Five firms exit highway projects as NHAI faces delay in land acquisition

Oriental Structure Engineers, Chetak Enterprises, KNR Constructions, Sadbhav Infrastructure Projects and a joint venture of IRB infrastructure Developers and Modern Road Makers are among the companies that have exited contracts as the National Highways Authority of India (NHAI) failed to give official approval for the execution of projects.

According to the norms, the NHAI gives an appointed date or official date for the road developer to start work. However, in many cases, the authority failed to provide this date due to delay in land acquisition. 

It is learnt that the five companies have surrendered eight projects across various states. “The delay witnessed in receiving the appointed date for hybrid annuity model or HAM projects is largely on account of land acquisition issues. Since the cost of land acquisition has gone up, the authority is facing delays in acquiring land which, in turn, is impacting the projects. As on December 31, 2019, 4 per cent of projects awarded in FY18 and 95 per cent of projects awarded in FY19 are yet to receive appointed dates,” said Shubham Jain, senior vice-president & group head at ICRA.  

According to estimates, the cost of land acquisition in 2016-17 was approximately Rs 1.3 crore per hectare. It is Rs 3.2 crore per hectare now. Higher cost of land acquisition has always been a cause for concern for the road sector. When road transport minister Nitin Gadkari announced plans to execute expressway projects in 2016, experts said that the land acquisition cost may prove to be a real challenge because of the steep cost involved. Expressways, by definition, are greenfield projects and involve huge land acquisition cost.

Estimates suggest that land acquisitions costs constitute around 50 per cent of the total cost of the expressway project. The cost of land acquisition varies from state to state and can even differ at two locations in the same state. The proposed New Delhi-Katra (Jammu & Kashmir) expressway, which would also reduce travel time to Amritsar by about two-and-a-half hours, would be executed on an alignment cutting across Jind in Haryana and connecting Amritsar via Barnala in Punjab. 

The project, which is slated to come up at a cost of Rs 60,000 crore, would reduce the distance between Delhi and Katra by 110 km. The distance from Delhi to Katra via the National Highway-1 is 729 km.