Will terminate stuck road projects: Nitin Gadkari

Gadkari refrained from naming the companies that were issued the contracts for these projects

Union Transport Minister Nitin Gadkari said the government would soon terminate 8-10 highway contracts that had turned “chronic” over land acquisition and environment clearance delays. 

The revival of these projects, totalling over Rs 5,000 crore, in the states of Tamil Nadu, Uttarakhand, West Bengal and Odisha, will be difficult.

In an interview to Business Standard, Gadkari said, "We will terminate these projects." 

The projects will be put up for re-bidding. 

The minister, however, refrained from naming the companies that were issued the contracts for these projects.

The 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 an average 25 per cent over the last three years.

Re-bidding for these projects begins 45 days after the completion of their termination, which is a cumbersome process. It could take a few months and several rounds of consultations among stakeholders.

“The government should set up a panel consisting of representatives from the road ministry, the National Highways Authority of India and the private sector.”

The committee should try conciliation so that these cases do not reach arbitration,” said Abhaya Agarwal, partner and PPP leader, EY India.

According to the government’s online monitoring system, of the 351 infrastructure projects worth over Rs 1,000 crore, 127 were delayed and 115 faced cost overruns as of February. As many as 51 faced both time and cost overruns. Of the 122 delayed highway projects, 90-odd are being executed by the NHAI. 

The factors responsible were delays in clearances, lack of supporting infrastructure, law and order problems, delay in shifting of utilities, pre-project activities, equipment supply, fund constraints and geological surprises.

Last year, the Centre began the exercise of re-bidding some stalled projects flagged by banks as likely non-performing assets. 

Some experts in the past have attributed delays to aggressive bidding by overzealous companies where  project developers faced difficulties in arranging equity because their balance sheets were leveraged. Also traffic projections for highway contracts were ambitious.

Some contracts were re-tendered by the government and the NHAI. Global investors such as Macquarie, Brookfield and Cube Highways have picked up stakes in 10 highway projects worth Rs 4,150 crore.

The Cabinet in May 2015 approved a policy that allowed project concessionaires to divest 100 per cent equity two years after completion of construction.

“The speed of land acquisition has gone up by four to five times compared to the United Progressive Alliance regime. We conduct regular review meetings with the states for better coordination,” Gadkari said.