China ban won’t hit construction pace of highway projects, says NHAI

By: |
July 3, 2020 1:01 PM

Banning Chinese firms will not hamper construction of highways, as Indian firms have sufficient capability, the National Highway Authority of India’s member-projects RK Pandey says

There is hardly any proof that presence of Chinese firms ensures faster pace of construction.

The Chinese presence in India’s highway construction sector is now limited to just four companies who are joint venture partners of local firms in over a dozen stretches with a total length of less than 1,000 km. Though this is a marginal role in a country, which has been constructing over 10,000 km of highways annually over the last few years and aims to increase the construction manifold, road transport and highway minister Nitin Gadkari’s decision to bar Chinese firms from participating in Indian road projects could be dampener for the neighbouring country, given its apparent plans to bag more highway projects in India.

Banning Chinese firms will not hamper construction of highways, as Indian firms have sufficient capability, the National Highway Authority of India’s member-projects RK Pandey says. There is hardly any proof that presence of Chinese firms ensures faster pace of construction, he adds.

Chinese firms have been taken on board as minority JV partners by a few mid-sized Indian developers primarily to meet technical qualifications for a bid on offer. There also have been a few instances of Chinese investors with big pockets showing interest in the toll-operate-transfer (TOT) projects launched by the NHAI to monetise operational assets and find investment funds.

On Wednesday, Gadkari said India would ban Chinese firms from participating in the bidding process for current and future highway projects. However, those projects already awarded will be spared.

Longjian, a Chinese state-owned enterprise mainly engaged in road and bridge construction, and Jiangsu Provincial Transportation Engineering Group Company are the two main firms engaged in the highways sector in India. Besides, CR-18 and China State Construction Engineering have presence; but all of them have invested in India through the joint venture route in projects being developed, at an aggregate cost of over Rs 7,000 crore.

An established domestic highway developer, on condition of anonymity, said Chinese companies have never got involved in a big way in the highway sector of the country. Moreover, these firms are roped in by Indian firms only to secure financial and technical qualifications. On the ground, the work is done by the Indian firms only.

“There are not many Chinese companies in the Indian highway sector at the moment. Those having presence were roped in earlier by small domestic highway builders. They took them on board mainly to qualify on the financial and technical parameters for a bid on offer. I don’t think they were involved in any project on offer in the recent past. So, the absence of the Chinese firms will have no impact,” said the developer.

ICRA’s Rajeshwar Burla also said only a few highway projects are there at the moment where Chinese firms have presence. These were awarded to joint ventures between Indian developers and Chinese construction companies with Chinese players as the minority partners mainly to meet technical qualification. It is more like a technical collaboration than on ground work execution.

“Over the last two decades, many Indian developers have built exceptional capabilities in highway sector and therefore, banning Chinese players really wouldn’t affect the sector,” said Burla.

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