The state support agreement (SSA) were supposed to be signed 4-5 years ago, but pending resolution of the states' concerns over revenue and autonomy, they have been put on the back burner.
Experts said that the states' laxity about SSAs has led to delays in the launch and completion of the projects, cost overruns and below-potential growth of the highway sector. Cost overruns of projected awarded inevitably result in arbitration.
Under the SSA, it is mandatory for the state government to provide the land, environment and mining-related clearances required for the road projects, besides lending other relevant support at the state level.
Talking to FE, senior NHAI officials said, "There are various projects (in the three states) for which there were no bidders. We have internally decided not to relaunch these bids until and unless the states sign the SSAs. A lot of developers have told us that since these states do not provide support they are hardly interested in these projects." Gujarat, Tamil Nadu and Uttar Pradesh account for more than 20% of national highways of the country.
In Gujarat, there has been delay of about 8 months in the construction of on NH--6 from Songadh to Surat, which is supposed to be built by Soma Isolux. Similarly, L&T's NH--8A project (Samakhiali to Gandhinagar) is also running behind schedule.
In UP, IL&FS's project from Moradabad to Bareilly is facing issues of land acquisition and is unduly delayed.
NHAI, the sources said, is unlikely to re-launch the bids for Ramanathapuram-Madurai and Thanjavur-Madurai stretches of the highway in the absence of the SSA.
Delays lead to an adverse impact on project implementation in states, in various projects. State support as envisaged is not forthcoming, resulting in delays. Support for land acquisition, removing encroachments, utility shifting, rehabilitation, maintaining law & order, restriction on creation of competing facility is very important for a project, said a senior official in the ministry of roads transport and highways.
Apart from land and environment clearance, the states are also liable for utility shifting, meaning that they have to ensure that various utilities are shifted from the project development area prior to handing it over to the concessionaire.
Delays in utility shifting result in delays in implementation leading to increased costs. Inter-agency approvals required are many and the time involved in physically removing key utilities like gas/oil pipelines is often huge. The relevant state government's support is crucial in addressing these issues expediently, said M Murali, director-general, National Highway Builders Federation.
A UP government official said there are a few issues that need to be resolved with the NHAI before the SSA can be signed by the state. "We have sought clarifications on competing roads, state revenues and sovereign rights.. until these issues are resolved, the SSA may not be signed," he said.
(With inputs from Deepa Jainani in Lucknow)