3 million.

“Highway 19 is going well,” Stephens said. “The dry weather is causing a lot of people grief, but it’s really improving the production for Smith and Co., the contractor.”

Most of the on and off ramps have been roughed in along Highway 19, except for those entrances and exits that have traffic. Most of the beams have been placed for the Bearkat Boulevard bridge and the Highway 75 bridge.

“Bearkat is going to really be nice,” he said. “We worked with the city on it and tried to make some changes on it so it looks a lot nicer. It’s really kind of the main entrance to the college.”

There will be Texas stars integrated into the bridge columns for aesthetic purposes.

“We’re trying to make things prettier,” Stephens said. “There will be an exit ramp like there is now, but there will also be a frontage road that continues past Bearkat.”

Highway 30 underpass

The next major project residents will notice is a change to the Highway 30, FM 1791 intersection. There’s a red light for the FM 1791 portion and a blinking yellow light for Highway 30 travelers. Starting this month, contractors have bid on building an overpass that will be the new FM 1791.

Highway 30 travelers will no longer have to worry about someone pulling out in front of them from the farm-to-market road.

“We should start in the winter, then it’s about a 24-month project,” Stephens said. “It’s going to improve safety a great deal. What we’ll do is have frontage roads on either side that will be about where the existing lanes are. If you’re driving on Highway 30, you won’t have to cross any traffic. You will still have to stop on 1791.”

Stephens said this project was needed for safety reasons, and as such, was awarded through the TxDOT safety program.

“Projects compete statewide for a limited amount of safety money,” he said. “We did have a fatality where someone went through that stop light and hit another car. It’ll be a really big improvement.”

There will be a U-turn lane so anyone needing to go back into town will have that ability.

Interstate 45 Frontage

A contract is set to be awarded this month for frontage road construction along Interstate 45 in Huntsville. This project is expected to cost $8.7 million and will relocate entrance and exits ramps all along I-45 in the city.

Construction will stretch northbound from in front of Charlie’s Used Cars down to exit 118. There will be a new entrance ramp in front of El Chico Mexican Restaurant. The ramp at La Quinta Inn will be an exit ramp as opposed to an entrance ramp. There will be a new entrance ramp past Wiesner of Huntsville. The current exit 118 will be rebuilt further south.

“The whole goal is now that Huntsville has grown, we’re trying to keep as much traffic out of the signals as we can,” Stephens said. “We’ll have entrance ramps before signals and exits after the signals.”

On the southbound ramps, construction will start at FM 1791 and extend to Bob Luby’s Seafood. The frontage road will remain much the same, but will be reconstructed. The southbound exit 118 (south of the interchange of Highway 75), will be rebuilt further south.

“We’re basically going to modernize it so it’s more of a high speed entrance ramp,” Stephens said. “We  will not touch the ramp in front of the Holliday Unit.”

I-45/75/1791 Intersection

A $2.5 million project clustered around the intersection of Highway 75 North, I-45 and FM 1791 will have a major change on traffic backup in the area.

The process is expected to begin in August of 2012. Just after the Texas Department of Public Safety office, there will be a separate U-turn lane that will go between the bridge columns and the abutment on the south side of the existing road.

There will be a connector road for I-45 stretching from just in front of  Kate Barr Ross Park and cutting across Texas Department of Criminal Justice property.

“That’ll be a big improvement there,” Stephens said. “We’ll move the signal near the DPS office up to where 75 is now. We’ll do away with the (cross through street). If you’re wanting to go to the TDCJ BOT complex, you will be able to do that without going through a signal on the west side of the Interstate.”

Stephens said traffic studies were conducted of the area to determine the best way to alleviate traffic during mornings and afternoon rush hour.

“We’re really hopeful that it’ll be a great improvement,” he said. “One of the big things – if you’re going north and you want to go to the BOT, there will be a dual left turn movement. That should improve things a great deal there.”

City Projects

City Manager Bill Baine said the city is looking into ways to connect Spur 59 with FM 1791, creating a cross street that would help travelers heading to the TDCJ BOT complex.

“The idea would be to provide a safe way for local citizens to bypass the head-on truck traffic,” Baine said. “We want to facilitate people commuting to TDCJ headquarters.”

Source: http://itemonline.com

Rs 8kcr highway projects on anvil

NEW DELHI: The ministry of road transport and highways (MoRTH) has asked the National Highways Authority of India (NHAI) to award 3,000 km of roads on a cash contract basis during the current fiscal year to step up road construction.This would mean that projects worth Rs 7,500 crore-Rs 8,000 crore would be up for grabs for private road developers in the next few months. So far, NHAI has been awarding projects either through the BOT (toll) or BOT (annuity) mode, but this is the first time the authority has been asked to award large stretches under the cash contract scheme.While toll road projects have been mostly bagged by big players in the sector, cash contract projects may help small and medium-level players. “The focus of cash contract works will be more in the hinterland areas, which have remained untouched. These stretches have less traffic, and hence are not viable to collect toll,” said an NHAI official.The cost of construction is estimated to be in the range of Rs 2.5 crore and Rs 3 crore per km. The ministry is also considering whether these projects can be rolled out without acquiring additional land by using space available along the existing roads. Under this scheme, only extended two-lane roads would be built.Officials said this method would help expedite project execution. They said Uttar Pradesh, which is going for election early next year, is likely to get a bulk of such projects. Since the projects would be funded by the NHAI or the ministry, the Union government will have greater control over these projects that could help complete the work on time.In the first phase of this scheme, the highways ministry has started floating tenders for 540 km of highways in UP. Some officials in the ministry say the timeframe of one year for the maintenance of these roads by private contractors may lead to poor quality, and they want this to be extended to three to five years.

Source: http://articles.timesofindia.indiatimes.com

World Bank asks NHAI to look for new models

Upset with delays in the implementation of highway projects, the World Bank has asked the National Highways Authority of India (NHAI) to look for alternative ways of awarding highway contracts to private companies.

Till now, funding from the World Bank for the National Highway Development Project has been confined to EPC (engineering, procurement and construction) projects costing over Rs 4,000 crore. In an EPC project, the government gives a contract for road construction on an outright payment to whoever quotes least cost.

NHAI is currently awaiting a response after it invited expression of interest. “As part of transaction assistance,” points out a senior NHAI official, “the World Bank has asked us to invite EoIs from consultants to select new mode for implementing highway projects.”

EPC projects have witnessed a lot of delays — some even stretching beyond seven years, when completing a road project normally takes three years. The World Bank customarily withdraws fund for a project that has not been built in seven years, leaving the project funding to NHAI.

Analysts feel that availability-based model would be suitable for India, as it is a large country and no one-size fit solution can be implemented for all. “Globally,” says Arvind Mahajan, executive director of consultancy firm KPMG, “the models are availability-based, depending on the conditions prevalent. And all these models are derived out of the basic model prevalent. NHAI has also experimented various models and a availability-based approach would be the best.”

Others feel that delays in the past is what makes the World Bank find issues with the EPC model. Notes National Highways Builders Federation Director General M Murali.“A hybrid model, with features for BOT (build operate transfer) annuity and BOT (toll) will be the best model for such projects.”

BOT (annuity) mode envisages a private company building the road and the government paying to the company in instalments every six months.

The maintenance of the road is also not the job of the road developer. In BOT (toll), a road developer builds the road and recovers the money through toll collection. The company is allowed to collect toll to recover the investments made during a period called concession period and can range up to 25 years.

The World Bank, apart from funding for developing highways, also fund the VGF (viability gap funding) payments and annuity projects. VGF is done in a BOT (toll) project to make it financially viable.

Source: business-standard.com

Workshop on Nationwide Electronic Toll Collection, held at Vigyan Bhawan, New Delhi on June 14, 2011

• Mr. C P Joshi , Honrable Minister Road Transport and Highways
• Mr.  Nandan Nilkani , Chairman , UIDAI
• Mr. R S GUJRAL , Chairman NHAI
• Mr. Ravi Palekar , GM (Electronics) , NHAI – Addressing the gathering
• Mr. Sachin Bhatia, CEO, Metro Infrasys

Workshop on Nationwide Electronic Toll Collection held at Vigyan Bhawan, New Delhi. With an objective of paving way for a unified Electronic Toll Collection (ETC) technology for National Highways in India, the Ministry of Road Transport & Highways constituted a Committee under the chairmanship of Shri Nandan Nilekani Chairman of UIDAI with a mandate to examine all technologies available for Electronic Toll Collection (ETC) and recommend the most suitable one for implementation throughout India. The other members of the Committee are Prof. Pankaj Jalote, Director, IIIT-Delhi ; Dr. Kolin Paul, Asst. Professor, IIT-Delhi ; Shri A.V. Sinha, DG (Road Development) & Special Secretary, MoRT&H and Shri. V.L. Patankar, Member (Technical), NHAI (Member Secretary).

The Union Minister for Road Transport & Highways Dr. C.P. Joshi has said that we should chalk out a plan to increase the percentage of national highways from present 2.2 % to 5 % in the next 10 years. Delivering inaugural address at the Consultation Workshop with the Technology Providers and Concessionaires in respect of Electronic Toll Collection (ETC) here today, he said that keeping in view the various types of highways there should be a hybrid pattern of toll collection. The Workshop was jointly organized by Ministry of Road Transport & Highways, National Highways Authority of India & National Informatics Centre. The Chairman of UIDAI Shri Nandan Nilkeni & Minister of State for RT&H Shri Tusharbhai A. Chaudhary also addressed the workshop. Shri R.S. Gujral, Secretary Ministry of Road Transport & Highways and Dr. V.K. Gairola, D.G (NIC) were present.

Based on the recommendations of the committee headed by Mr. Nandan Nilekani to use RFID technology for ETC, the Apex Committee, responsible for ETC implementation planning, is in the process of prescribing certain standards which should be complied with all over the country to ensure interoperability. The primary purpose of this workshop was to take feedback from the key stakeholders, comprising concessionaires and ETC technology service providers. Security, cost effectiveness, convenience and scalability have been the main criteria based on which the detailing has been done.

Based on the feedback, the specifications and data detailing will be finalized for open market release. The plan is that the authorized manufacturers will be producing Transceivers and Tags based on these standards, the concessionaires will be procuring these Transceivers and in turn, the technology service providers will be integrating the entire ETC system at the toll plaza. Although details on other aspects like clearing house are being worked out simultaneously, majority of the decisions will depend upon these standards only.

Followings are the Tolling Companies, RFID Manufacturer and concessionaire took part in the workshop:

• Kapsch Metro
• Egis Infra
• L&T Infra
• GMR
• HCC Infrastructure
• JICA
• IRDSA
• DSC
• EFKON India
• Siemens
• IAITO Infotech Pvt. Ltd.
• ESSEN, Mumbai
• ATT System, Banglore
• Mitsubishi
• IBI Group
• Neology
• Steria
• Tag Factory

Brief of discussion over finalization of technology between committee and Industry Peoples:

• Dr. B.K. Gairola, Director General, NIC  – extreme left
• Dr. Y.K. Sharma, DDG, NIC - middle position
• Dr. Rajat Moona, Director General of CDAC, IIT Kanpur
• Dr. Y.K. Sharma, DDG, NIC - extreme Right

Mr. Venkat from GMR expressed change from IP 66 to IP 65 for the readers as IP 65 is also good enough and IP 66 will increase the cost for the readers without any additional value.

Mr. Hari from Efkon
He raised an issue over the  relative humidity of 100% for Transceiver antenna.

Committee Conclusion :
Committee agreed for the IP 65 standard and 95% relative humidity as it comply against all possible environmental threat at toll scenario.

Mr. Anand Shenoy from IAITO Infotech Pvt. Ltd.
Raised his voice over minimum requirement of reading of 10 Tags per second with 240 bits of EPC memory and 64 bits of Tag Id.

Committee Conclusion: committee agreed onto change it to 2 Tags per second with above said minimum requirement. On the other query raised by Mr. Shenoy that the data retention period must be 3-4 year for the tag memory instead of 10 years as their is no UV protection asked for the tag and without any special material with the effect of UV rays its hard to maintain the data in tag for 10 years, The committee replied as they will keep it under consideration and if required they will bring it in next phase.

On the query raised by Team from Metro Infrasys- Mr. Nitin Thakur and Mr. Harimohan for the option of having color coded  Tags for different class of vehicles, as it will help in operation at toll plazas. The Committee said that it is difficult to see the color in the moving car in the sun. However committee will discuss it in next phase.

Mr. Vipul  Sharma(Left), Mr. Mayank Manish(Right)
The long discussed topic was the polarization standard for the antenna, Panel has asked for circular polarization pattern for the antenna but Mr. Vipul Sharma and Mayank Manish from one of the leading manufacturer of RFID Equipment Neology reasoned to have it linearly polarized due to its long range and less interference phenomenon, also linearly polarized antennas can work at higher speed , committee keep this for discussion and will revert again.

Mr. Manoj Agarwal and Mr. Manish from Delhi Gurgaon Expressway strongly supported the idea of a law for putting a penalty on cash vehicles coming to Tag lane .

For the standard for the communication between plaza server and CCH server, there will be addition of Plaza id into the prescribed format by the committee. Plaza level fare plan and policy will be governed by the plaza itself while the global discount will be governed by the CCH server and will be updated in all the plaza server by CCH server itself. Committee also agreed to look into the various aspects of fare plans at different plazas.

Highlights of the Workshop:

ETC critical components:
Tag Distribution Channel & Inventory Management

• On-line channels by user
• Authorized service centers of vehicles (Service centre need to install the SPV client software and antenna connection), since centre must have authorized people to affix tags.
• RTO(Operation is similar to above)
• Vehicle dealer network(Operation is similar to above)
• Authorized point of sale installation(POS can be insurance companies, PUC centers, Petrol Pumps etc; Operation is similar to above)

Inventory Management of Tags:
SPV will keep track of allocated EPC Ids, Tag Ids etc. It will perform a demand forecast Tags and keep the tags available for distribution through distribution channel.

Handling Special Cases

• Valid ETC enabled vehicle was ejected due to non-read of Tag – Premium cash lane should verify it with the ETC database.
• Clone Tag – If customer complains/suspects that his/her Tag is cloned, Tag re-initiation is to be done for same Tag. Old Tag value is marked for special handling.
• Change in registration number of vehicle – Vehicle should approach distribution channel network and get a new tag. Old tag is to be destroyed physically and listed for special handling.
• De-registration of vehicle (due to destruction/ end of life/ Export etc.)-Tag is to be destroyed physically and listed for special handling.

Listing for Special Attention
Vehicle is listed for special attention following conditions:

• Insufficient balance as determined by clearing house
• Credit card co. declined the payment
• On Police look-out
• Suspected cloned Tag
• Tag with invalid Vehicle Registration no. (e.g. when Registration no. is changed)
• When toll plaza operator notices Tag carrying details different from vehicle itself (e.g. the vehicle Registration no. and/ or Vehicle class)

Videos

Conclusions drawn at the end of the seminar:

Documents Attached:

• Agenda Workshop
• Apex Committee for ETC Implementations – GOI, Draft Specifications Document
• ETC Report on RFID – July 2010

Toll Roads in China: Speeding Up Growth

Infrastructure has played an instrumental role in the Chinese economy’s ascent to the position of a global economic powerhouse. And the overarching importance of infrastructure in China was underscored yet again when the sector grabbed a 38% lion’s share of the $586 billion Chinese stimulus package introduced in November 2008. Out of all the infrastructure sectors, the effort to improve the country’s roads has received the strongest impetus and investment from the Chinese government. According to consulting firm KPMG, since 2000 China’s expressway network has been growing on an average of 20% per year. With this, the country has zoomed to the second position globally in terms of expressway network, next only to the U.S.

Driving forces of road construction

Outlined in a series of five-year plans, the development of infrastructure in the Chinese economy has remained an integral part of its economic development initiatives, But expressway construction in China only gained momentum in 1989, when the forces of economic liberalization were gathering steam. As a result of these comprehensive economic reforms, the Chinese economy surged to an average annual growth rate of 9% in the three decades spanning 1978-2008, a remarkable achievement. Driven by industrial production and exports, this higher economic growth was naturally accompanied by a greater demand for freight transport, which in turn created a demand for construction of new roads. Higher living standards along with improved levels of domestic consumption further added to this transport demand. What’s more, China’s zooming car sales and its emergence as the largest car market globally in 2009, also necessitated the quick construction of highways and expressways. Notably, the building of highways is a crucial factor in the country’s “Go West” policy aimed for the integrated development of central and western China, which lags behind the more economically prosperous east, as well as some parts of the north¹ .

National Trunk Highway System: Backbone of China’s road network

China’s ambitious National Trunk Highway System (NTHS), launched in 1990 originally envisaged 35,000 kilometers (21,748 miles) of expressways that would link all the major cities with each other as well as the ports. While this core of the Chinese transport system, covering a population of almost one billion, was due to be completed in 2020, it was functional by 2007, 13 years ahead of schedule. The NTHS, also known as the 7918 network, links all provincial capitals as well as cities with a population of more than 200,000, and incorporates the following:

• 7 Highways from Beijing
• 9 North to South vertical expressways
• 18 East to West horizontal expressways

Building expressways at a breakneck speed, China today boasts of 65,000 kilometers (40,389 miles) of expressway network, the second largest in the world, compared to a mere 147 kilometers (91.34 miles) in 1989 . The country is poised to expand this network further to 85,000 kilometers (52,817 miles) by 2020, according to the Ministry of Transport. For greater integration of rural areas in the economic development process, the government also plans to build and modernize about 270,000 kilometers (167,770 miles) of rural roads.

Regulatory framework for roads: Government at the helm

The fast-paced expansion of the road network in China, especially expressways, over the past 15 years has been possible due to the government’s systematic tiered approach. The development has been led by the State Council as a central entity for overall planning and standards, while the Provincial Transport Departments are responsible for detailed planning, design as well as building. Successive five-year plans have also outlined specific provincial targets for road construction, which have facilitated large-scale implementation simultaneously of many parallel projects.

The governance or regulatory framework for roads in China is as follows² :

State Council: This is the highest executive organ of state administration, with the premier at the helm, along with ministers and state councilors. The State Council has the responsibility of approving and issuing plans and policies for road sector development.

Ministry of Transportation: The Ministry of Transportation (MOT) assumes the role of policy oversight as well as regulation of all transport modes, except railways.

Provincial Transport Departments & Transport Bureaus: The 27 Provincial Transport Departments and the transport bureaus for the four mega cities- Beijing, Chongqing, Shanghai and Tianjin- are responsible for the implementation of the transport programs and policies. They are also accountable for raising funds for the road projects, and for their operation as well as maintenance.

Financing of road projects

On the funding front, the provinces finance about 65%-90% of the capital cost needed to construct and maintain the expressways through their own budgets and debt. MOT sets policies, standards and provides investment support for construction. While expanding the inter-provincial National Trunk Highway System, the government decided to adopt a toll-based network, which would be predominantly financed by debt³ .

While the financing and management of the expressway network predominantly remains in the public sector domain, the government has adopted a distinctive form of Public-Private Partnership (PPP) financing for some expressway projects. For example, after completing the construction of a toll expressway, provincial governments set up an expressway corporation as a public limited company, listed on the stock exchange. The provincial government then invests the money paid by the shareholders into construction of new toll roads. As such, China followed a one road-one company model, which allows for joint venture, securitized ownership, direct private sector investment, as well as different forms of leasing and concessions. Overall, private investments constitute a mere 7% of expressway financing in China. Here, the build-operate-transfer (BOT) method of road construction and management, which is a popular form of PPP financing, has been recently introduced in China. It is a tendered process, in which the chosen concessionaire (private entity) finances, builds and operates a road for a specified period.

China and India: Contrasting approach to road projects

In terms of the total road network, China ranks second, while India ranks third globally. A common characteristic of the road network in both countries is the predominance of rural roads, which constitute almost 90% of the total road length in China and 79% in India. While India boasts of a highway network of 66,590 kilometers (41,377 miles), its minuscule expressway network of 200 kilometers (124.3 miles) is dwarfed by China’s 65,000 kilometers (40,389 miles) expressway network⁴ .

While traditionally road construction in India was entirely undertaken and financed by the government, budgetary constraints have resulted in alternative models for road projects. With the objective of attracting private investment in road development, maintenance and operation, the National Highways Act (NH Act) of 1956 was amended in June 1995. These amendments facilitated private entities to invest in the NH projects, as well as levy, collect and retain fee from users, and regulate traffic on these highways as per the provisions of the Motor Vehicle Act of 1988.

The National Highways Development Program (NHDP) forms the backbone of India’s road network with a length of 66,590 kilometers (41,377 miles). While this constitutes only 2% of India’s total road network it, it carries about 40% of the total road traffic. Launched in 2001, the NHDP is spread over seven phases to be completed by 2015. This ambitious program consists of connecting the four metropolitan cities of New Delhi, Mumbai, Chennai and Kolkata (the Golden Quadrilateral), while substantially upgrading its existing network too.

Read full article here:
http://www.thomaswhite.com/explore-the-world/BRIC-spotlight/2010/china-toll-roads-expressways.aspx

Delhi-Gurgaon Expressway: Job Unfinished

These days driving on the Delhi Gurgaon Expressway in Peak Hours, perhaps you are asking yourself, what must be the traffic condition at toll plaza and at entry road to my office? How much time is needed? Will the traffic move fast or slow? It’s been more than 2 years since the highway became operational but the degree of difficulty in driving on this has increased sharply in recent months as more and more sections are
becoming congested.

When Delhi Gurgaon Expressway was conceived by NHAI, the main objective was to provide high-speed connectivity between Delhi and the commercial hub, Gurgaon. However, today instead of providing speed connectivity it has become a subject of argument between, NHAI, Concessionaire and planning authorities of Haryana and New Delhi.

January 2008 marked the completion of the much-awaited Delhi Gurgaon Expressway but due to lack of proper planning, poor traffic forecasting, unplanned traffic management, poor urban design and lack of traffic enforcement it became a nightmare for the users. Further the increased traffic added to the mess in management of the highway and concessioner faced a huge challenge in starting the operations.

It is very sad to see this highway in such a sorry state of affairs where the issues are not addressed by the stakeholders but just being passed on to each other. Today, contrary to high expectations, this highway is just another ordinary road and is not able to give a nice driving experience to the road users and leave a good impression on the users.

The aesthetic perception for highway user is very bad indeed which conjures up images of choked Hero Honda road with overflowing drain water, poor service roads, narrow entries and exists, poor landscaping and toll plaza lanes welcoming commuters with choked lanes and driver criss crossing the lanes. This highway in the National Capital Region of India is far from creating an impression on any visitor from abroad who touches it when he enters the city and suburbs. It is a far away from the natural landscape and aesthetic quality which we can see internationally in all highways. Concessionaire was given the design with which he has to construct and operate now.

Expert highway planners and traffic engineers were not able to envisage for amenities required for the highway. The high cost of right-of-way acquisition generally prohibited the creation of buffer zones between highway and neighbourhood. Bridges, overpasses, skyways, fencing, sound barriers and interchanges that are a basic necessity on this stretch were not envisaged and now after development these are being accommodated in an unplanned manner. These unplanned and graceless structures are not well designed and lacks the aesthetic appearance.

The biggest challenge on this highway in the coming years would be circulation of traffic. Traffic planning and enforcement has not been addressed adequately leaving concessionaire of the highway helpless. For more than 50 villages on both sides of the road, this is another massive freeway which is used without payment of any toll, without any policy and without any documented right since they were overlooked at the planning stage. Today the challenge for the office going people is not just to drive on this but taking the entries and exits on this as well. All entries and exists are narrow and curvy lacking center lines and ample shoulders. At peak hours it takes more than 40 minutes which is almost double the time for crossing the highway. Prime commercial areas and prime residential localities of Gurgaon close to these exits and entries are facing the
heat of this oversight.

Since it began operation, safety has been a big issue and it has also achieved the notoriety of being called “The Killer Highway”. There are only limited over-bridges along the entire stretch to cater to the communities living on either side of the heavily populated areas through which the expressway runs. Right from fencing to over-bridges, everything is being implemented on a need basis now. Few issues are still un-addressed like movement of two-wheelers which is almost equal to the existing traffic on the expressway and effort has not been made even to count them so that some planning can be done for accommodating them on this highway. Half completed service roads and poor signages have also added risk to the users on the highway.

This development is not without its drawbacks – traffic congestion is a serious issue, especially at the toll plaza. During peak hours, it can easily take up to 15 minutes to cross the toll plaza which would have taken a minute to cross if managed properly. The highway operations staff needs lot of training in highway management and operations. The benefits that construction of this expressway offered in terms of employment and connectivity is outweighed by traffic congestion. The toll plaza at the Delhi-Gurgaon border has also proved inadequate in handling the increasing traffic, leading to traffic jams during peak hours. Though the plaza is tag enabled, only 35-40 percent of the traffic that passes through avails of this facility and that too with lot of mess.

From dense fog in winters to scorching heat waves in summers, from over loaded truck on the main highway to two wheelers zipping from all directions, from the encroached service roads in Haryana to un- authorized parking on service roads, from high speed to bad traffic etiquettes on Expressway, from Cash Users in Tag Lanes to Blacklisted Tag users, from lack of Basic Amenities to power failures in highway lighting, from lack
of VMS signages to stray animals on Highway, there are lot of issues that need to be addressed in Highway Management.

Highways are not only meant for driving. Internationally highways are meant to give a pleasant experience to the users where they feel safe to drive and reach their family and home in time. Aesthetics of expressway in terms of median, edges, lighting and road furniture is developed in such a fashion that it adds to the driving experience. The idea is to choose pleasing aesthetic solution which appeals to the users without compromising the safety issues of the highways.

To conclude, the Delhi Gurgaon Expressway has not only made developed localities of Gurgaon more accessible, it has also facilitated development of new localities. Master Plan 2021 has opened many sectors for development which benefitted with better connectivity after completion of this expressway. However, the quality of services on the Delhi-Gurgaon expressway might get worse if not addressed on time. Gurgaon is already booming and it needs improved connectivity and a sharp reduction in travel time, both within the city as well as to and from the national capital. All stake holders and people involved in this project need to sit together and seriously deliberate to address all outstanding issues. A time bound plan for addressing these issues can be done only by a truly innovative way of thinking about the freeway in the urban environment.

All said and done, much work still remains to be done……

Sachin Sharma
Executive President -Infrastructure
Bajaj Hindusthan Ltd
www.bajajhindusthan.com

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

Infrastructure sector set to receive

More bank credit will soon flow to build infrastructure in the country with the Reserve Bank of India (RBI) on Tuesday reducing the level of provision against substandard loans to the sector from 20 per cent to 15 per cent.

The central bank’s decision to treat annuities and toll collection rights under build-operate-transfer (BOT) road and highway projects as tangible securities has also come as a major relief to infrastructure companies.

Banks and institutional lenders said the move on provisioning would enable lenders to loosen their purse strings for the infrastructure sector where long gestation projects often end up with issues that are beyond the control of both the lender and the borrower.

“There are many uncertainties in the infrastructure sector. Often there are delays due to reasons such as obtaining environment clearances and delay in equipment supplies that lead to assets becoming substandard. The RBI move will definitely encourage banks to go ahead and provide more advances to the infrastructure sector since it will provide a comfort factor,” SS Kohli, chairman and managing director of India Infrastructure Finance Company (IIFCL), the government’s flagship infrastructure finance company, told Financial Chronicle.

SBI chairman O P Bhatt said the announcement on infrastructure lending would help banks to finance such projects. “The treatment of annuities as tangible securities under BOT scheme will help attract private equity and give a boost to infrastructure sector,” he added.

UCO Bank chairman and managing director SK Goel echoed the view. “RBI move will reduce the burden of banks since loans to infrastructure projects often become substandard due to technical reasons. With only 15 per cent provisioning requirement, banks will be encouraged to lend more,” he said.

CMD of Bank of Maharashtra (BoM), Allen C A Pereira, said banks have been raising concerns over project delays and asset-liability mismatches in their infrastructure portfolio.

“Infrastructure projects are long gestation projects and several times things do not work out the way it was originally planned. Therefore, there was a strong case for easier provisioning norms for substandard assets. The RBI move is to ensure that banks do not suffer,” Tourism Finance Corporation of India CMD Archana Capoor said.

According to the planning commission, projected investment in infrastructure such as ports, airports, railways, power, irrigation, water supply and sanitation during the 11th plan (2007-11) is Rs 20,54,205 crore. The huge demand for funds can be gauged from the fact that the road ministry alone plans to award projects to build around 18,000 km during this financial year worth more than Rs 1,50,000 crore. Of this, 65 per cent of projects would be on BoT toll basis, 20 per cent on annuity and remaining 15 per cent on engineering, procurement and construction (EPC) model.

However, bankers said the RBI move was not to make banks meet their overall credit growth target when of offtake to sectors such as real estate has slumped. “These issues are not linked. The slowdown in overall lending and to the housing sector may be due to other reasons. Housing loan borrowers may be adopting a wait-and-watch approach,” Pereira of BoM said.

UCO Bank’s Goel agreed: “This is purely to encourage flow of funds to infrastructure sector. Overall credit growth and trends for specific sectors cannot be linked.”

Meanwhile, infrastructure companies have welcomed the decision to treat annuities and toll collection rights under BOT projects as tangible securities, saying the decision would give private road developers easier access to funds at lower interest rates.

At present, in BOT road projects, there is nothing that can be considered as tangible asset. This is because the concessionaire has to transfer the land either to the National Highways Authority of India (NHAI) or the state government after about 30 years of the agreement. Toll collection is also uncertain and therefore treated as an intangible asset. This makes it difficult for developers to obtain loans under the secured category.

“Now that the RBI has allowed annuity and toll collection rights as tangible securities, where there are provisions to compensate the project sponsor if a certain level of traffic is not achieved, it will make banks pro-active to lend to the sector,” Issac A George, chief financial officer of GVK Power and Infrastructure, said.

In its credit policy, RBI said annuity and toll collection rights should be treated as tangible securities subject to the condition that banks’ right to receive them is legally enforceable and irrevocable.

“Most banks offer loans to road developers under secured categories. However, there are lots of provisions and agreements that the parties work out among themselves. The developers also pay a higher interest rate of up to one and a half per cent for unsecured loans. The RBI announcement will help developers to save the additional interest cost and avoid legal troubles,” said Vishwas Udgirkar, an executive director at PricewaterhouseCoopers.

The move is also expected to lower the cost of road projects. “The RBI move to treat annuities and toll collection rights as tangible securities will create a healthy market for securitisation of toll portfolio, thereby reducing the cost of road projects after construction,” said Hemant Kanoria, chairman and managing director of Srei Infrastructure Finance.

Source: mydigitalfc.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

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