Land acquisition delays force NHAI to scrap six projects

Industry players say cancellations could deter private investments

The Centre’s ambitious plan to kick-start development of critical infrastructure, including roads, during an election year has hit a barrier with the National Highways Authority of India (NHAI) deciding to scrap six projects worth Rs 4,000 crore due to land acquisition hurdles.

NHAI is mandated to acquire land to develop national highways. It has so far scrapped four projects in Goa and Kerala and has now decided to let go off two more this year in Kerala, said a senior NHAI official. The projects could have added more than 420 km to the highway network. NHAI was looking to widen the national highways running through these states.

V K Sharma, chief general manager for land acquisition at NHAI, told Business Standard:  “So far, we have terminated four projects in Kerala and Goa and we are in the process of terminating two more in Kerala. Land acquisition also remains a hurdle in West Bengal, but we have not scrapped any project there.”

Kerala and Goa are the only states where the authority has given up projects due to land acquisition troubles this year. This could be a deterrent to private sector investments in the country, according to industry players.

“These decisions send out a wrong message to investors. Land acquisition has to be done with coordination between state governments and NHAI,” said M Murali, director-general, National Highways Builders Federation (NHBF). The enactment of a new land acquisition law could help make acquisition easier for public utility projects, he added.

Undeterred by the six projects being scrapped, NHAI is now looking to acquire 10,000 hectares during the current financial year. It has acquired 4,000 hectares and looks to award 9,000 km of road projects during the year. “We have already acquired 4,000 hectares this year and we have set a target of 10,000 hectares for the year. We are certain that we can achieve that,” said Sharma.

The land acquisition target for the year is more than 50 per cent over the last years achievement when NHAI acquired 6,669 hectares.

Last year, the road transport ministry could award only a little more than 1,000 km of road projects and the prime minister had expressed concern over the delay in road development. The delay, largely caused by environmental clearance and land acquisition problems, had kept many private sector investors away from road projects. Last year, as many as 13 projects received no bids from the private sector.

According to the road transport ministry, a little more than 30 projects are delayed due to land acquisition troubles. West Bengal, Kerala and Assam each accounted for at least six projects. According to the existing norms, NHAI should take over 80 per cent of the total land before inviting bids from investors to develop projects. The remaining 20 per cent has to be completed within three months of awarding the project.

According to the National Highways Builders Federation, the criterion is not met in most instances with NHAI struggling to acquire land on a stretch and instead acquiring in a fragmented manner, which makes development difficult.

Experts have also pointed to NHAI’s inability to plan well after it had to scrap the projects in the states. “Kerala and Goa have limited land availability and the state governments have been opposing the plans to acquire land for roads. The NHAI should have studied the situation more closely before planning to undertake the projects. But with the number of vehicles on the rise, the state governments should also look at a sustainable model,” said Vishwas Udgirkar, senior director at consultancy firm Deloitte Touche Tohmatsu.

The Ministry of Road Transport has been trying to revive interest in the road sector through a slew of measures including amendments in the exit policy for private developers and rescheduling the premium that the developers owe the National Highways authority.