NHAI readies 6,000 kms for award of contracts

The authority estimates that the combined worth of these projects will be around Rs 55,000 crore

The National Highways Authority of India has set a target of award projects totaling to 6,000 kilometres during the current year and is looking at a new government to fast track the award of projects. NHAI estimates that the combined worth of these projects will be around Rs 55,000 crore. Out of these projects, some worth Rs 6,500 crore are also ready to be awarded since they have all the necessary clearances.

The authority has already acquired the land needed for the projects to be awarded soon and the necessary clearances. "We have been working on keeping projects ready to be awarded. It is the prerogative of the new government to decide on the mode on which they are to be awarded. There is a lot of work that needs to go into the process. Our job is to keep all the projects in the shelf that can be awarded soon," a senior official at NHAI said.

The authority has been struggling to keep with completion of road projects and awarding new projects in the country during the last few years in the wake of a heavy slowdown in the domestic economy and lack of participation of private sector road developers in the country. A large number of road developers had also threatened to walk out of crucial road projects which were awarded during 2010-2012."We are looking at awarding 2300 kilometres of road projects under the EPC mode and another 3700 kilometres of road projects under the PPP mode.

The concern with awarding project under the PPP mode is that we are yet to understand if the market is willing to invest in road projects", another official from NHAI added. Under the EPC mode, the government funds the road projects and a private developer undertakes the road project while under the PPP mode, the private developer develops the road project and collects his return through the collection of toll or through annuity.Over the past few years road developers have been staying away from road projects after they bid aggressively during 2010-2012 when the government awarded a record 147 road projects worth Rs 1.47 lakh crore. The high expectation while bidding was attributed to India's high economic growth, which has slowed considerably over the past few years.

"Developers now take a maturer stand and are likely to be careful while bidding for road projects. But we are not likely to see the kind of aggression we saw from companies earlier" said Abhaya Agarwal, partner at EY, a tax and audit consultancy. As of now, road projects worth Rs 83,000 crore are pending completion. Since 2009, the United Progressive Alliance (UPA) government has recorded the completion of only three projects, adding a meagre 315 km to the existing highways' network.Last year the government awarded less than 1500 kilometres of road project under the EPC mode after it found no takers for PPP projects.

The National Transport Development Policy Committee, headed by former Reserve Bank deputy governor Rakesh Mohan, had earlier pegged private investment needs in the road sector at Rs 6.65 lakh crore over the next 20 years.The figure (Rs 6.65 lakh crore over 20 years) translates into Rs 33,250 crore a year, which is less than the total value of projects awarded under the public-private partnership (PPP) route in 2010 - Rs 51,354 crore.