Update on NHAI expressways projects

April 3, 2008

It is reported that, with access controlled expressways attracting massive investments, ministry of road transport & highways has decided to conduct the feasibility study for more such expressways and construction companies eyeing the access controlled expressway projects of National Highways Authority of India are likely to get investment opportunities for at least 4 such projects spread over 495 kilometer over the next few months. They are1) 70 kilometer Chandikhol Jagatpur Bhubaneswar – INR 761 crore2) 47 kilometer long Delhi Hapur – INR 474 crore3) 198 kilometer long Vijayawada Elluru Rajamundri – INR 1,602 crore4) 180 kilometer long Delhi Agra highway – INR 1,918 croreThe feasibility reports for these projects are already completed and the work is likely to be awarded in about 6 months. These projects are for widening the current 4 lane highways into 6 lanes and operating them for certain durations. Companies would have to bid competitively for these projects on a revenue sharing basis. Thus companies would have to bid on the extent of toll revenue that they are ready to share with the Government if they are allowed to operate the roads. Since these highways are already 4 lane stretches, the road operators can start toll collection even during the project construction phase from an appointed date, mutually decided by NHAI and the road operator. The toll revenues will be routed to an escrow account.Recently, NHAI has awarded 4 such mega projects of 882 kilometer length, which are likely to cost an estimated INR 10,912 crore. From the NHAI perspective, these projects have emerged as money spinners, with companies willing to foot the entire construction cost and part with 2% to 48.06% of their revenues in the initial leg of the project. At the end of the concession period, which is about 12 to 15 years duration, the winning firms have agreed to part with 12% to 59% share of toll revenues.The feasibility reports for another 10 projects of similar nature are under preparation. They are1) 315 kilometer long Kishangarh Udaipur stretch – INR 2,205 crore2) 235 kilometer long Udaipur Ahmedabad – INR 1,645 crore3) 190 kilometer long Varanasi Aurangabad – INR 1,330 crore4) 184 kilometer long Nellore Chilkaluripet – INR 1,288 crore5) 148 kilometer long Krishnagiri Walajapet – INR 1,036 crore6) 145 kilometer long Pune Satara – INR 1,015 crore7) 85 kilometer long Ludhiana Chandigarh – INR 595 crore8) 80 kilometer long Belgaum Dharwad – INR 560 crore9) 56 kilometer long Samakhiali Gandhidham – INR 392 crore10) 55 kilometer long Indore Dewas – INR 385 croreThe ministry has also decided to conduct the feasibility study for 4 such expressways between Delhi and Meerut, Chennai and Bangalore, Vadodara and Mumbai and Dhanbad and Kolkata. Source: http://steelguru.com

Written by ITW Editor · Filed Under Default, Investment and Finance

NHAI goes in for a board shake-up

April 3, 2008

The ministry of shipping, road transport and highways has been under severe criticism for NHAI’s inability to meet the deadlines for developing road projects in the country.

New Delhi: Ahead of plans to give out some 10,000km in road projects over the next year, the ruling United Progressive Alliance, or UPA, is replacing at least half of the six-member board of the National Highways Authority of India, or NHAI, the country’s apex road regulator.

The radical revamp of the board, the first of its kind, comes at a time when the ministry of shipping, road transport and highways, which works closely with NHAI, has been under severe criticism for its inability to meet the deadlines for developing road projects in the country.

The revamp comes at a time when the ministry of shipping, road transport and highways has been under criticism for its inability to meet the deadlines for developing road projects in the country

NHAI oversees the National Highway Development Programme (NHDP), under which, almost 33,097km of highways were to be four-laned. Barely 50% of the projects have been awarded so far. As of February this year, work on only 7,942km of highways have been completed; of this, work on around 5,500km was completed during the tenure of the National Democratic Alliance government, which preceded UPA.

NHDP, launched in 1996, was seen as a flagship programme for successive governments, especially since an estimated 60% of freight is still transported by road in the country. There are 66,000km of national highways in India.

Neither the minister, T.R. Baalu, nor the concerned officials, NHAI chairman N. Gokulram and road transport secretary Brahm Dutt, could be immediately reached for comment on Thursday evening. As a result, it is still not clear as to why the government has sought such an overhaul in the NHAI board. The changes have been effected over the past 15 days.

Mint has independently confirmed from various government officials who do not wish to be identified that three out of the six members on NHAI’s board were asked to return to positions at the ministry in the last fortnight. According to officers at NHAI who do not wish to be identified, one of the members C. Kandasamy has already been named a chief engineer at the ministry of shipping and road transport.

A.V. Sinha and Nirmaljeet Singh, too, are being forced to “come back” to their parent ministry. “In one case, the ministry said it would promote a junior officer thereby forcing an NHAI member—on deputation with NHAI—to seek repatriation (back to the ministry),” an officer at the regulator who did not wish to be identified added.

While Sinha could not be reached for comment, Nirmaljeet Singh and Kandasamy declined comment. “I am not with NHAI any more. And for any information pertaining to board members, please contact the chairman,” Kandasamy said.

The shake-up in NHAI’s board comes at a time when the regulator has been accused of not only failing to meet deadlines, but also misgovernance.

“In fact, one of the members was threatened with suspension because some projects in Tamil Nadu got delayed,” said the officer at NHAI.

Highway builders say working with NHAI is difficult primarily because officers refuse to make decisions. “You can say one contractor is bad or may be two contractors are bad, but how can all contractors be bad at the same time? It is the authority (NHAI) that refuses to make decisions for three years sometimes. We are tired of working for them,” said an executive with a highway builder who did not wish to be named. “Why is it, that the same contractors perform on time when it comes to work by the Delhi Metro Corporation?” the executive asked.

Contractors also claim that the authority is unwilling to release money for changes in the scope of work for fear of being investigated by the vigilance department. Mint had earlier reported that almost three in ten NHAI contracts end up in some form of arbitration or the other.

None of the contractors or highway builders contacted by Mint would speak on record, saying it could affect their chances of winning contracts from NHAI in the future.

Meanwhile, the NHAI officials said the board was being revamped because it did not agree with certain proposals made by the Planning Commission on guidelines for drafting tenders for upcoming projects.

“The fact is that the minister has been unhappy with the way the NHAI has functioned in the last year and so these changes are being contemplated,” said a senior government official, who did not wish to be identified.

NHAI has also been named in a court case filed by the National Highway Builders Federation, a trade body representing highway contractors, who claimed that recent pre-qualification criteria used by NHAI favour large bidders. The case is expected to be heard by the Delhi High Court on Friday.

One analyst said it was not fair to accuse only the board, saying that other organizations, such as the Planning Commission, were equally to blame for not ironing out policy issues related to work on NHDP. “The paranoia of the government (over being blamed for non-completion of highways in an election year) could be a factor,” said this analyst who did not wish to be identified.

Source: www.livemint.com

Written by ITW Editor · Filed Under Investment and Finance