Plan panel questions four-laning of some national highway sections

NEW DELHI: The Planning Commission has kicked off a fresh debate, questioning how National Highways Authority of India ( NHAI) has gone ahead with four-laning of national highways even when the daily traffic volume on these stretches did not qualify them to be widened beyond two lanes.

In a recent letter to highways minister C P Joshi, deputy chairman of Planning Commission Montek Singh Ahluwalia raised questions on five projects, including the 70-km Lucknow-Rai Bareli section. Ahluwalia said there were standards – daily traffic volume – set by the Indian Road Congress (IRC) for considering widening of roads to two lanes, four lanes and six lanes. The letter said these standards were bypassed to push certain projects for four-laning under the build-operate-transfer (BOT) model.

Moreover, Ahluwalia mentioned that such a move could have adverse bearing on the finances available for the highway development programme in the country since the allocated budget could get exhausted in less number of projects.

The letter came despite the recent experience of how government had to start six-laning of the Golden Quadrilateral project only 6-7 years after its construction because of the high increase in traffic. “We will always compare our infrastructure development with China to push the need to go on overdrive, but we are caught in issues like this. We have seen how four-lane roads built in the past 10 years are becoming inadequate to handle huge traffic. Are we building roads for the next five years or for decades,” asked a senior ministry official.

Engineers working with IRC said it was not mandatory for the government to follow the recommendations set by the professional body. “But we can see how the Planning Commission uses our recommendation as per its convenience. It has downplayed the views of IRC so far as making safe roads are concerned,” said a senior retired engineer from the ministry who is associated with IRC.

In fact, Ahluwalia reiterated the views of his colleagues in the plan panel on such issues. In his letter to Joshi, he wrote that all highways should be at grid (surface) level without any flyover. Besides, he said there was no need to construct service roads all along the highways in rural areas, though accidents are on the rise in these areas. His juniors have been raising these issues, which have been termed impractical and compromises safety aspects.

A source in IRC said they had told the government that it could “downsize” the plan if it did no have “enough funds” rather than build unsafe roads and those which don’t meet operational needs. “Here, the Planning Commission does not find the merit of IRC’s recommendations,” a senior IRC member said.

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

NHAI awards Rs 2,815 cr project to GVK

With private companies growing interest in the road sector, the National Highways Authority of India (NHAI) today awarded a Rs 2,815 crore contract in Madhya Pradesh to infrastructure player GVK that will fetch it an annual premium of about Rs 190 crore for 30 years, more than the total project cost.

With this award, the income to NHAI would be over Rs 870 crore per annum from four projects which it bid out within last few days.

“We have successfully awarded Rs 2,815 crore project in Madhya Pradesh for four-laning of Shivpur-Dewas section to GVK Transportation. NHAI will get a premium of Rs 189.9 crore per annum on this for 30 years, with a provision of an increase of five per cent every year,” a senior Road Ministry official told PTI.

The 330 km-project will be built under phase IV of the National Highways Development Project (NHDP) on BOT (build, operate and transfer) basis on DBFOT (design, build, finance, operate and transfer) pattern.

GVK was selected out of 14 major bidders that included players like GMR, Gammon, Essar and Punj Lloyd, the official said, adding that the “contract was proposed to be bid out on 15 per cent viability gap funding (VGF).”

The development comes close on the heels of NHAI bidding out its first mega project — Kishangarh-Udaipur-Ahmedabad at Rs 636 crore annual premium for 26 years to Bangalore-based GMR Infrastructure on July 29.

Further, the highway authority, which awarded projects worth over Rs 12,000 crore in the last four days, got about Rs 50 crore premium on Hospet-Bellary stretch in Karnataka and Orissa border-Aurang section.

Highways developers bid premium if they find the project lucrative; the private companies are confident that the toll revenue accruing to them would be more than their total cost.

Earlier, NHAI virtually used to provide grants on schemes to road developers to make the projects viable.

NHAI has announced to award 59 projects– involving 7,994 km, with a total cost of about Rs 60,000 crore– this fiscal.

India has a network of 3.3 million km roads out of which national highways constitute only 70,548 km. To augment it, the government plans to build 35,000 km of roads by 2014.

Source: business-standard.com

We will be awarding 7300 km minimum this year: NHAI

In an interview with ET Now, Dr. JN Singh , Director Finance, NHAI, talks about the NHAI’s future projects and future strategy. Excerpts:

ET Now: Could you outline for us the quantum of new orders you have released in the first two months of this financial?

Dr. JN Singh: Around 1000 kms is what we have already released this year so far in the first two months. We are geared for around say 700-800 km in the next quarter as well per month.

ET Now: So can I safely assume that you will meet your guidance of awarding new contracts of at least 7500 crores?

Dr. JN Singh: Yes, 7300 km is what we definitely feel that we will be achieving this year. Most of the awards we expect right now that will be completed by December-January itself and we are fully geared for that. The feasibility reports are very well prepared. The land acquisition is substantially in place, and the things look okay right now.

ET Now: But lately we have seen that there have been several issues as far as land acquisition is concerned. Recently there has been widespread violence in Uttar Pradesh over land acquisition. How is NHAI looking to tackle this problem?

Dr. JN Singh: Fortunately as far as NHAI is concerned, we have not experienced such type of opposition so far. Maybe this opposition is because the UP projects are also taking commercial ventures along with the road and that’s what angers farmers or the land holders. As far as NHAI is concerned, it is doing purely a road building. It is not so far at least is mixing commercial ventures with the roadside. So that’s why though there would be some complaints about the lower rate that we are offering or at times people would like to go to arbitration for land acquisition but there has been no concerted move at any place, anywhere in the country that land acquisition as far as NHAI is concerned is a problem. It is of course an issue.

Click here to read full conversation

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

17 states pledge cooperation for highways projects

New Delhi, April 13 (IANS) Seventeen states and the union territory of Chandigarh Tuesday assured support to the centre for timely execution of highways projects in the build, operate and transfer (BOT) mode.

The governments of Andhra Pradesh, Arunachal Pradesh, Assam, Chhattisgarh, Haryana, Himachal Pradesh, Jharkhand, Maharashtra, Madhya Pradesh, Manipur, Meghalaya, Nagaland, Punjab, Rajasthan, Tripura, Uttarakhand, West Bengal and the union territory of Chandigarh signed the State Support Agreement (SSA) with the ministry of road transport and highways.

The agreement was countersigned by the National Highways Authority of India (NHAI).

For the development of highways, support of the state governments is essential in the matter of land acquisition, removal of encroachments, shifting of utilities, rehabilitation and other local law and order related issues.

“The SSA aims at formalising the cooperation arrangement with the state governments to the implementation of the extensive programme of development of national highways on public-private-partnership (PPP) through the NHAI,” an official statement said.

Five states — Karnataka, Kerala, Goa, Puducherry and Sikkim — will also sign the SSA soon, it said.

However, Uttar Pradesh has indicated its desire to withdraw from the SSA it signed earlier.

“Discussions are going on with the government of Uttar Pradesh to resolve the matter,” the statement added.

Source: sindhtoday.net

Vadodara-Bharuch NH-8 stretch not equipped to handle fire mishaps

VADODARA: The Vadodara-Bharuch stretch of National Highway-8 is not equipped to handle any major fire incident.

An RTI application has revealed that as per an agreement signed between National Highways Authority of India (NHAI) and private operator L&T Vadodara Bharuch Tollway Limited (VBTL),which had bagged the six-laning project of 83.3 km stretch of NH-8 on build, operate, transfer (BOT) basis, L&T VBTL is supposed to provide fire brigade service on the highway. But, the ground reality is that there is no fire brigade service on the stretch, which ironically witnesses highest traffic movement, including vehicles that transport chemicals.

The RTI response that was provided to applicant Yashwant Jangid by NHAI states that as operations part of operation and maintenance (O&M) manual, the operator will have to take care of ambulance, fire brigade and tow away trucks and cranes as rescue and medical aid services. The documents under schedule-L carry stamps of both NHAI and L&T VBTL.

But, an L&T VBTL official looking after accident management of the stretch told TOI that he wasn’t aware about such a clause in the concession agreement. “If there is a fire incident on the stretch, we have handy fire extinguishers. If still the fire does not get extinguished, then we call local police which in turn contacts local fire brigade to do the needful,” the official said.

“L&T VBTL officials interpret that the clause in the agreement is to provide only fire brigade services, which does not mean that the highways should have fire vehicles stationed,” a NHAI official claimed. But, the fact remains that L&T VBTL has never approached Vadodara Fire Brigade and Emergency Services (VFBES), managed by Vadodara Municipal Corporation, to get their service.

“We are supposed to function and provide our services only in municipal jurisdiction of Vadodara. When we cross corporation limits, our services are charged. But, we have series of bills pending which neither the contractor of the highway nor the victims of accidents have paid,” chief fire officer of VFBES H J Taparia told TOI, adding that L&T VBTL has never approached them to sign an agreement for such services.

Incidentally, even on Wednesday morning, VFBES officials had to rush to Dumad Chowkdi from the starting point of Vadodara-Bharuch highway when a truck rammed a tree leaving the driver dead on the spot, while officials extricated a cleaner’s body that was trapped by using hydraulic equipment.

“We handle nearly 35 to 40 calls a year on this part of the highway as nobody is ready to go on that road,” Taparia added.

Source: timesofindia.indiatimes.com

IVRCL Infra bullish on BOT road projects

IVRCL Infrastructure and Projects Ltd said it has received a Rs 1,550 crore BOT (Built Operate Transfer) road project in Madhya Pradesh from the National Highways Authority of India (NHAI). The concession will be for 25 years and the project will be completed in 30 months.

“The 155-km long road project will be executed by a special purpose vehicle owned by IVR Prime. The road construction will be taken up by IVRCL Infra,” said Mr E. Sudhir Reddy, the chairman of IVRCL Group.

“With this, IVR Prime has BOT projects — confirmed and lowest bidder — worth Rs 10,000 crore,” he said adding that the company expects to win six BOT projects by this year end.

The project, which is a part of National Highway 59, involves design, engineering, construction, development, finance, operation and maintenance of the road that runs between Indore and Ahmedabad.

Mr Reddy said that the debt-equity of 5:1 would be used to fund the project. “The equity component will be raised through internal accruals and raising debt will not be difficult for us,” Mr Reddy said.

Following the road transport and highways minister, Mr Kamal Nath’s target to build 20 km road every day by April 2010, the NHAI has put the process of awarding contracts on the fast track. “We are currently doing 9 km a day and would be in a position to scale up to 20 km a day by April-May 2010,” Mr Nath had said recently.

Recently, the government had approved road projects worth Rs 6,152 crore in five states for upgrading nearly 562 km of four-lane highways into six lanes.

Mr Nath had also coined the idea of issuing infrastructure bonds to raise money from non-resident Indians on the lines of the Resurgent India Bonds issued in 1998 and the India Millennium Bonds issued in 2000.

Roadblock to four-laning as ryots reject Govt of

VIJAYAWADA: The much-awaited widening of Hyderabad-Vijayawada National Highway No.9 project is likely to be delayed for another three to four months as farmers on either side of the highway are not agreeing to part with their land.

The GMR Infrastructure Ltd has bagged the 181-km long road project worth of Rs 1,200 crore on a BOT basis through international competitive bidding and its works are scheduled to begin in January, 2010 after completion of the land acquisition process by Dec, 2009.

However, with the Government intending to acquire land at half its market value, many farmers are not interested in handing over their valuable land for the expansion work.

The 181-km four-laning work on Hyderabad-Vijayawada National Highway would be taken up from 40th km near Malkapuram in Nalgonda district to 221-km mark at Nandigama in Krishna district. For this, a total of 1,053 hectares land would be required in 53 villages in Nalgonda district and 13 in Krishna district.

According to a senior officer in the National Highways Authority of India (NHAI), the Government which is scheduled to complete the land acquisition process by the first week of December, has so far acquired not even 50 percent of land from the total of 1,053 hectares.When revenue authorities visited the land to be acquired at Nakirekal and Chityala in Nalgonda district and Jaggayyapet in Krishna district some days ago, they experienced a stiff resistance from landowners.

According to local people, the market rate of land in the villages surrounding Nandigama is Rs 15 lakh per acre and Rs 20 lakh per acre in Nandigama town. However, the Government is willing to acquire the land by paying amounts not exceeding Rs 6 lakh per acre.

Source: expressbuzz.com

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