India’s highway-building programme is in crisis. This is partly due to its very ambitious scale, which means that public funds are not adequate to meet the programme’s demand for capital, given the swiftness with which roadsneed to be rolled out. There are other reasons as well. The crisis is also caused by the government’s inability to design auctions that eliminate unrealistic bids and delays that, in some cases, are a direct outcome of tardy clearances and regulatory hassles. The road sector’s problems have also arisen because the government’s private sector partners failed to take into account the effect a growth slowdown would have on their revenue, or were too ambitious in their forecasts. Thanks to a combination of these factors, not even a single build-operate-transfer (BOT) project was awarded in the first six months of the ongoing financial year, indicating the degree to which the private sector has soured on road-building. Basically, nobody wants to touch it.

In October, the government set up a panel under the chairman of the Prime Minister’s Economic Advisory Council, C Rangarajan, to figure out if there was a way out of this conundrum. The panel had some difficult decisions to take. In particular, many existing highway concessionaires wanted to defer the premiums that were due to the National Highways Authority of India, or NHAI, under the BOT system. The premium, which can range from Rs 3 crore to Rs 680 crore a year, is to be paid out over 20 to 25 years, increasing by five per cent every year. The total premium due over the next few decades is Rs 1.5 lakh crore. But the fact that revenues have not matched estimations means that many companies are grumbling about having to pay out. The government, meanwhile, alert for once to the concern that the private sector is trying to feather its own nest at the expense of the public exchequer, may reportedly want to cut off the payment of dividends by road-building companies – usually special purpose vehicles, or SPVs – to their parent company as long as premiums to the NHAI are still outstanding. Another possibility that the Rangarajan panel is considering is reducing the upfront payment of premiums for the next few years by a fixed proportion – 75 per cent, in fact. The NHAI has already argued for a low discount rate and against penalties for private developers.

It is certainly true that the private sector must stay involved in road-building in India. The government cannot pay for everything. And something must be done to enable stalled projects to move forward. However, an arbitrary and opaque mechanism is a very bad idea; nor should the private sector be allowed to dictate terms. The government must take account of the fact that just giving into demands for renegotiation sets up a severe moral hazard problem, and that it also renders past auctions unfair and future auctions problematic. Thus, two criteria should be front and centre in the final decisions taken by the government. First, the mechanism for dispute settlement should be transparent, consistent and independent. Second, it should not unduly benefit the private sector. In fact, there should be clear penalties – regardless of the request from the NHAI – for anyone who has delayed a project. This should include the government, since in some cases private developers have suffered because the government has sat on clearances for five years. Transparency and financial accountability are essential to clean up India’s vital roads sector.

Source-http://www.business-standard.com

NEW DELHI: A former NHAI official is set to be booked for “misguiding” the authority’s ex-chairman to allow shifting of two toll plazas on Panipat-Jalandhar stretch of NH-1. After an inquiry committee of NHAI recommended action against the official last month, highways minister Oscar Fernandes okayed filing of an FIR against him.
The NHAI inquiry found that “then member (projects) S I Patel had misguided” then chairman by suggesting in the file that the shifting of two toll plazas was as per contract conditions. It said the decision was against “public interest” and would have allowed the private developer to maximize toll collection.

In fact, the decision to allow shifting of toll plazas was a glaring one as both NHAI and its independent consultant had rejected the proposal thrice in March, April and May 2010. But only a month later, the consultant recommended the shifting of toll plazas “subject to approval of competent authority”. Two months later, then NHAI chief Birjeswar Singh gave in-principle approval.

This inconsistency in NHAI decisions also came under criticism from the Supreme Court where the case of shifting of toll plazas is being heard.

NHAI sources said the role of five more officials and the independent consultant is being investigated and appropriate action would be taken after the court proceedings.

Patel, a retired engineer from Gujarat, was earlier named by CBI for allegedly favouring a private company in tender allotment for widening of Nagpur-Betul highway. But the highway ministry never cleared CBI’s requests to prosecute him.

Tension prevailed when the demolition squad reached the area in the morning. Locals staged protest, alleging that the eviction drive was illegal. “The authorities had not served us any notice to vacate the land before carrying out the eviction. We have been staying in the area for the past so many decades and suddenly they came and evicted us. It is unfair,” said Sabitri, a resident of the area. To avoid any untoward incident, the district administration deployed eight platoons of police at the spot.

The authorities refuted the allegations. “In June last year, we had carried out eviction in the area but the evictees re-encroached on the lands. Due to fresh constructions, we were not able to move ahead with the road project,” said a government officer.

He said the drive was undertaken according to direction of the Orissa high court. During the first-phase eviction drive, seven persons were injured in a clash between slum dwellers and policemen.

NEW DELHI: Highway minister Oscar Fernandes wants to implead himself in the case on the Panipat-Jalandhar highway widening case which the Supreme Court is hearing.An official note was moved in the NHAI saying the minister “desired to appear before the Hon’ble Supreme Court of India for early decision in the matter so that construction of the highway can start at the earliest”. The proposal was moved before the last hearing on Monday. The note said work on six-laning of Panipat-Jalandhar highway was stopped by the concessionaire Soma-Isolux more than one-and-a-half years ago.”The concessionaire is not even carrying out the minimum required maintenance of the highway to keep it traffic worthy. The condition of the highway is very poor and at a number of locations, it is unsafe for traffic movement,” the note said.

However, the plan was dropped by the ministry at the last minute. Sources said Fernandes was keen to appear before the court since poor progress on this stretch was raised by several MPs from Haryana and Punjab.

The concessionaire has been fighting to shift toll plazas to plug revenue leak, which NHAI has claimed would maximize toll collection by the company. NHAI has been opposing the relocation of toll plazas citing public interest.

On Monday, the arguments got almost completed. Now both the developer and NHAI have been allowed to file their written submissions before November 29 when the court will take up the case again.

BANGALORE: The Karnataka high court has ordered notice to both Karnataka as well as the Union government and the national highways authority of india (NHAI) in response to a petition challenging the construction of elevated road connecting Bangalore International Airport (BIA) at Devanahalli, just outside Bangalore city.

Justice A S Bopanna has asked the respondents to file their objections to the petition filed byAgni Aerosports Limited, Jakkur. The petitioners, who are a running helicopter training school have claimed that they were forced to approach the court finally as their repeated requests/requisitions with the government against the said road project since 2010 have failed to yeiled any results.

The petitioners have complained that the area comes under ‘no construction zone’ and the construction of the elevated road has been undertaken without permission and the same would affect the helicopter training activities undertaken by them. Interestingly, the construction of the elevated road project is going on briskly and almost 75% work is said to be completed.