The year 2012-13 was one of the most challenging years in terms of awarding of projects, says National Highways Authority of India (NHAI) chairman RP Singh.

The original target of awarding 8,800 km was increased to 9,500 km by PMO mid-year; the target was lowered to 8,500 km and then to 5,000 km. However, NHAI ended up awarding 1,000-1,100 km. The poor performance was on a high base and construction per day was down from 16 km per day to approx 10-12 km per day.
Singh says award of projects is a market-driven phenomenon, adding that the NHAI is now looking to award projects only on EPC basis versus BoT as most developers do not want to bid for the latter due to funding constraints.
Banks are holding their funds towards the roads sector until assured of design and traffic growth details. NHAI believes the Indian road sector needs to get private equity players, along with other ways to pay premium. “We do not see NHAI taking up too many cash contract projects,” he told CNBC-TV18 in an interview.
However, in a major relief to the road development sector, the Supreme Court on March 12, 2013 ruled in favour of the NHAI by delinking the environment clearance (EC) and the forest clearance (FC). Now, the contracting companies do not have to wait for the FC and can commence the construction work once the EC is received. This will allow projects to get completed faster, Singh believes.
The work on 20 stalled highway projects worth Rs 27,000 crore, which were stuck for a long time for want of EC, would be executed soon after the clearance from the Ministry of Environment and Forests (MoEF) and the projects are set to get back on track.
Meanwhile, the government has asked banks to ease funding for the road projects and consider toll revenues as tangible assets. The finance ministry has proposed RBI to treat loans to the roads project as secured. NHAI says if government’s proposals are implemented, credit flows to the fund-starved sector could grow by at least 20-25 percent. The road ministry has been making a lot of representations to the Finmin lately to discuss sector issues.
On GMR exiting Rs 7,700 crore Ahmedabad- Kishangarh highway project, and GVK exiting the Shivpuri-Dewas Expressway in MP, Singh says NHAI is working out details to back-end premiums for GMR and GVK projects. “The companies exited the high profile projects as they turned unviable for them,” he says. GMR, however, had indicated fresh interest in the project if the premium terms are tweaked.