When the economy slows, the highway sector, too, gets hit. Such was the impact that in the first seven months of the financial year, only close to 1,500 km of highway projects were awarded. In an interview with Shaikh Zoaib Saleem and Jyoti Mukul, Minister of Road Transport and Highways C P Joshi is optimistic but admits that targets will be difficult to achieve. Edited excerpts:
As the third quarter comes to an end, how realistic is the target to award 8,800 km of projects this financial year, which in itself is 700 km less than what was set by the prime minister?
I do not deny it (that the target is unrealistic). Financial conditions have hit all infrastructure sectors. But we have started getting good signals in the last two months. In Rajasthan, we recently got a premium on a project. Though it is a token premium, it is a good signal. As soon as we get the approval of PPPAC (the Public-Private Partnership Approval Committee), I am hopeful that we will able to award 3,000 km of BOT (build, operate, transfer) projects by the end of this year. As soon as the Cabinet Committee on Infrastructure approves it, we have to open the RFQs (request for quotations). Plus, we have already awarded projects in the North-east.
Even if you award the projects, companies are finding it hard to get financing, as they are facing trouble in getting further loans.
The banking secretary has sent a circular to banks asking them not to lend unless 100 per cent land is available. Earlier, whenever we used to have 70 or 80 per cent of the clearances, financial institutions used to lend to the concessionaire. But land acquisition and removal of encroachments are the functions of state government. These concerns were raised in a meeting convened by the cabinet secretary. We have been assured the banking secretary will be asked to give appropriate directions to the lenders.
The industry had recently cited post-concession negotiations as one of the problem areas. Do you think setting up of an independent regulatory body will help in monitoring such things?
There are provisions in the concession agreement to address all the problems. We have independent engineers for each project. They are supposed to address all these issues. But if someone is not performing his or her duties, then aberrations come up.
What is the reason for extending the financial closure deadline beyond 300 days?
We need to be practical and pragmatic. We are giving them an extension because we have a temptation of the premium for 20 years. Premium of roughly Rs 3,000 crore a year is expected due to the high demand road projects had in the last financial year.
How far are environmental clearances stalling projects?
One is the Forest Rights Act, actually the domain of the tribal affairs ministry. The environment ministry interprets it as their domain. Second, the space along roads that we use to plant trees are now being claimed as protected forests, despite that being our land. Also, there are some lengthy processes. Like in wildlife issues, you have to first go to the state wildlife board, then the national wildlife board, then the Supreme Court judge; and the process takes three-four years. For forests, you need to have a clearance from the state governments. They have also issued a notification saying that earth is a mineral, so we are unable to extract clay. So, from where do we get our material?
While the new EPC (engineering procurement contract) will have fixed time and cost, a part of the responsibility in getting environment and forest clearances for the projects is shared by the roads ministry.
We are raising these issues at the highest levels and it will also be addressed by the new Cabinet Committee on Investment.
