Centre to give delayed highway projects a move on

Improvement in sector could be owing to quicker disbursement of compensation after land acquisition by the central govt: Officials

The central government is planning to bring down the share of national highway project contracts that have been delayed to 15-20 per cent of the total from the average of 25 per cent in the past three years.

Despite a slew of measures, including a greater engagement with state governments and restructuring projects, the government continues to grapple with the problem of delayed contracts.

However, officials said the improvement in the sector could be owing to a quicker disbursement of compensation after land acquisition by the central government. And the companies concerned were allowed to reschedule premium payments and exit projects under a new policy.

The Ministry of Finance in 2014 allowed all stuck projects awarded on premium to get their payments rescheduled in line with the recommendations of the C Rangarajan Committee. The committee said the premium reschedule should take place only if the toll collected at a particular project was not enough to meet the cost of the project.

Contractors pay the government a premium instead of receiving viability gap funding.

In an official response to a query on the status of the stalled projects, the ministry said 73 of those, involving 8,310 km and costing around ~1 lakh crore, were stalled. Of these, 42 have been restructured and 12 of them have been bid out.

Some experts believe with the Bharatiya Janata Party in power both at the Centre and many states, a better monitoring of projects is possible. In some cases, lenders have shied away from project closure in the absence of state government support.

Delays in land acquisition in the past had affected the implementation of projects, hence the process remained a critical milestone in road construction.

“The same party in power at the Centre and states assures seamless land acquisition and other statutory approvals as these prerequisites have been delayed in the past due to the absence of state support,” Adil Zaidi, partner, economic development and infrastructure advisory, EY, said.

The other statutory approvals are shifting utilities to make way for highway construction.

A senior road ministry official, however, said the pace of construction depended on the leadership in states. “Easing land acquisition and the pace of road construction in a state has more to do with the chief minister’s thrust on infrastructure development rather than having the same party in government at the Centre and the state,” said an official.

In August 2016, the Cabinet Committee on Economic Affairs authorised the National Highways Authority of India (NHAI) to monetise publicly-funded operational National Highway projects that were generating toll for at least two years after the Commercial Operations Date (COD) through the Toll-Operate-Transfer (TOT) model.

“The process of land acquisition and subsequent compensation to the land dwellers have been eased in the past few years and they have helped a lot in starting the delayed projects,” the official said.