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Schedule lags in 107 highway projects; legacy issues for majority

Implementation capability of some aggressive bidders a possible factor

Highway
In 2017-18, the National Highways Authority of India awarded 7,400 km of projects, valued at an all-time high of Rs 1.2 trillion

While the number of highway project contracts awarded in 2017-18 touched a new high, a number of older ones are well behind schedule.

In data shared with the Lok Sabha last month, the ministry of road transport and highways said 107 projects had or would miss the originally scheduled completion date.

Most of these were awarded prior to May 2014, when the present government took charge. 

However, 19 of these 107 were awarded between May 2014 and August 2016. 

The average completion time stipuled in the contract for any road project is between two to three years. In some cases, extending to four years, depending on the length of road and nature of the work.

The ministry’s data was in response to a question in Parliament on whether highway projects had been delayed or terminated for default. 

According to a senior ministry official, projects beyond the schedule, from appointed date to date of completion, are termed as delayed. 
“We had prepared a list of languishing and delayed projects in 2014. Languishing projects were those stuck due to delays in receiving the necessary clearances. Of those projects, some were cancelled and some taken over by the government and re-bid,” he added. Half the languishing projects have achieved some progress since; rest are still delayed.

“The developer community’s capability could be an issue. The understanding was that projects were being given out only after land acquisition and other approvals are in place. If there is still a delay, it means either some projects initially got awarded without fully adhering to this or the reasons are beyond land acquisition, like execution capability of the contractor,” said Manish Agarwal, leader- forapital projects and infrastructure at consultants PricewaterhouseCoopers India (PwC).
Some blame the delay on implementation flaws of those bidding aggressively. “Some of the projects awarded in 2014-2015 that are facing issues went to weak sponsors. However, the execution for projects awarded over the past two years is expected to be better. Even in the hybrid annuity model (where the government shares the construction cost up to an extent), some of the early projects which went to weak sponsors might face the same issue,” said an official with a rating agency, who did not wish to be identified.

In 2017-18 (it ended on March 31), the National Highways Authority of India awarded 7,400 km of projects, valued at an all-time high of Rs 1.2 trillion. 
Agarwal of PwC has a word of caution on the aggressive award activity. “In general, we know the delivery capability of the developer community is getting stretched. As the volumes increased, we have not seen the delivery capability in terms of execution move in tandem,” he says.