The Indian road sector
continued to face multiple challenges in this financial year in the form of
high interest rates, sluggishness in award of road contracts, reduced
availability of funds, execution slowdown, and increased competitive intensity.
However, execution on many of the projects awarded over the last one year
remained slow primarily because of delays in land acquisition, clearances, and financial closure. Projects that had the requisite approvals
and funding reported healthy execution.
While both developers and
contractors are going through a rough phase over the last one and a half years,
the challenges were higher in the case of companies that had recently entered
the project development space. While developers with a portfolio of operational
toll road projects were partly hedged from high interest rates due to
inflation-linked toll rates, those with projects in the developmental phase
faced challenges in achieving financial closure due to weakened project
viability owing to high interest rates besides delays in land acquisition and
approvals.
With NHAI increasingly awarding projects under the public-private partnership (PPP) model, engineering, procurement and construction (EPC) contractors have struggled to maintain their order-book growth. The equity requirement for BOT projects, along with the weak capital markets that have made raising capital difficult, has increased their dependence on external borrowings. Further, many of these companies have raised debt at the parent or holding company level to meet the equity requirement in BOT projects thus significantly increasing the indebtedness at the group level.
The details of allocation
and expenditure for development / construction of NHs are as under:
Year
|
Allocation
|
Expenditure
|
2007-08
|
14,193.74
|
12,337.06
|
2008-09
|
17,522.26
|
14,670.86
|
2009-10
|
19,080.92
|
14,660.20
|
2010-11
|
25,526.80
|
19,617.34
|
2011-12
|
31,862.19
|
29,605.00
|
2012-13
|
29,438.05
|
19,499.76
|
2013-14#
|
34989.49
|
2864.48
|
# Expenditure up to June,
2013
NHAI awarded only 3,857 km
during 2012-13 period. The comparatively lower quantum of award in previous
years affected the completion rate. The targeted and completed length under
various schemes including Special Accelerated Road Development Programme in
North East (SARDP-NE) and Left Wing Extremism (LWE) during the last three years
and the current year are as under:
Year
|
Target
(Length in km)
|
Achievement (Length in km)
|
Length Constructed per day
|
2009-10
|
5830
|
5164
|
14.15
|
2010-11
|
5534
|
4334
|
11.87
|
2011-12
|
5824
|
5013
|
13.73
|
2012-13*
|
6092
|
3857
|
12.60
|
The progress of
construction of National Highways has been slow due to several problems such as
land acquisition, shifting of utilities, environmental and forest clearance,
approval for rail over bridges as well as shortage of skilled/semi-skilled
manpower and economic slowdown. In order to expedite implementation of the
Projects, Regional Offices have been set up by National Highways Authority of
India (NHAI) headed by Chief General Manager. Powers have been delegated to the
Chief General Manager who is involved in expediting forest / environmental
clearances and monitor land acquisition matters as well as implementation of
Projects. Special land acquisition units are also set up to expedite land
acquisition. Chief Secretaries of State Government have also been nominated as
Nodal officers to expedite Highway Projects. Projects are also closely and
periodically reviewed at Headquarter as well as field units.
Recently, the issues of de-linking environmental
clearance from forest clearance and exempting linear stretches from the
requirement of NOC from Gram Sabha have been resolved. Reserve Bank of India
has given dispensation to treat the debt due to lenders, to the extent assured
by Project Authorities in terms of concession agreement, as secured loan.
Disinvestment of 100% equity to other willing buyers has been allowed after
completion of the construction and also substitution of concessionaire allowed
after achievement of financial closure to salvage the languishing projects. The
NHAI has also constituted Negotiation / Reconciliation Settlement Committees
and also High Level Expert Settlement Advisory Committee to settle the claims /
disputes. Further, Government has decided to award contracts on Engineering
Procurement and Contract (EPC) basis also.
Infraline Energy Roads Knowledgebase Team
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