NHAI revamp in the offing; large-scale reforms needed: Nitin Gadkari

The government is taking steps to revamp the National Highways Authority of India (NHAI) and large-scale reforms are needed further, Union Minister Nitin Gadkari said on Tuesday.

NHAI has been mandated the task to develop, maintain, and manage National Highways, the arterial roads of the country, for inter-state movement of passengers and goods.

The total length of National Highways at present is abut 150,000 km, about 2 per cent of the length of all the roads, but they carry about 40 per cent of the total traffic.

"We are taking steps for revamp of NHAI....major reforms are needed in the Authority," the Road Transport and Highways Minister said addressing a webinar organised by industry body Assocham.

The minister said the need of the hour is to devise bankable projects suitable for the market with acute precision and accuracy citing how NHAI devised Rs 5,000 crore highway monetisation projects under TOT (toll-operator-transfer) mode which could only be bid by foreign players.

"It took six months to convince them (Authority) to come out with small Rs 500 crore packages for asset monetisation under TOT as Rs 5,000 crore package could only be bid by foreign players," Gadkari said adding "the project mode should be market driven and bankable" and not just which are taken in "boardrooms."

Likewise, instead of engineering, procurement and construction (EPC) mode, the Authority was in favour of BOT mode for building 3,000 km of highways but tenders are not out yet, he said in the webinar on 'Covid-19 Impact and Investment Opportunities in Roads and Highways'.

He recalled how once "zero tender" was the response for 17 projects on build-operate-transfer (BOT) mode by NHAI.

Gadkari also cited delays in setting up roadside amenities and stressed that the government is planning to set up 2,000 petrol pumps along the highways. He also expressed displeasure over NHAI seeking time from players for reconciliation of disputes adding that NHAI sought time in 22 such cases.

At the same time the minister said despite decentralisation of powers and empowering project directors and regional officers of NHAI to take decisions for projects up to Rs 50 crore, a large number of such issues were being referred to the headquarters. He said all transfers in NHAI have been made digital.

Last week, NHAI said that in view of the novel coronavirus outbreak it has gone fully digital with cloud-based 'Data Lake Software', becoming the first such construction sector organisation in the country.

Gadkari urged industry players to turn the present crisis into opportunity by tapping the global market in the current scenario. He also urged the industry to be more competitive and come out with innovative projects including the pre-cast structures for highways.

Earlier, B K Goenka, Immediate Past President, Assocham stressed the need for reducing the cost of borrowing.

"Though RBI is reducing the repo rate on a regular basis, this is not reflected in cost of debt. The commercial banks are not able to pass the interest rate cut to the industry....this anomaly has created negative equity returns especially in the HAM (hybrid, annuity mode) projects which are primarily dependant on NHAI for its fixed revenues," he said.

Today, recovery from NHAI is at least 1.5 per cent less than borrowing rate. This has led to erosion of equity value by approximately 25 per cent, Goenka said and added there is need to change the existing structure of NHAI payment, it should be linked to SBI rate rather than RBI determined Bank Rate.