Highways hit roadblocks in 2012

Dec 27 2012, 14:54 IST
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Against the target of awarding 8,800 km highways during 2012-13, contracts for only 1,100 km could be given. (Reuters) Against the target of awarding 8,800 km highways during 2012-13, contracts for only 1,100 km could be given. (Reuters)
SummaryAgainst the target of awarding 8,800 km highways during 2012-13, contracts for only 1,100 km could be given.

The ambitious target of building 20 km of highways a day hit major roadblocks as the key infrastructure sector lost its fancy with the banks and financial institutions during the year.

Against the target of awarding 8,800 km highways during 2012-13, contracts for only 1,100 km could be given by the government in the first three quarters of the fiscal. These contracts were to be awarded on build, operate and transfer (BOT) mechanism but the overall economic slowdown and banks reluctance to fund projects took toll on the sector.

Difficulties in land acquisition and delays in environmental clearances added to the problems.

Even intervention of the Prime Minister's office could not lead to tangible results. The issue of banks' unwillingness to finance projects is pending at the level of PMO, which asked the Ministry to address the matter to the PMEAC so that it can be resolved.

A number of private companies in the road sector during the year had raised the issue of a conservative and rigid approach by banks in providing loans to the highways projects with the Transport Ministry.

However, as per Road Transport and Highways Minister C P Joshi the sector continues to retain the positive outlook, of achieving the milestones set, for the coming year amid abundant challenges.

Discussing the 'roadmap' for the sector Joshi admitted that "response (to projects) is not as positive as we expected. The bids which were supposed to materialise could not," but exuded confidence that with the Cabinet approving EPC document, the Ministry will soon roll out 4,000 km worth of projects under this mode.

"The RFQs (Request for Qualification) are in place and shortly we are going to award these projects," he said stressing, "Already the global environment has impacted Indian economy, lenders have been instructed to be cautious of their investments in this country."

Last year there was aggressive bidding and the Ministry got Rs 3,000 crore premium on the projects bid out," Joshi said expressing hope that these projects would come up next year despite bankers being cautious in lending to the sector.

"Times are changing hopefully we will get good response in 2013. Last (financial) year, the infrastructure sector witnessed Rs 80,000 crore worth of investment in infrastructure. It has started to pick up now, let us hope for the best," he said.

On the issue of not being able to achieve the target of building 20 km of roads a day, Joshi said, "Once you award the projects the construction takes three years, the difference between award and construction is normally three years.

In 2011-12 we could award more than 7,000 km, we got Rs 3,000 crore worth of premium, the trend was there in 2011-12 but the scenario changed in 2012-13. We hope in the coming months once again we will get good response."

The Ministry faced much criticism on the front with even a parliamentary panel in its latest report saying that building 20 km of highways per day " has been a distant dream so far."

Meanwhile leading infrastructure firms are trying to find buyers for their road projects, as per the industry.

The National Highways Authority of India (NHAI) also was in media focus during the year for wrong reasons like inordinate delays in projects like Golden Quadrilateral.

"NHAI is not in a position to complete any project and is adding projects after projects without achieving targets in older ones," the Parliamentary Standing Committee on Transport has said in its latest report, adding, "This shows their deficiency either in planning of programmes or proper execution of the same."

It said, "The much-publicised GQ (Golden Quadrilateral) and NS & EW (North South & East West) Corridor under National Highways Development Project (NHDP) have not been completed till date."

A length of four kms is still to be completed under GQ project, which aims to provide direct connectivity between four metros – Delhi, Kolkata, Chennai and Mumbai. It was originally scheduled for completion in 2004.

In North-South & East-West Corridor, out of 7,142 km, 6,031 km has been completed, 691 km is under implementation and 420 km is yet to be awarded.to take up 4000 km on EPC basis in 2012-13.

The year saw NHAI getting a new Chairman – former DIPP Secretary RP Singh – after being headless for nearly two years.

It was expected that NHAI that the step will give a push to government's flagship road building programme – National Highways Development Project (NHDP) being implemented by it but nothing changed.

The position of full-time Chairman at NHAI fell vacant in August, 2010 after the retirement of Brijeshwar Singh. Road Transport Secretary A K Upadhyay has been holding this additional charge.

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