Progress on road projects indicates proactive govt: Crisil

Construction work in 12 road projects, which were awarded in FY 2014, has started, indicating a proactive government and faster approvals by the implementing agencies, a study by Crisil Research said.
As many as 16 road projects were awarded in 2013-14 by NHAI, of which execution work has already commenced in the case of 12. "This shows unprecedented pick-up in execution amid a proactive government and faster approvals by implementing agencies," the rating agency said.
The execution is expected to improve the returns for developers of build-operate-transfer (BOT) projects and companies engaged in the EPC segment.
"This is a welcome respite and augurs well for the road sector. In the last five years, 90 per cent of the national highway projects completed were delayed because of lack of environmental clearances, non-availability of land, funding constraints, etc," Crisil Research Director Rahul Prithiani said.

Of the projects awarded in FY 2012 and FY 2013, work had begun only on 10 per cent and 18 per cent, respectively, at similar juncture. In some of the projects awarded last fiscal, progress has been as much as 40-50 per cent.
"Such momentum is unparallelled and stands in sharp relief to imbroglio seen in the last couple of years."

The average time overrun had increased from about 20 months in FY 2009 to about 50 months in FY 2014. Both BOT and EPC projects got stuck, with the average delay around 13 months for BOT projects and 45 months for EPC projects.

Land and environment issues have not only caused time overruns but also a significant 45 per cent cost escalation -or an average Rs 200 crore per project, the report said.
To clear the snarl and spur execution, the government has been taking many proactive steps such as fast-tracking environmental nod, delinting forest and environment clearances, increasing limits on sand mining, and enabling online filing for clearances to construct rail overbridges and underbridges, Crisil Senior Director Prasad Koparkar said.