A majority of the highway projects awarded by the National Highways Authority of India in the last two years for implementation in the Public Private Partnership mode have failed to achieve financial closure and even those with ‘Appointed Date’ are lagging far behind due to various reasons with no hope for completion within the stipulated time period, according to the National Highways Builders Federation.

In a recent letter addressed to the Prime Minister, the representative body of highway developers expressed concern over the slowdown in the road sector and stressed on the need to immediately initiate measures for revival. It said that given the slowdown, the projects being put up for bidding by the NHAI were either not attracting bids or at the most attracting single bids.

Highway_ProjectsMonitorThe NHBF blamed the lack of consistency among various ministries in the government particularly with regard to policy related matters such as substitution of concessionaire, grant of environmental and forest clearances, availability of raw materials like stone aggregates, sand and common soil used in road construction and rescheduling of premium quoted by highway developers in respect of projects for holding up the revival of the road sector.

The letter further said that the absence of an integrated policy for facilitating long term financing of road projects had placed additional burden on banks and restricted their lending capacity. Since infrastructure projects have a long gestation period, the banks lend on floating rates derived from base rate. The interest rate fluctuations subsequently lead to project cost escalations.

“The need of the hour is to change the mind set of all the stakeholders and ministries to speed up the process of revival of the road sector. This process can only be feasible by way of creating a single window clearance mechanism for highway sector and also by reviewing the existing provisions of concession agreement, rationalizing the procedures and processes in NHAI, financial reform and restructuring of sector and integrating the procedures of government agencies viz. Ministry of Environment and Forests, Ministry of Finance and Planning Commission. Efforts should be made to bring in the improvements as soon as possible to enthuse the ailing sector,” the NHBF said in the letter.


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