Computerised toll plazas on all highways by April 2014

August 14, 2013

ENS Economic Bureau : New Delhi

Users of national highways in the country can expect a hassle-free passage across all toll plazas from April next year, as the road transport ministry has announced plans to implement electronic toll collection on all tolled national highways.

At a panel discussion on next-generation tolling and corridor management, organised by Feedback Infrastructure, road transport minister CP Joshi announced the deadline. “We have recently incorporated a company called Indian Highways Management Company Limited (IHMCL), for implementation of nation-wide electronic toll collection (ETC). The government of India is also amending the Central Motor Vehicle Rules, 1989, for fitment of RFID tag on vehicles by the automobile manufacturers,” Joshi said.

Joshi also added that implementation of ETC will not only make traveling convenient but will also have a lot of other benefits. “With the implementation of ETC, we will see a lot of changes happening in the way projects are bid. Computerisation of tolling will also give a clear and transparent picture on tolls,” he said.

Around 50 per cent of the firm will be owned by companies in the sector. Another 25 per cent will be owned by financial institutions and the rest will be owned by the National Highways Authority of India (NHAI). “We have given more representation to private players in the company. In fact, this is their company and the government’s job is only of a facilitator. Almost all large companies have shown interest in this venture…,” said JN Singh, chairman of IHMCL and member (finance) of NHAI. The company has a paid-up capital of Rs 30 crore, which will be enhanced in due course according to the requirement and will have eight members, including the chairman.

IHMCL will start the process by setting up a Central Clearing House (CCH) for nation-wide ETC interoperability and infrastructure for tag distribution. The company is in the process of inviting Request for Qualification (RFQ) for short listing agencies for implementing end-to-end Turn-key ETC on pan-India basis.

Maintenance firms to be under lens

Soon, companies responsible for maintaining tolling and operations of various stretches and toll plazas will be penalised in case services provided are not of a particular standard. The standards are mentioned in the agreements signed between the government and road developer or operations and maintenance contractor.

“There are various services standards mentioned in the agreements, which the company that maintains the toll plaza and stretch has to provide. In case of a company not being able to provide that quality of service, it will be penalised,” said J N Singh, chairman of Indian Highways Management Company Limited (IHMCL).


Highway Ministry to pump in Rs 33, 688 crore for development 6,418km of highways in Northeast

August 5, 2013

By Bikash Singh, ET Bureau |

Northeast India will witness investment of Rs 33, 688 Crore for construction of 6418km of roads during the 12th plan period under the special accelerated road development programme (SARDP-North East) and Prime ministers package for Arunachal Pradesh

(Northeast India will witness investment of Rs 33, 688 Crore for construction of 6418km of roads during the 12th plan period under the special accelerated road development programme (SARDP-North East) and Prime ministers package for Arunachal Pradesh)
GUWAHATI: Northeast India will witness investment of Rs 33, 688 Crore for construction of 6418km of roads during the 12th plan period under the special accelerated road development programme (SARDP-North East) and Prime ministers package for Arunachal Pradesh.


Union Minister for Road Transport and Highways Oscar Fernandes who was in Guwahati on Friday reviewed the progress of National Highway works said around 2000km of roads are sanctioned for this year. This will come up with an investment of Rs 3100km.


Fernandes said that a high-level meeting chaired by Prime Minister Dr Manmohan Singh was held on July 18 last to review the status of development projects in the region and discussed steps to accelerate the same.


Secretary to the Ministry of Road Transport and Highways Vijay Chibber also announced that the ministry has also decided to carry out feasibility of Imphal bypass and explore the possibility of highway between Chumukedima near Dimapur in Nagaland and Maram in Manipur. It was also decided to undertake 100 km length road construction to connect Sittwe port in Myanmar.


The ministry has decided for developing 130 km stretch of Agartala Sabroom section of NH-44 to two lane standards this will provide connectivity to Chittagong port through Bangladesh. It was also decided to construct alternative highway to Gangtok.Chibber added time taken for road construction in Northeast India is twice higher than the national average. “Pre construction activity consumes lot of time. Law acquisition is a problem here. State PWD and BRO are not fully geared up.


Roads: Opportunity for new players?

August 3, 2013

The need of the hour is positive policy making from government while private sector should contribute by innovation and informed risk taking, writes Sudhir Hoshing.

Indian roads sector is undergoing an evolutionary phase where the government is putting forth several public-private partnership (PPP) models (such as BOT, EPC, OMT, etc) in order to attract the interest of private players for efficient and effective development of the backbone of the nation’s economy. In terms of number of projects, roads and highways are emerging as the favoured destinations for PPP with 53 per cent projects in PPP from road sector.

Sector challenges

The sector, however, witnessed several constraints and financial stress due to inordinate delays in land acquisition, long-winding processes for obtaining statutory clearances, revenue leakage due to toll non-compliance, economic slowdown, etc. These problems led to investors shying away from bidding for any new projects in 2012-13.

The average number of bidders in 2012-13 was five, with 13 projects attracting no bidder at all. This is clearly a drastic drop over the average of 20 bidders during 2011-12. Given drying up of equity markets and lenders apprehensive to lend to the sector, weaker players will find it tough to raise funds. Out of the 32 national highway projects awarded during 2011-12, 18 projects have not succeeded in obtaining the financial closure. The number of projects failing to achieve financial closure further shoots up to over 30 considering projects awarded in 2012-13 as well.

Government response

The government began deliberating on various measures to revive the waning investor interest and put the sector back on the growth path. Alternative sources of project funding are being explored by the government including, but not limited to:

100 per cent government funding through EPC contract, since there are very few takers for BOT projects due to equity crunch.

Encouraging credit enhancement schemes being introduced by companies like IIFCL: Under such schemes, the institution provides partial credit guarantee to enhance the ratings of the project bond thereby enabling channelisation of long term funds from fairly untapped sources such as insurance companies and pension funds etc.

Exploring funding through Infrastructure Debt Funds: The IDF would seek to raise debt capital from domestic as well as foreign resources and invest in projects under the PPP model that have completed a year of operations.

In addition to the above, the government considered a slew of measures to revive the sector, such as:

Grant of partial COD if 75 per cent construction is complete and balance is stuck due to land acquisition issues: Provisional Completion Certificate shall be issued by Independent Engineer/ NHAI for the portion completed and the concessionaire shall be permitted to do partial tolling on the completed portion.

Linkage of NHAI-estimated Total Project Cost to Wholesale Price Index: Usually there is a variation between government’s project cost estimates and developer’s estimates due to cost and time over runs between the initial bid and award stage. This would substantially reduce with the inflation-indexed mechanism being considered by NHAI to appraise Total Project Cost (TPC). NHAI guarantees 90 per cent payment of debt to the lenders in case of termination but it recognises only its own TPC. So, banks have greater risk in lending for a project where the TPC is higher than the NHAI estimate. Termination payment in inflation-indexed mechanism would however be inflation-adjusted, thereby adequately addressing the risk of lenders.

Delinking environment and forest clearances: Proposals of over 20 highway projects, which had already been recommended for environmental clearance last year, are stuck because forest or tree cutting clearances had not come through. Construction work can now begin on these stretches and NHAI can start allowing commercial operations date for four-to-six laning projects, a move that will allow developers to start collecting tolls. Extension of time required to achieve financial closure: The concessionaire is liable to gather its funds for the project within 180 days of the date of awarding the project. If it fails, it can request for a grace period of 120 days more after paying a penalty. However, beyond that, if the firm is unable to submit its sources of funds, the project stands cancelled. It is then either rebid or awarded to the second lowest bidder. NHAI has in some instances allowed the concessionaire more than 300 days for financial closure, where the project was stuck due to reasons beyond the control of the concessionaire. For example, in case of Kota-Jhalawar highway project in Rajasthan which was stuck due to delay in securing statutory clearances, NHAI extended the deadline for financial closure beyond 300 days.

Consideration of loans extended to highways sector as secured loans: The finance ministry has urged the Reserve Bank of India to consider a change in its stance that treats loans to road projects as unsecured, as this makes banks wary of lending.

Early exit options for highway builders after completion of construction: Under the norms in place since November 2009, developers must hold at least 26 per cent of equity up to two years after the COD. The ministry is examining the possibility of easing such restrictions and consequently freeing up equity capital of the developer locked in operational projects. While the move is intended to clear ground for new investors in the funds-starved sector, the departments of economic affairs and expenditure of the finance ministry feel that non-serious investors wanting to make quick capital gains could misuse the proposed facility.

Consolidation phase & opportunities ahead

Of late, the sector seems to be headed towards consolidation with several developers looking to divest their stake in BOT projects. GMR recently sold 74 per cent stake in its subsidiary, GMR Jadcherla Expressways. SBI Macquarie, Uniquest Infra Ventures (Malaysian government sovereign wealth fund Khazanah Nasional Berhad and IDFC JV) are noted to have expressed interest in many road projects. Such secondary market deals would offer a good proposition to buyers having adequate funds to take on the projects. Availability of 50 road projects worth Rs 50,000 crore totalling 5,000 km are on the block in the secondary market with no takers for most of these projects.

Further, as per announcement on Budget 2013, most of the proposed 3,000 km of highways would be awarded on EPC basis. There are many regional players who have expertise in EPC but they shy away from BOT projects as they are not in a position to block their investment for 20 to 30 years and face traffic risk. These regional players will look for EPC opportunity in the areas where they already have their resources mobilised. Thus, they could benefit from EPC projects of size less than Rs 500 crore, where they could earn good returns due to regional presence. The ministry is looking to award projects on Operate, Maintain and Transfer (OMT) basis. A model concession agreement for operation and maintenance of national highways through private players on OMT basis has already been approved. The OMT model is very similar to the Build, Operate and Transfer model except that in case of the former, instead of construction, operation and maintenance, the private entity’s responsibility stands confined to just operation and maintenance of highways.

However, the recent OMT projects that were out for bidding had capex ranging from Rs 50 crore to Rs 100 crore and equity commitment of at least 33 per cent stake during the entire concession period keeps small players, having the requisite expertise, from participating in such projects. This means that pure service providers without balance sheet strength will not be able to participate in such projects, especially given shorter concession period.

Overall, the opportunities are difficult to identify and serious players who can withstand the challenges will be able to survive. The need of the hour is positive policy making from government while private sector should contribute by innovation and informed risk taking.



Road developers see polls to slow NHAI targets

August 3, 2013


Coming elections in the country are going to cause delay in road works. Road developers are set to see challenging business environment as the National Highways Authority of India (NHAI), which missed project award targets in the last year by a huge margin, may not meet them.

A senior Hindustan Construction Company official said that on one side the government may try to implement things quickly, but by the time it happens the model code of conduct will come into play. There are just six months left as post December this year the entire government machinery will come to standstill, he said.

Analysts too said while the build operate and transfer (BOT) projects will be constrained due to economic slowdown and fund crunch, the engineering procurement and construction (EPC) projects would slow due to elections. Edelweiss Capital, said that a tough economic environment will constrain BOT awards.

Achieving the fiscal 2014 target hinges largely on award of 3,500-4,000 km EPC projects. The timing of central and state elections will also cast its shadow on the project award, Edelweiss said in a recent report.

The Ministry of Road Transport and Highways had set an ambitious target of awarding 8,800 km of road length in fiscal 2013, which was raised by the Prime Minister Office to 9,500 km. NHAI, however, was able to award only 1,112 km projects. For this fiscal, the road ministry has again set an ambitious target of awarding 9,000 km projects, about 50% through the EPC route.


IL&FS secures major highway widening contract in India

June 20, 2013


India-based transportation infrastructure company IL&FS Transportation Networks (ITNL) has signed a new concession agreement with the National Highways Authority of India (NHAI) for a Rs16.65bn ($304.3m) road widening project in the states of Jharkhand and West Bengal.

To be executed under the National Highways Development Project (NHDP) Phase V on design, build, finance, operate and transfer (DBOFT) basis, the latest project includes six-laning the Barwa-Adda-Panagarh stretch of National Highway 2 (NH-2) from km 398.240 to km 521.120, including the Panagarh Bypass.

The project is set to be implemented on a toll basis, and has a concession period of 20 years, including a 910-day period for construction. ITNL had quoted a premium of Rs420m ($7.68m) for the project.

 {“The project is set to be implemented on a toll basis, and has a

concession period of 20 years,

including a 910-day period for construction.”}

Established in 2000, IL&FS Transportation Networks is a surface transportation infrastructure company and a private sector BOT road operator in India.

The company is involved in the development, operation and maintenance of national and state highways, roads, flyovers and bridges in various states across the country.

IL&FS has also signed a concession agreement with NHAI for Rs13.48bn ($246.48m) four-laning of the Khed-Sinnar section of National Highway 50 (NH-50) in the state of Maharashtra.

The programme will carried out under Phase IV B on DBFOT basis and has a concession period of 20 years, including construction period of 910 days.

BOT News: UP highways on public-private-partnership model

May 10, 2013

Pankaj Shah, TNN

LUCKNOW: The Uttar Pradesh state government is in talks with potential bidders to develop 11 state highways, in what could be a big push to its mandate to develop road connectivity across the state.

It has been proposed that the highways will be developed by Uttar Pradesh State Highways Authority (UPSHA) on the public-private-partnership (PPP) model.

The prominent projects included the Shahjahanpur-Hardoi-Lucknow State Highway, Basti-Mehendawal-Tamkuhi road, Akbarpur to Jaunpur, Mirzapur and Dudhi Road, Gorakhpur to Maharajganj Road and Muzaffarnagar to Saharanpur via Deoband Road.

The state government has also clarified doubts of prospective bidders for the Agra to Lucknow green-field expressway. The ambitious access-controlled Agra to Lucknow six-lane, eco-friendly green-field expressway is to be constructed on a minimum distance and minimal agricultural land formula through the PPP mode.

Earlier on 24 April, the government held a pre-application conference for the Agra to Lucknow project in New Delhi where 15 prominent developers including GVK, GMR, ESSEL Infra and IL&FS Transportation, among others participated. The project will be developed at an estimated project cost of Rs 9,600 crore on Build-Operate-Transfer (BOT) model, for a 30-year concession period.

The Agra-Lucknow expressway expects to offer a smooth link between Greater Noida and Lucknow via Agra covering a distance of about 270 kms.


Building 20 km highways per day a long way off

April 1, 2013

Building 20 km highways per day a long way off

NEW DELHI: Building 20 km of road on national highways a day is still a distant dream for the UPA II government.

Four years after the then road minister Kamal Nath had announced the ambitious target, the National Highways Authority of India — the central agency which builds highways across the country – has managed to build just 8 km of highways per day during the financial year 2012-13 that ended on Sunday.

According to statistics made available by the NHAI, the agency was able to construct a little over 2900-km stretch in 2012-13. Though the figure is highest so far (see box), NHAI still has way to go before it is able to meet the 20-km-a-day target. To achieve this, NHAI will not only have to award higher number of highway projects but will also have to build 7000 km stretch every year. Experts say it seems unlikely unless the highway agency augments its capacity.

RP Singh, NHAI chairman, however, said, “Our target was to build 3000 km. Our achievement is much better than expected and is the highest as compared to the previous years”.

But more than meeting its construction target, what has worried road ministry officials is the dismal achievement vis a vis awarding highway projects during 2012-13. The NHAI has been able to award a little over 1,000 km stretch as on March 31 as against the original target of 9,500 km which was later scaled down to 6600 km.

Officials attribute this to a host of factors, including the prevailing market condition and delay in getting environment clearance. “For the time being, we should live with this. There are a number of reasons — administrative such as delay in getting environment clearance, land acquisition etc. and market related which have been responsible for dismal award figures,” BK Chaturvedi, Planning Commission member (infrastructure) told HT.

While NHAI has been able to build 2900 km highways during 2012-13, the road ministry has been able to build an additional 2900 km as part of its various non national highway development projects.


These include providing connectivity to the naxal-affected areas and the North-East region.

Chaturvedi is holding a meeting to review the progress of road projects on April 3.

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Concession agreement signed for widening of Nechipu to Hoj road

December 26, 2011

he Nechipu – Hoj Section of NH-229 is a part of Trans Arunachal Highway. The construction of 2 lane Trans Arunachal highway from Tawang in Arunachal Pradesh to approaches to Bogibeel bridge in Assam was announced by the Prime Minister on 31st January, 2008 during his visit to Itanagar.

A  Concession Agreement has been signed in the Ministry of Road Transport and  Highways for  “ Widening of existing road to 2-lane national highway standards from Nechipu to Hoj on hybrid BOT (Annuity) model under the Arunachal Pradesh Package of Roads and Highway. The Nechipu – Hoj Section of NH-229 is a part of Trans Arunachal Highway. The construction of 2 lane Trans Arunachal highway from Tawang in Arunachal Pradesh to approaches to Bogibeel bridge in Assam was announced by the Prime Minister on 31st January, 2008  during his visit to Itanagar.

The Trans Arunachal Highway is a very important Highway which runs across the State of Arunachal Pradesh. The project road will improve the internal connectivity of western districts of Arunachal Pradesh with Itanagar, namely Seppa, Bomdila, and foster socio-economic development of the whole of the State. Apart from this, the road would help in hydro power projects coming up in Arunachal Pradesh. The road would also greatly facilitate the security/ defence agencies to combat anti-national activities and threat on border areas.

  • Length of the Project: 311 km;

  • Total Project Cost (TPC): Rs. 1486 cr;

  • Civil construction cost of the project: Rs. 1255 crore

  • Construction period: 4 ½ years

  • Concession period: 17 years

  • Cash support during Construction period: Rs. 1004.0   crore

  • Semi Annual Annuity (25 nos.) : Rs. 39.0 crore each; to be paid  to Concessionaire during maintenance period.

  • NPV in 2011-12 of Government Cash flow to the project @ 10% discount rate is Rs. 1077 crore.

This project have been approved by Cabinet/CCI in its meetings held on 9th January, 2009, 30th June, .2009, 4th March, .2010, 6th May,.2010 & 9th June,.2011; Tendering for 2 times were annulled owing to high annuity quotes;

The project is to be implemented on hybrid BOT (Annuity) model. This is a hybrid model under which 80% of the estimated construction cost will be disbursed to the concessionaire during construction phase and remaining construction cost and maintenance cost etc. will be defrayed through annuity payments. The target to complete 2-lane is by June, 2016.  The concessionaire will also maintain the road for 12 ½ years after the construction period of 4 ½ years and Ministry will pay 25 semi-annual annuity to concessionaire during maintenance period of 12 ½ years.


A  Concession Agreement has been signed in the Ministry of Road Transport and  Highways for  “ Widening of existing road to 2-lane national highway standards from Nechipu to Hoj on hybrid BOT (Annuity) model under the Arunachal Pradesh Package of Roads and Highway. The Nechipu – Hoj Section of NH-229 is a part of Trans Arunachal Highway. The construction of 2 lane Trans Arunachal highway from Tawang in Arunachal Pradesh to approaches to Bogibeel bridge in Assam was announced by the Prime Minister on 31st January, 2008  during his visit to Itanagar.

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

December 3, 2009

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

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

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

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

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

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

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

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

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

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

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


Government moves towards open toll system for highways

October 22, 2009

Highway users, there is good news round the corner. Soon, you will not have to stop for payment at every toll plaza.

The government is on the verge of introducing an open road tolling (ORT) system in the country, by which toll payment would become a one-time transaction per trip. Gurgaon Toll Plaza

The toll fees will be deducted either from the users’ bank account, or it collected at the beginning of the journey, in the manner of pre-paid or post-paid phone connections.

The ministry of road, transport and highways (MoRTH)  will on October 31 start a six-month pilot project to test the efficacy of ORT on three stretches on the national highways.

Three systems of ORT — Active, Passive and Calm tolling systems — would be tested for suitability.

The active tolling system (a microwave tag-based system that sends or receives signals) will be tested on the Gurgaon-
Jaipur stretch. The passive system (also microwave-based, but only send signals) on the Panipat-Jalandhar stretch. The calm ORT system, an infrared-based system that sends and receives signals and works on an optical fibre network, will be tried on the Surat-Dasihar stretch.

“We will finalise a system that is best suited for India. The tests have to be very elaborate and that is why they will carry on for six months,” a senior official at the ministry, who did not wish to be named as he is not authorised to speak to the media, told Hindustan Times.

A third party will independently evaluate the three systems for suitability for use in India.

The new toll system will significantly reduce the time spent by commercial vehicles at tollbooths. For instance, a commercial vehicle plying between Delhi and Mumbai has to stop at 20 toll plazas.

On an average, there is a toll plaza every 60 km in India.

“It will be a very good thing. Separate lanes for the new toll system will result in significant saving of travel time,” said Anil K.G., resident consultant of Bangalore-based logistics company Transworld International, which runs a fleet of 150 trucks.


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