Highways construction manages to hit 15 km a day in FY13
Battling a tough year, the ministry of road transport and highways has wrapped up the financial year 2012-13 on a satisfactory note. Overcoming several road blocks, the government has managed to construct 15 kilometres of highways per day during the year. Though short of the ambitious 20-km-a-day target set by the government under the national highways development project, this represents a sharp increase of more than 4 km a day over prior year.
Speedier construction has come as a big relief for the ministry which otherwise had nothing much to boast about in a particularly bad year plagued by project delays and poor investor interest in new projects.
Implementing agency for national highways, the National Highways Authority of India (NHAI), saw very few projects being taken up by developers during 2012-13 under the public-private-partnership (PPP) mode.
In FY13, highways construction and expansion increased to 5,800 km as against 4,955 km in FY12. Out of the 5,800 km, nearly a half, 2,840 km, was completed by the NHAI. Interestingly, NHAI?s performance has also shown an improvement as against construction of 2,248 km in FY12.
Sources said both NHAI and agencies undertaking projects under the ministry have improved their performance. ?The sector is directly impacted by the slowdown and thus the bidding of new projects has taken a direct hit. Though our focus was on construction we have still managed to achieve the highest target ever?, said an NHAI official.
NHAI undertakes only those road projects which fall under the national highways development project (NHDP). In contrast, the ministry takes up all non-NHDP works, including road development in the north-east region (SARDP-NE) and the left wing extremist (LWE) regions. State public works departments (PWDs) also undertake highways expansion and construction works on behalf of the ministry.
Ministry officials are optimistic of improved performance in the coming years on the back of improved performance by the ministry?s agencies. ?We are on our target to achieve 20 km a day of construction,? said an official.
Though the numbers for FY13 look progressive, the troubles surrounding the sector are leading to debates within various government departments. A review of the sector would be done on April 4 under Planning Commission member BK Chaturvedi.
Investments in the road sector slowed down considerably in the past year owing to the slowdown in the economy and various hurdles faced by investors such as delayed land and environment clearances, stranded projects locking up funds and sticky issues of remunerative return to investors.
In the budget for FY14, finance minister P Chidambaram has announced the setting up of a regulator for the sector, besides setting a target of awarding 3,000 km of highways in the first six months of the financial year as against just 1,000 km in the whole of 2012-13. The minister also sought to bolster infrastructure financing through a slew of measures like credit enhancement facility and higher threshold for tax-free infrastructure bonds to R50,000 crore.
Minister for road transport and highways CP Joshi had recently told FE that his ministry would set higher targets for the current fiscal, despite the difficult economic environment.
Amongst the various reasons for the slippage in road development targets last fiscal, a major factor was the lack of investor interest. ?The worsening of the state of the economy has contributed to this and so have resultant financing problems. To overcome this, we have taken many steps like reviving the engineering, procurement and construction (EPC) model. We are now racing against time when it comes to awarding projects. The idea is not only to meet the target for next year but also to make up for this year?s (2012-13?s) shortfalls by the end of next fiscal.? Joshi had said.
Though the ministry has not yet decided on the fresh targets for this fiscal, the momentum gathered in the just concluded year has lifted the mood of ministry mandarins, from desperation to hope.