Roadblock to new highway projects till November
The road ministry and the National Highways Authority of India (NHAI) have decided not to award any new highway projects till November. This move comes at a time when the Prime Minister’s Office (PMO) has stepped up tracking the progress in award and implementation of infrastructure projects. The reason cited for this move is due to financial stress of potential bidders, non-availability of land and uncertainty over securing environment clearances.
Bidding has been virtually put on hold for the time being due to the steep decline in award of new projects. There has been a steep decline in the award of build-operate-transfer (BOT) highway projects from a peak of 6,491 kms in 2011-12 to 1,116 kms in 2012-13. Things don’t look bright this year either, with a steeper decline predicted. This was confirmed by government sources as well as officials from developers like Soma Enterprises and Reliance Infrastructure. National Highway Builders Federation reinforced this notion by stating that no new projects were being awarded till the end of 2013 as there were no takers.
National Highway Authority of India (NHAI) stated that they are not ready to launch any bid on the engineering procurement and construction (EPC) mode nor the BOT mode as of now. The reason behind this statement was because it was felt that developers are cash-strapped and the investment climate is not conducive enough for bidding to be launched.
On their part, developers have their own expectations from the government before fresh bidding is launched. In their opinion, the government must prepare detailed project reports and traffic studies to attract the right bidders. Steps should also be taken to prevent long-pending arbitration cases, high interest rates and falling toll collections hindering projects. To put forward their point of view, highway developers have had several communications with the Roads ministry and the NHAI. The problems faced by developers have been taken into consideration and will be acted upon seriously.
Other pertinent issues that have caused a roadblock to highway development are land acquisition bottlenecks and reluctance of banks to lend towards such projects, considering the uncertainty involved. Government authorities are concerned by rising incidents of developers unable to achieve financial closure and their shying away from contracts. They would want to ensure that developers do not face problems and their concerns are addressed at the earliest. For highway development activity to pick up, it is absolutely necessary that all these issues are suitably resolved at the earliest.
