163 out of 982 highway projects delayed

As many as 163 out of 982 ongoing national highway projects across the country have been delayed because of various reasons. Revealing this information in Parliament recently, the Ministry of Road Transport and Highways said that the main reasons for the delays were problems over land acquisition and shifting of utilities, poor performance of contractors, arbitration and contractual disputes, environment, forest and wildlife clearances, issue of road over-bridges and under-bridges with Indian Railways, public agitation for additional facilities and non-availability of soil aggregates among others.

India’s Minister for Road Transport and Highways and Shipping, Nitin Gadkari, admitted that deficiencies in project designing, environment clearance, land acquisition and construction of railway bridges were some of the major problems for road projects. Calling for effective project management in projects, the minister said, “Cooperation, coordination and communication between different stakeholders may give a perfect shape to any project management consultancy. A thrust on cost-effectiveness without compromising on quality should be the staple thought behind a project management consultancy.”

The ministry is expediting work on the 163 road projects by streamlining environment and forest clearances—a major bottleneck in execution—exit policy for equity investors and concessionaires, rescheduling premiums for stressed projects, securitising road sector loans, mutual termination and cancellation of awarded road projects and subsequent rebidding, close coordination with other ministries, creating an infrastructure debt fund, revamping the dispute resolution mechanism, and frequent reviews at various levels.

The central government appears to have stepped on the gas to complete the projects that were lagging behind. For instance, CRISIL Research, India’s largest independent research house, pointed out that the road projects awarded in the last fiscal showed an “unprecedented pickup in execution amid a proactive government and faster approvals by implementing agencies.” This, in turn, is expected to improve the returns for the developers of BOT projects and companies (EPC contractors) engaged in the construction of roads.

Specifically, out of 16 projects awarded in 2013-14, work has already begun on 12, or 75 per cent of the contracts awarded. “That’s a big difference considering that for projects awarded in 2011-12 and 2012-13, work had begun only on 10 per cent and 18 per cent of them, respectively, at a similar juncture. And in some of the projects awarded last fiscal, progress has been as much as 40-50 per cent already. Such momentum is unparalleled and stands in sharp relief to the imbroglio seen in the last couple of years,” CRISIL observed.

In light of the current market conditions, particularly with regard to the highway sector, the Government of India is focusing on implementing national highway projects through EPC instead of BOT. However, the government is hopeful that once the highway sector gathers momentum through the execution of EPC projects and current issues plaguing the build-order-transfer mode are addressed, it would be in a position to shift focus back on PPP projects in BOT-Toll mode.

Meanwhile, over the last three years, the Indian government received 1,759 proposals for road projects from state public works departments out of which 1,177 proposals included in the annual plans were approved depending on the availability of resources, priority and technical parameters. An expenditure of Rs. 15,492 crore has been set aside for the approved projects.

NH PROJECTS UNDER CONSTRUCTION AND DELAYED