Capital goods: Pace of land acquisition is strong for NHAI

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Updated: December 29, 2018 3:19:40 AM

Pace of land acquisition is strong and NHAI is targeting the 10,000-hectare mark in FY19.

There was limited clarity provided on ineligibility of bidding by construction companies that delay the execution of ongoing projects.

Our meetings with NHAI helped obviate any funding concerns towards their near-term commitments and on their ability to scale up pace of land acquisition. Key negatives include capacity constraints (consultants, concessionaires) to materially grow pace of ordering and weak response to its second ToT package.

There was limited clarity provided on ineligibility of bidding by construction companies that delay the execution of ongoing projects.

Pace of land acquisition is strong and NHAI is targeting the 10,000-hectare mark in FY19. It expects the cost of acquisition to be around Rs 30-35 mn per hectare and overall cost of land acquisition to be Rs 300 billion in FY19.

The increase in the pace of land acquisition is a function of the uptick in the pace of ordering. NHAI has facilitated state governments to increase the pace of land acquisition through a combination of (1) providing manpower resources, and (2) conducting regular meetings (to track progress and clear hurdles).

NHAI shared that states acquire land for constructing highways through the provisions of Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, with no amendments made. In this context, the recent notices issued by the Supreme Court to five states for certain amendments in their land acquisition acts do not impact NHAI projects. With land acquisition accounting for 30-50% of the project cost, NHAI is not considering increasing toll rates beyond the indexation formula set. Inherently, it is relying on increased funding from the Centre to take care of enhanced cost. NHAI comforted that the annuity payments for work completed on land provided would happen as per the schedule of the concession pact.

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