New roads half of target, fresh awards just a seventh

Written by Timsy Jaipuria | New Delhi | Updated: Feb 27 2014, 03:10am hrs
Reflecting a big slippage in investments and waning investor interest, both award and construction of centrally-assisted roads including national highways have lagged targets by a huge margin in 2013-14.

According to the ministry of road transport and highways (MoRTH) data, at January-end this fiscal, construction of these roads stood at just 56% of the full-year target at 4,460 km while new project awards were a dismal 14% of the target or 9,638 km.

Both the annual targets, officials admit, could be missed.

Pertinently, in the previous two years, construction of these roads exceeded the targets 107% of the target was achieved in 2012-13 and

100% in 2011-12. As far as awards of new projects are concerned, the slippage became evident in 2012-13 itself, with awards at just 15% of the target of 12,449 km at 1,916 km. In 2011-12, actual awards were a comfortable 83% of the target of 11,805 km at 9,794 km. The awards were a record 10,279 km against the modest target of 3,500 km in 2010-11.

Despite the flurry of awards in 2010-11 and 2011-12, construction has under-performed in subsequent years due to the fall in toll receipts (which has led to calls for premium payment rescheduling), delays in land and forest clearances, funds crunch faced by infrastructure companies and lenders reluctance to increase their exposure to the sector.

The MoRTH data include both PPP projects and the conventional EPC contracts, NHAI and NHDP projects and the road projects for northeastern state and those for areas affected by insurgency.

Significantly, the data on construction also include improvement (repairs, but not addition of fresh lanes) of existing roads which in many cases forms a major chunk.

The current problems are liquidity constraints of infrastructure companies and bureaucratic hurdles. We do not seem to have a solution to these problems and so, it is tough to revive growth in the road sector, said Vinayak Chatterjee, chairman of Feedback Infra. The proposed recast of premium payments of more than 40 projects entailing premia in excess of Rs 1 lakh crore is also getting delayed as a final government decision on the methodologies is yet to be taken.

On its part, MoRTH is trying to revive investor interest with an easier exit policy and liberal terms for premium rescheduling but the results of these efforts are yet to be seen.