India built 2,979 km of highways during the April-September in the current fiscal year, or 16.5 km a day, up 21.7% over the corresponding period a year ago, thanks to a renewed focus on conventional government-funded engineering, procurement and construction (EPC) projects and a recent pick-up in the newly designed hybrid annuity model that greatly mitigates risk to private developers.
Though construction is still far slower than needed to meet the target of 15,000 km (41 km a day) for all of 2015-16, government sources were still optimistic of meeting the target. The pace of construction, from about 20 km a day in April-July, fell largely due to the monsoon that slowed down activities on the ground.
The sources said the National Highways Authority of India (NHAI) constructed 985 km of roads during the first six months of the year while 1,994 km of highways were built by the ministry of road transport and highways (MoRTH), which carries out the task mostly through the state public works departments.
“Construction work got affected due to heavy monsoon that lasted for nearly four months. Now the work will pick up. We will try our best to achieve the target,” NHAI chairman Raghav Chandra told FE.
NHAI has been entrusted with the task of building 8,000 km of the targeted 15,000 km highways to be constructed in the current fiscal and the remaining has been proposed to be done by MoRTH.
On the award front also, only 3,969 km of highway projects could be awarded till September-end this fiscal, while the target has been set at 25,000 km for the current fiscal. Awards during April-September last year totalled 4,482 km. NHAI has awarded 2,253 km in H1 this year compared with 2,458 km in the corresponding period last fiscal. MoRTH’s project award also fell to 1,645 km during the April-September period compared with 1,967 km a year ago. NHIDCL awarded 71 km projects.
The decline in new awards is primarily because there is a backlog of awarded projects, where construction is yet to start.
Of the projects awarded till September in the current fiscal, 1,411 km was through hybrid annuity and build-operate-transfer model and the remaining through the EPC route. Of the total 4,482 km projects awarded last fiscal, 874 km was awarded for development by hybrid annuity and BOT model and the remaining through the EPC route.
During all of last fiscal, India had constructed 6,061 km of highways and awarded 10,098 km projects. “There are many projects on which the work has started. These are at various stages of implementation,” an official said. It usually takes two and half years to complete a highway project.
The government has taken several steps to address the investment famine in the sector: It eased the exit policy for developers to enable them invest in new projects, introduced the hybrid model where the government bears 40% of the project cost.