India’s north eastern region, where the road ministry has made ambitious plans to improve road infrastructure, including an accelerated road development program is witnessing a lack-lustre demand from private road developers, largely due to security concerns and threats from local terrorist groups.
Road developers have been staying away from road projects in the region as officials have been kidnapped and ransoms demanded for, in addition to machinery and equipment being burnt down by local terrorist groups. The central government is planning to spend close to Rs 34,000 crore over the next three years to develop roads in the region.
“It is not just the road sector, public sector companies including Indian Oil Corporation and ONGC have to provide protection money and they account for it later as some sort of development fee. In the road sector there are always instances where crushers and other machinery are often burnt down. People are very scared to undertake projects there”, a senior official at a private sector infrastructure company said on conditions of anonymity.
The roads ministry has denied any such concerns. “There are no issues. I have been personally visiting the north east ever since I took over as the minister and road projects are taking off well”, Union Minister for road transport, Oscar Fernandes had earlier told Business Standard.
Country’s highway authority, NHAI has meanwhile said that the trouble in the region has held back a number of projects and addition of roads are negligible as compared to the plans set by the ministry. “There is no hope for these projects as they are impossible to take off. As soon a project is awarded the developers get demand notices from some of the local thug group asking for money. They also kidnap officials and the private sector does not want to take that risk”, a senior official at NHAI said.
The government is planning to develop road projects in the north east as it prepares to connect the country with Myanmar and to the Southeast Asian regions including Thailand as part of its look east policy. A massive plan to connect India with Thailand through the road route by 2016 is also underway and is expected to be completed by 2016. Meanwhile, the government is also in the midst of undertaking the Special Accelerated Road Development Program (SAADP-NE) to improve road connectivity in the north east region by 2016. The first phase of the accelerated program is expected to develop more than 6500 kilometres by 2016 of which only 1000 kilometres have been completed so far. And officials say that the completion of the remaining 5500 kilometre by 2016 will remain a distant dream
“In our view, this program has not been successful. The private sector is not interested in road projects here and they have to arrange for protection money. They are not interested in taking the risks and we do not think the problem can be resolved soon”, the NHAI official added.
India's road sector has been suffering since the past few years largely due to inactive participation from the private sector developers due to funding constraints. In addition, land acquisition has also become a major concern in Asia's third largest economy. “There is a higher execution risk in the region but we think developers factor in these risks. There are other concerns such as labour and geographical constraints which has made the implementation of projects difficult”, said Sushi Shyamal, Partner at consultancy firm, EY.