NEW DELHI: Government on Monday approved flexibility to award highway projects on public funding mode, or EPC, where private players are not bidding for works on public-private partnership (PPP) model. At a review meeting – chaired by Prime Minister Manmohan Singh – it was decided that the highways ministry and NHAI won’t rush to award more projects simply to achieve targets.
The ministry has reduced its award targets drastically on both PPP and EPC modes. Against the original target of awarding about 3,200 km on PPP model, NHAI and the ministry have awarded only 700 km. Similarly, while the target to award on EPC was kept at 6,950 km, it has been whittled down to around 5,000 km.
“We are hopeful of awarding about another 1,000 km on EPC of the 2,000 km that NHAI had planned to bid out on PPP mode after the PM and finance minister has favoured our stand. We submitted how there is a need to go slow and to shift to EPC mode since private players are not putting bids for quite some time,” said a senior ministry official.
Though officials also submitted that the ministry and NHAI are in a position to invite tenders for three expressway projects – Eastern Peripheral Expressway, Delhi-Meerut and Mumbai-Vadodara – they are unsure whether there will be bids on PPP mode.
Meanwhile, department of economic affairs secretary Arvind Mayaram said that the bad patch for private investment in infrastructure will pass. Speaking on sidelines of Indian Roads Congress (IRC) convention, he said private investment will resume in the next six-eight months as economic condition has started improving.
Planning Commission member B K Chaturvedi also admitted that private investment has fallen significantly due to global financial situation. “During our mid-term review we will consider whether there is a need to rework the financing model to increase government funding. Obviously, we now want more projects to be on EPC mode,” he added.
THIRUVANANTHAPURAM: Works minister V K Ebrahim Kunju on Tuesday said the national highways in the state would be developed in 45 metres only. The National Highway Authority of India (NHAI) had informed the government that it would not be able to develop the highways in 30 metres, he said.
“We proposed 30 metres in view of the hurdles in land acquisition. The NHAI said the state would have to take charge of the highways if the width is 30 metres. It is not possible for us to develop the highways and we have informed the ministry that we agree to the 45-metre plan,” he told a news meet.
The minister dismissed the chances of elevated highways, saying they are not feasible. “It can be done only in special cases.”
He said the KSTP phase II and state roads improvement projects were on track. On condition of roads after rain, he said a performance guarantee of three years has been imposed for bituminous macadam and bituminous concrete roads and five years for heavy maintenance roads.
Move in the wake of domestic developers keeping away from bidding for road projects
With developers in India staying away from bidding for road projects, the Ministry of Road Transport & Highways plans to conduct road shows abroad to attract foreign firms to take up projects here.
According to sources, the road shows are expected to be conducted in China and Australia, among others, over the next few months.
A senior official in the ministry told Business Standard the ministry has prepared a presentation to be made to the Prime Minister shortly and “one of the proposals is to do road shows abroad to ask investors to participate in PPP (public-private partnership) projects in India”.A National Highways Authority of India (NHAI) official also confirmed that such a proposal is being studied.
The proposal comes at a time when many private road developers, including infrastructure majors GVK, GMR and Larsen & Toubro, have stopped investing in road projects owing to land acquisition problems and funding constraints, among other reasons. Some other developers have also walked out of road projects due to funding concerns.
With the general elections approaching and road construction turning out to be a crucial factor, reviving construction activity is a priority for the government. It has managed to award only less than 1,000 km so far this year.
Experts, however, say the government will need to sort out problems plaguing Indian companies before inviting foreign developers.
“The Indian road sector is at a crossroads and we need to take policy decisions to help Indian companies. Once the internal problems are sorted, will we be able to see some fruits from the decision to do road shows abroad,” said Vishwas Udgirkar, senior director at Deloitte India.
Private road developers in India have also been plagued by the quantum of premium that companies have to pay to NHAI. The firms have been asking the government to reschedule the payments so as to provide a breather for them. Private developers owe close to Rs 1.51 lakh crore to NHAI as premium over the next 20 years. The government has set up a panel under the Prime Minister’s Economic Advisory Council chairman C Rangarajan to decide the terms and conditions of the premium rescheduling.
Premium is the amount a concessionaire pays NHAI for a build-operate-transfer project, on the assumption the returns will be very high. This is usually decided on the basis of future traffic flow at the time of bidding.
SUMMARY- EPC route was adopted for projects that received or were expected to receive poor response in PPP bid
The column “Toll time for UPA” (FE, September 25, goo.gl/3yr40K) highlighted a few issues and included a commentary on the reported reluctance on the part of NHAI to follow the government policy of building highways through PPP. Here, I aim to clarify the issues raised in the column (in bold).NHAI is not keen on following government policy of building projects through PPP but wants to go back to the bad old cash contracts wherein NHAI engineers decide whether a road has been built properly and then release payments.
NHAI has awarded more than 150 projects on PPP since FY10 under the model concession agreement (MCA) and most of these are in various stages of implementation. However, since FY13, a large number of projects under PPP mode did not receive any response from the bidders. Seventeen projects on BOT (toll) and three projects on BOT (annuity) did not receive any response even though these projects were put to bid at least once, and even five times in some cases. The reason for poor or no response to the bids for BOT (toll) road projects is acute shortage of equity and over-leveraged and deeply stressed balance sheets of the prospective developers. Private equity funds and other players are not willing to fund the equity requirements of new or under-construction PPP projects. For want of suitable empowerment, NHAI is not able to proactively manage the concession agreements even in situations where the underlying conditions have undergone a drastic change. Even if NHAI gets bids in few BOT (toll) projects, it is likely to be sub-optimal. In such a stark backdrop, NHAI had proposed that all projects, where there has either been or there is likely to be poor or no response, should be taken up under EPC mode. However, NHAI is not against PPP and is still inviting bids on BOT (toll) basis in appropriate cases.
The contention that NHAI is planning to go back to the old EPC contract on item rate basis is misplaced. NHAI has adopted the EPC mode whereby the design and construction responsibility is assigned to the contractor for a lump-sum price and the monitoring and supervision is to be undertaken through a qualified firm selected through a transparent process as per the new EPC guidelines. In fact, India’s PPP success story is almost entirely attributable to NHAI which carried out over 240 highway projects through PPP mode.
Instead of junking privatisation process, NHAI can moot for higher VGF.
As per the MCA, VGF is limited to 40% of the TPC which is roughly equal to 50% of civil cost. Any further increase in VGF will undermine the private partnership in the project. There is a need for a judicious mix of PPP and EPC projects on the basis of viability and optimally roll out of projects available on shelf.
NHAI engineers’ insistence on more over-bridges instead of underpasses raises the cost as it does not make sense to make a 4/6 lane road go over an existing 2-lane structure.
The myth that NHAI is insisting on sub-optimal solutions, providing overpasses (wherein the crossroad will go over the highway) instead of underpasses is not based on technical considerations but seems to be based on the experience of green-field motorways abroad without taking into account ground realities from an Indian perspective.
NHAI’s proposal for stopping toll collection during construction period of 4/6 lane projects shall increase financial stress to the developers.
Our proposal is based on experience, public perception and future perspective. During construction, many road diversions are created, resulting in a constraint of carriageway, hampering smooth flow of traffic. Taking advantage of the present MCA, the concessionaires, under the pretext of NHAI’s default on account of non-availability of land in isolated pockets, do not carry out the work with due diligence even on the available fronts. It was observed in most of the four- to six-lane projects that the concessionaire does not get any bonus from additional revenue for early completion of the project as toll collection commences from the date of commencement of construction.
NHAI need not counter-sign every loan refinancing, which is the crux of its dispute with IDFC on the Delhi-Gurgaon Expressway, as long as the amount it pays on termination of a project remains unchanged and the agreement to get a part of the upside toll once traffic on a road exceeds a certain target.
Breach of trust, hoodwinking concession agreements cannot be good business practice. However, the matter is sub-judice. As per the concession agreement, the concessionaire shall not make any modification to any of the project agreements without prior written consent of NHAI where the modification has or may have the effect of increasing or imposing any financial liability or obligation on NHAI in any manner. One cannot jump to any conclusion at this juncture.
Jammu, : The ongoing widening work along the Jammu-Udhampur road stretch of 286-km-long Jammu-Srinagar highway is triggering daily traffic chaos, giving tough time to commuters.A number of narrow diversions and ongoing digging at short distances, starting right from the last stop of Udhampur city onward to Jammu, slow down the traffic and cause frequent jams.
Pertinently widening of Jammu-Udhampur road is part of the National Highway Authority of India’s (NHAI’s) flagship project of four-laning of Jammu-Srinagar Highway.
“In view of ongoing work, it takes three to four hours to reach Jammu from Udhampur,” said a commuter.
The situation is worst from Tirkri to Jajjarkotly as many stretches along the road have been reduced to a single lane.
The NHAI has divided the Jammu-Srinagar Highway four-laning project into six sub-projects, including Jammu-Udhampur road (65 kms), construction of Chenani-Nashri tunnel (12 kms), Udhampur- Ramban road (43 kms) Ramban –Banihal road (36 kms), Banihal- Qazigund- road (15.25 kms) and Qazigund – Srinagar road (67.7 kms).
The widening work along the Udhampur-Jammu road stretch includes four tunnels besides equal number of flyovers and bridges. The longest tunnel is of 540 meters length while others three are of 330 meters, 300 meters and 210 meters. The NHAI has fixed May 2016 as deadline for completion of the project.
National Highways Authority of India plans to launch a tax-free bonds issue to mop up about Rs 5,000 crore by December, an official said.
KOLKATA: National Highways Authority of India plans to launch a tax-free bonds issue to mop up about Rs 5,000 crore by December, an official said. “The process has already begun. We will soon mandate a merchant banker for the same,” Satish Chandra, member (finance) at the state-owned autonomous agency, told ET.
The highways authority, or NHAI, which is responsible for all the national highways in the country, has already notified top merchant bankers and roped in rating agencies Crisil BSE -1.14 %, Care and Brickwork Ratings India for the proposed issue. Delhi-based M V Kini & Co will be its legal advisor.The proposed issue will be subject to statutory approvals.An NHAI official said the money raised will be used for future investment needs as the agency currently has some Rs 4,000 crore of cash in its books. “We do not need funds immediately for two reasons: we still have some cash in hand and execution work on several projects — some 11-12 of them — is yet to take off due to economic slowdown,” the official said.
A person familiar with the development, however, said the highways ministry is not yet convinced about the proposed issue and has sought an explanation from NHAI. Last year, the agency had failed to issue Rs 10,000 crore of bonds, though the same was sanctioned.
Incidentally, ongoing tax-free bonds of state owned entities India Infrastructure Finance Company and Power Finance Company are yet to catch retail fancy. Both the issues are yet to achieve the retail subscription target of 40% of the overall issue size. The issues are offering a few basis points lower rate of interest in select maturities compared with the earlier ones.
Also, with a gush of issues, including those of Rural Electrification Corporation BSE -0.68 %and National Hydroelectric Power Corporation, having already hit the market, investor appetite appears to have waned.
A market analyst said that only higher rate of interest can now get retail investors back into tax-saving bonds this fiscal year.
Though the existing bridge was built for the movement of 12,500 passenger cars per day, nearly 40,000 cars cross Nethravati during festivals. Traffic was crawling on the bridge Wednesday morning . Photo: Special Arrangement
Old bridge will be repaired and opened to one-way traffic from Kerala
A new parallel bridge being built across the Nethravati on the National Highway 66 here will be ready by the end of March next year, said the National Highways Authority of India (NHAI). The new three-lane bridge would ease the traffic congestion on the existing two-lane bridge.
Speaking at the Karnataka Development Programme Review Committee meeting here on Wednesday, K.M. Hegde, Executive Engineer, NHAI, Mangalore Project Office, said that 80 per cent of the work of the bridge was over.
Mr. Hegde said the existing two-lane bridge had been built for the movement of 12,500 passenger car units (vehicles) a day. But as traffic density on the highway had gone up now it resulted in traffic jam sometimes. During festivities, traffic movement went up to 40,000 passenger car units (vehicles) per day.
The parallel three-lane bridge would facilitate the movement of 35,000 passenger car units (vehicles) a day. One-way traffic from Mangalore to Kasaragod would be allowed on the new bridge, which is 800m long and 12m wide. Embankment work on the one side of the bridge was pending.
He said that once the new bridge was ready, the old bridge would be closed for about a month for repairs, and on reopening would allow one-way traffic from Kasaragod to Mangalore.
B. Ramanath Rai, Minister in-charge of Dakshina Kannada and Minister for Forests, Environment and Ecology, presided over the meeting for reviewing progress of development projects in the district.
An official from the Karnataka Road Development Corporation Ltd (KRDCL) told the meeting that widening and upgrading the 800-metre-long exit road from Mangalore International Airport had not been completed due to land acquisition issues. The district administration was yet to acquire land to a length of 350m and handed over to KRDCL.
The official said that the widening work of Mani-Sampaje stretch on Mani-Mysore Road would stick to the deadline and be over by May next year.
B.A. Mohiuddin Bava, MLA, said that companies were not setting up shops at the Export Promotion Industrial Park at Ganjimath (on Mangalore-Moodbidri Road) because of issues relating to power supply. An official of Karnataka Power Supply Corporation Ltd (KPTCL) blamed the delay in setting up a 220 kV sub-station at the park for the problem. Whether Karnataka Industrial Area Development Board, which developed the park, should set up the sub-station or KPTCL should do it, has not been sorted out, he said. Mr. Rai directed the officials to settle the issue mutually at the earliest.
The World Bank has approved a $500 million loan for the National Highways Inter connectivity Improvement Project in India to improve the national highway network’s connectivity with economically lagging and remote areas.
The project will focus on three low-income states – Rajasthan, Bihar and Orissa – and on less developed regions in Karnataka and West Bengal, a press release from the Bank said.
The release said that, In recent years, there has been an increasing recognition of the importance of improving transport connectivity in remote and economically lagging areas which do not fall under the National Highways Development Programme (NHDP).
“Some 43% of the primary highway network, also known as the non-NHDP network, has been identified for development. Considerable stretches of the non-NHDP network requires strengthening and upgradation, and suffer from connectivity gaps. Substantial portions of these roads are intermediate or single-lane highways and have poor traveling conditions,” it said.
“Over the years India’s core highway network has seen significant improvement. However, over 40% of thenetwork suffers from major connectivity gaps and requires better maintenance and upgradation. These roads often serve as the primary or the sole transport link to several remote and economically lagging regions. By providing better connectivity and strong institutions, the project will help states achieve fastersocial and economic benefits,” said Mr Onno Ruhl, World Bank Country Director for India.
The National Highways Interconnectivity Improvement Project, approved on October 29, will upgrade and widen about 1,120 km of existing single/intermediate lane National Highways to two-lane in Bihar, Orissa and Rajasthan and in less developed regions of Karnataka and West Bengal.
Other key components of the project include enhancing the institutional capacity of the Ministry of Road Transport and Highways (MoRTH) to better manage the highway network.
Recognizing that road safety is a critical issue in the country today, the project will strengthen road safety management systems with the objective of reducing fatalities and serious injuries from road accidents in the country.
“Road safety in India continues to be a major concern. Road accident death rate in India is ten times the levels seen in the European Union and is costing the economy an estimated 3% of the GDP on an annual basis. This project will focus on road safety by strengthening capacity, improving data collection and training,” Mr Ruhl added.
The project will focus on improving road accident data collection and analysis at central and state levels through implementation of the Road Accident Database Management System (RADMS) in project states; strengthen road safety capacity at the central level; and focus on training.
“The project will contribute to economic growth both locally in the project area and at the regional level by removing barriers to connectivity. It will develop priority highways within the non-NHDP network; implement a range of contracting and institutional reform measures; and will have specific interventions for process improvements, network monitoring and management, and updating of standards and specifications, with particular emphasis on road safety,” said Mr Pratap Tvgssshrk, senior transport specialist and the project’s task team leader.
Overall the project will help road users have improved access to highways and transport services and benefit from the savings in travel time and transportation costs. Other expected positive outcomes of the project include improved access to a larger number of economic opportunities, better health services, better access to higher levels of education, and improved road safety.
The loan, from the International Bank for Reconstruction and Development (IBRD), has a 5-year grace period, and a maturity of 18 years, the release added.
Jalpaiguri, Oct. 29: Gautam Deb, the north Bengal development minister, today held a meeting with the NHAI, panchayat representatives and the NH31D project officials to loosen the last land knot holding back the four-laning of the highway for two years.
After the meeting today, the first sign of government action on the ground to push the crucial but delayed project, the NHAI said it would float a tender after Diwali to start four-laning work for the two-lane highway.
The NH31D is part of the East-West Corridor from Porbandar in Gujarat to Silchar in Assam.
The four-laning would be done from Ghoshpukur in Siliguri to Salsalabari in Cooch Behar, a 155km stretch. According to officials, the widening of NH31D would require about 570 hectares.
The NH31D and NH34 are the lifelines of north Bengal, whose railway network is not comparable to south Bengal’s. The north Bengal stretch of NH31D is the only part of the East-West Corridor where four-laning is yet to begin.
Government sources today said a 9km bypass road was the only stretch for which land remained to be acquired. After the state government agreed to acquire land within one year for four-laning the highway, the state has helped NHAI to acquire land in Jalpaiguri and Mainaguri.
The two gram panchayat pradhans who attended the meeting have been told to speak to villagers in their areas — Baroghoira and Magurmari II in Jalpaiguri’s Dhupguri — where land is required to lay the bypass to the NH31D skirting Dhupguri town.
The widening of the highway has been stalled since 2011. The bypass from Jhumur Bridge, 1.5km from Dhupguri town, to Dhupguri College where the bypass will again meet the NH31D, has hit a wall because villagers have refused to give land.
A group of villagers has formed the Krishi Jami Bastu Uchhed Raksha Committee (Dhupguri Bypass). Abu Taher, its secretary, said nearly 1,000 landowners would be affected as about 600 acres would have to be acquired.
“There are houses, schools, temples, mosques and shops and also multi-crop farm land….We are also not happy for being left out of today’s meeting,” Taher said.
He said the committee had forwarded a proposal to the district administration to utilise an embankment of the Jaldhaka river that is used as a zilla parishad road. “The embankment begins a kilometre from Dhupguri Chowpathy and then meets a zilla parishad road just before Dhupguri College. The NHAI should utilise that route,” Taher said.
The NHAI, however, has refused to change the highway plan anymore.
“It is not possible for us to change the detailed project report. We have decided to float a tender for the entire stretch after Diwali,” said NHAI’s Siliguri project director R.K. Chowdhury after the meeting.
Minister Deb said the pradhans had been asked to speak to the landowners.
“We have already solved similar problems in Siliguri, Chopra, Mainaguri and Cooch Behar,” he said.
NAGPUR: Peeved by the inaction of National Highway Authority of India (NHAI) despite the ever worsening condition of the Mansar-Khawasa road, the Nagpur bench of Bombay high court on Tuesday issued an ultimatum to it to complete all repair works by February 2014.
TOI’s September 20 issue had reported in detail about the 40km stretch from Mansar to Khawasa on NH-7, where only potholes are left instead of road. Despite being a national highway, the potholes have turned into almost two-feet-deep ditches throughout the stretch. Of late, it had gained notoriety for accidents, long traffic snarls and damaged vehicles.
During the last hearing, a division bench comprising justice Bhushan Gavai and justice ZA Haq had asked NHAI what action it proposes against Oriental Nagpur Bye-Pass Construction Private Limited for failure to maintain the road. However, the court was informed by NHAI through an affidavit that Oriental’s contract ended on September 27 last year. The judges then asked chief general manager of NHAI to float new tenders and award contract to new bidder for repairing the road before November 15.
Ramtek MLA Ashish Jaiswal has also filed an intervention application in the suo motu petition where Nikhil Padhye was appointed amicus curiae.
Though the existing bridge was built for the movement of 12,500 passenger cars per day, nearly 40,000 cars cross Nethravati during festivals. Traffic was crawling on the bridge Wednesday morning . Photo: Special Arrangement
