As many as 22 road projects worth Rs 18,300 crore, awarded between July 2015 and October 2016, have slipped behind schedule. Spanning 1,239 km, these projects have missed the official date for the commencement of construction, or the so-called appointed date (AD), due to a combination of factors, including delay in land acquisition, pending financial closure and environmental clearances. Some of the projects that have missed the scheduled date for the start of construction include the road project from Rajgunj in Jharkhand to West Bengal border section of National Highway 32, awarded to Ashoka Buildcon for Rs 486 crore under the engineering, procurement and construction (EPC) mode. Another project, Lucknow to Sultanpur, awarded under the hybrid annuity model (HAM) to Dilip Buildcon for `2,016 crore, is behind schedule due to some minor permissions related to cutting of trees and the estimates for shifting of utilities that are still awaited.
For two companies — PNC Infratech and MEP Infrastructure — the delayed projects constitute 37.2% and 35.1%, respectively, of their total order book. For Ashoka Buildcon, the figure stands at 7% while for Sadbhav Engineering it is 8% and for Dilip Buildcon, 11.5%.
Devam Modi, director, Equirus Securities, told FE, “Land acquisition remains the most obvious bottleneck facing road projects. The National Highways Authority of India (NHAI) has definitely made significant progress on this front; however, we are still seeing delays of a year or more in various cases.”
However, Rohan Suryavanshi, director, strategy and planning, Dilip Buildcon, told FE that the challenges to land acquisition are not a major issue. “The due process for land acquisition has to be followed and in a three-tier system of democracy, the process is sometimes a little longer than expected. Before we bid for any project, we do a due diligence and we believe this is a calculated risk. Usually, we are ahead of schedule on most of our projects and on a top line of Rs 5,000 crore in FY17, we even got an early completion bonus of Rs 106 crore from NHAI,” he said.
PNC Infratech has four projects that are behind schedule, three of them awarded under the EPC route and one HAM project. The EPC projects are Nagina to Kashipur, Koilwar to Bhojpur and Bhojpur to Buxar. The HAM project is from Dausa to Lalsot in Rajasthan that was awarded for Rs 881 crore. The reasons for delays in these projects are pending environmental clearances, utility shifting and tree cutting. Stage 2 forest clearance is also pending for the project between Koilwar to Bhojpur.
For Sadbhav Engineering, the project between Rampur and Kathgodam awarded under the HAM route for Rs 738 crore, is yet to go ahead with felling of trees as well as finalising the estimate for utilities to be shifted.