Road Ministry asks NHAI to resolve row with road developers
April 29, 2013
Since its inception earlier this year, the committee has taken up seven cases of pending claims but is yet to resolve any of them, said ministry officials. At present, about 227 cases with 10,963 crore of developer dues are stuck under arbitration or are pending in court.
“We have asked them to meet more frequently and would like them to sit each week, so that they can resolve multiple cases swiftly,” said a highways ministry official, who didn’t wish to be named. Many of these claims are due to delays in land acquisition, change in scope, officials’ reluctance to sign off on deviations and cost escalations permitted under the contract, restricting the ability of developers to bid for new projects.
In November 2012, the NHAI board had approved a three-stage system to resolve disputes under which pending claims and cases are first referred to a committee of chief general managers from NHAI. Then it is taken to the three-member independent settlement advisory committee ( ISAC), which reviews the recommendations and can communicate and negotiate with contractors. Their recommendations are then taken to the board for approval. The seven pending claims are currently stuck at the second level. The ministry hopes to fast-track settlement of claims, some of which go back to projects awarded as far back as 1997-98, and release the much-needed capital – stuck in financial disputes – back into the funds-starved sector.
NHAI yet to set target for BOT projects
April 29, 2013
By YASHODHARA DASGUPTA, ET Bureau | 29 Apr, 2013, 05.00AM IST
By the end of 2012-13, thirteen projects at a total project cost of Rs16,000 crore received no financial bids, though some of them were put on the block more than once. This financial year, infrastructure companies gave three annuity-based projects worth Rs1,900 crore a miss despite the government assuring payment in such a model. In all, National Highways Authority of India was able to award projects covering 1,116 km in 2012-13, while 1822 km got no bids. “It is very clear especially if you see that even annuity projects did not get a response, that there is a total lack of equity in the market,” said RP Singh, chairman of National Highways Authority of India.
“Unless our two proposals on easier exit options for concessionaires and back-loading of premium are agreed to, it will be very hard to go ahead with BOT projects in the sector,” he cautioned. The beginning of the year saw infrastructure majors GMRBSE -0.47 % and GVK walk out of mega-projects worth over Rs10,000 crore. National Highways Authority of India officials said Ashoka Buildcon has also sent a notice seeking termination of its Rs1,100 crore project in Odisha. While the companies have cited regulatory and clearance issues, the highways authority says companies are backing out as they are facing severe financial stress. “The industry has seen the effects of aggressive bidding in 2010-11 and 2011-12 that lead to problems with financial closure.
NHAI has also not been able to provide the clearances required and there is a policy lacunae going on that has made investors cautious,” said an official of a prominent infrastructure firm that was selected in the pre-qualification rounds in many of the 17 projects. “The clampdown on mining in states like Karnataka and Orissa has also affected viability of projects in those areas because of the sharp decline in mining traffic,” he added. Two projects in Karnataka worth close to Rs2000 crore and three projects in Odisha including the Chandikhole to Paradeep and Chandikole to Talcher stretches saw no interest despite the fact they were offered a few times.
“Regulations on exit options have been difficult, capital for many companies is blocked in existing projects and policy issues like land availability are the reasons why interest has waned in highway projects off-late. Earlier people used to take a risk even with land availability issues, but that confidence has gone away because of which companies have also stopped implementing projects,” said Sunil Kanoria, vice-chairman, Srei InfrastructureBSE 1.73 %. The highways ministry is currently drafting a revised note for the Cabinet on allowing companies to divest 100% of their equity in existing projects as well as easier norms of substitution of concessionaires.
If approved, this could free up equity from existing projects, which could be invested in new projects. The ministry is also working on the deferral of premium payment by companies like GMR. About 25 companies with premium of Rs97,000 crore are facing financial stress and could be interested in this option, according to National Highways Authority of India
Road ministry fixes 9,000 Km national highway target for this fiscal
April 18, 2013
NEW DELHI: The road ministry plans to award at least 7,300 kilometres of national highways this financial year. It has fixed an internal target of 9,000 km, which is a tad more ambitious than last year’s revised target of 8,800 kilometres.
The ministry has set a target of awarding 3,800 km in the first six months itself – higher than the 3,000 km announced by thefinance minister in his budget speech in February. The decision was taken after a review meeting held today by the road minister C P Joshi.
“We have set high internal targets so that we are able to achieve at least 3,000-km in the first six months and 7,300 km by the end of the year,” a road ministry official told ET. Last year, the ministry had managed to award road projects for only 1,933 km – 20% of what was planned for 2012-13. This year’s target of 7,300 km is line with the government’s promise of building 20 km a day.
“Of the 3,800 km, 1,654 km will be awarded by the ministry, 2,147 km will be through NHAI, about 1,200-km via the Engineering Procurement and Construction mode and 1,400 km through the Build-Operate-Transfer model,” said the official.
The road sector saw a dramatic drop last year in the number of projects that were bid for by companies. As many as 13 projects worth about 16,000 crore saw no takers. In contrast, 6,644-km – the highest since 2004 – was awarded in 2011-12. Ministry officials attribute this to a lack of equity with road construction companies and the overall economic environment. Given the subdued response to BOT toll projects, the ministry now plans to award more than 50% of the projects through the Engineering Procurement Construction mode.
It also aims to complete 4,500 km this year under schemes of National Highway Development Programme, Special Accelerated Road Development Programme for the North-East and Left Wing Extremism affected regions.
http://economictimes.indiatimes.com
Building 20 km highways per day a long way off
April 1, 2013
Building 20 km highways per day a long way off
NEW DELHI: Building 20 km of road on national highways a day is still a distant dream for the UPA II government.
Four years after the then road minister Kamal Nath had announced the ambitious target, the National Highways Authority of India — the central agency which builds highways across the country – has managed to build just 8 km of highways per day during the financial year 2012-13 that ended on Sunday.
According to statistics made available by the NHAI, the agency was able to construct a little over 2900-km stretch in 2012-13. Though the figure is highest so far (see box), NHAI still has way to go before it is able to meet the 20-km-a-day target. To achieve this, NHAI will not only have to award higher number of highway projects but will also have to build 7000 km stretch every year. Experts say it seems unlikely unless the highway agency augments its capacity.
RP Singh, NHAI chairman, however, said, “Our target was to build 3000 km. Our achievement is much better than expected and is the highest as compared to the previous years”.
But more than meeting its construction target, what has worried road ministry officials is the dismal achievement vis a vis awarding highway projects during 2012-13. The NHAI has been able to award a little over 1,000 km stretch as on March 31 as against the original target of 9,500 km which was later scaled down to 6600 km.
Officials attribute this to a host of factors, including the prevailing market condition and delay in getting environment clearance. “For the time being, we should live with this. There are a number of reasons — administrative such as delay in getting environment clearance, land acquisition etc. and market related which have been responsible for dismal award figures,” BK Chaturvedi, Planning Commission member (infrastructure) told HT.
While NHAI has been able to build 2900 km highways during 2012-13, the road ministry has been able to build an additional 2900 km as part of its various non national highway development projects.
Source- http://paper.hindustantimes.com
These include providing connectivity to the naxal-affected areas and the North-East region.
Chaturvedi is holding a meeting to review the progress of road projects on April 3.
Eastern Freeway to be completed today
March 29, 2013
Eastern Freeway to be completed today
MUMBAI: The city’s longest flyover, connecting the 9.29-km stretch from Orange Gate on P D’Mello Road to the Mahul creek salt pan between Anik and Chembur, will be completed on Saturday. It will also be the second largest flyover in the country, the largest being the one that connects Hyderabad airport to that city.
Still, the Eastern Freeway elevated road will be the longest such in an urban area in the country once the final concrete block is lifted and placed on Saturday afternoon. The bridge will have 313 pillars and 3,340 segments.
With the development, massive traffic decongestion on the eastern road corridor of the city will be achieved from May onwards, as the flyover forms part of an upcoming 17-km signal-free freeway. Mumbaikars would be able to enter and exit the road from eight points. While six pairs of ramps would become be operational in May, the remaining two will be opened to traffic in June at the earliest.
A 4.5-km mixed road-tunnel-flyover connectivity willcome about between Anik and Chembur; the freeway will offer Mumbaikars a much-awaited 20-minute road journey from CST to Chembur—the entry point there being at Panjarpol near R K Studios.
Thus, the 17-km freeway is divided in three parts: the 9.29-km elevated road, the 4.3-km road-tunnel-flyover and an elevated 2.5-km flyover from Panjarpol till the Mankhurd-Ghatkopar Link Road (MGLR) via Govandi.
“By May end, we will start the four-lane road up to Shivaji Chowk, Chembur, from CST, but for the last leg (till MGLR), we may need another one or two months,” said a senior MMRDA official. “The second part of the freeway will be eight-laned to take traffic from four lanes of flyovers and four lanes of roads below.
Source- http://timesofindia.indiatimes.com/
NHAI project award touches new low of 787 km in FY13
March 26, 2013
Financial Express reported that the National Highways Authority of India has reached a new low in project awards, managing only 787 km in 2012 to 13 a level last seen in 2008 to 09 when the global economy witnessed its worst ever slowdown.
The global slowdown following the sub prime crisis in the United States had its effect on NHAI’s performance, which could award only 6 projects spanning 600 km.
The dismal performance during the current year in terms of project awards was preceded by high performance in 2011 to 12 when the NHAI and the highways ministry together had awarded a record 8,000 km of projects. Of that, around 6,000 km were awarded by NHAI and the rest by the road transport ministry.
Officials in NHAI said that their board is likely to take up the proposal for another 500 km of road projects in its meeting to be held on Tuesday. But it will be difficult for the highways authority to be able to complete the award of projects before the end of this fiscal.
Low award by NHAI will badly impact the government’s truncated target of awarding 5,000 km for road projects in the current year.
After a robust performance in 2011 to 12 the Budget set a target of 8,800 km of road projects for 2012 to 13 which was later increased to 9,500 km by Prime Minister Mr Manmohan Singh. Mid way the target was further revised downwards to 8,500 km and further down to 5,000 km which is unlikely to be achieved.
NHAI together with the road transport ministry will likely be able to award 2,300
Source: http://www.steelguru.com
PBA Infra bags EPC contract from Solapur Tollways
March 11, 2013
Lalitha Rao ,Monday, March 11, 2013
PBA Infrastructure Ltd has been awarded the EPC contract for four laning the Solapur-Gulbarga, Maharashtra- Karnataka border section of National Highway 9, from Solapur Tollways Pvt Ltd, a joint venture of Coastal-Srei Consortium. The contract worth 780 crore is being executed as BOT (Toll) on DBFOT pattern under National Highways Development Project Phase-III. NHAI had appointed Artefact Projects Ltd as project consultant.
The Cabinet Committee of Infrastructure approved the project in November 2011 at a total estimated cost of992 crore including land acquisition, rehabilitation and pre-construction activities. The concession period including construction period of the project is 25 years. The project starting from km 249.00 to km 348.80 would cover the districts of Pune, Solapur and Osmanabad in Maharashtra.
Speaking to Projectmonitor, S.K. Bothra, President, PBA Infrastructure Ltd, said, “We are mobilsing fund through five banks with Canara Bank as the leading Bank. We are planning to start the work by April 15.”
While talking on the land details he said that about 80 per cent of the land has been possessed and the remaining stretch would be acquired soon. The four laning of the 100-km long stretch is expected to be completed in 36 months, he said.
Srei Infrastructure Pvt Ltd, the first beneficiary of the project, under consortium arrangements with various companies has a diversified portfolio of annuity and toll-based road projects close to 5,500 km with a total capital cost of around 13,000 crore, awarded by the NHAI under NHDP, Ministry of Road Transport and Highways and various other State Governments.
In its 2011-2012 Annual report, the company stated that during the year under review, the Company as co-developer has successfully completed the construction of Thrissur-Angamali Road Project in Kerala on NH-47 under NHAI and Jaora Nayagaon Road Project in Madhya Pradesh on SH-31 under Madhya Pradesh Road Development Corporation. Meanwhile, the company also started the six-laning of Chandikhole Jagatpur Bhubaneswar project in Odisha on NH-5 under NHAI. Other than the Solapur- Maharashtra Karnataka Border project on NH-9 the company also won the Bikaner-Suratgarh project on NH-15 from Public Works Department of Rajasthan on build- operate transfer basis.
Source-http://www.projectsmonitor.com
India Inc shuns govt road projects
December 24, 2012
MUMBAI: The infra growth story at least in the road sector appears to be over as the private sector is now shunning government’s road projects. The government which announced an ambitious target of $1 trillion of infrastructure spending is finding no takers for the 8,000 km of road projects to be awarded under the built, operate & transfer (BOT) mechanism this fiscal.
Interestingly, the National Highways Authority of India (NHAI), the nodal agency for awarding these road projects, witnessed phenomenal success in awarding over 8,000 km of road projects last year as 31 of the 51 road project were bagged at premium. Based on last year’s success, the government increased the target to award 8,800 kms of road projects this year; however, NHAI so far was able to award only 700 kms with less than four months remaining in the current fiscal.
Two projects, worth about Rs 2,450 crore, awarded last year to DSC Ltd and Gannon-Dunkerley Co Ltd were terminated after failure to achieve financial closure. This was the first time that such termination had to be done due to failure of companies to achieve financial closure (tie up debt).
At current pace of less than 5 km of road construction per day, the government is way behind its ambitious target of achieving 20 km of road construction per day for which it needs to award over 7,000 km of road projects each year. The reason: Availability of 50 road projects worth Rs 50,000 crore totaling 5,000 km are on the block in the secondary market as the debt-laden infrastructure firms wants to get rid of these road projects that they bagged by aggressive bidding and are now finding it difficult to execute due to the depressed returns. Prime Minister Manmohan Singh reviewed the performance of the transport sector in a series of meetings recently and a recent PMO statement on targets for awarding road transport and highways project last week said, “The ministry will try its best to award road projects as per the original targets for FY 12-13 and will certainly cross 8,000 kms of awards this year by March, 2013. Road projects of at least 3,000 kms length will be awarded under OMT by March, 2013.”
This means that in the absence of takers for road projects under BOT basis, which requires companies to raise funds from the market, the government is planning to award 3,000 km of road projects on engineering procurement contract (EPC) basis, where government spends the entire money required to build roads. However a government statement on Wednesday said, “As against the target for awarding works for a total length of 8,800 km during 2012-13, it has been possible to award projects for a length of 705 km upto October, 2012. Some projects have not received good response from bidders. Apart from general slowdown of economy, viability of some of the projects, sectoral lending caps of the banks, limitations of the concessionaires like availability of equity and other resources to execute the projects appear to be the main factors for poor response.”
“I have my doubts on the PMO statement. If they awarded just 700 kms in the first nine months, then how can they award 9000 km in the next three months. The constraints like land acquisition, funding from banks and remain the same. The government first needs to address these issues before awarding further road projects,” Bajrang Choudhary, CEO, Infrastructure Project Development at SREI Infra told ToI. Leading infrastructure firms like L&T, GVK, GMR, IVRCL, Gammon Infrastructure, SREI Infrastructure, Gayatri Projects, Madhucon Projects, Ashoka Buildcon amongst others have meanwhile reportedly put their road assets on the block.
Infra firms meanwhile are being chased by their lenders to sell assets any which way they can as the banks have stopped lending to the road sector with stringent lending norms scaring away private developers from investing in the highway projects. Over three dozen highway projects are awaiting financial closure.
source: http://timesofindia.indiatimes.com
New Highway Projects boost Indian construction industry.
November 26, 2012
National Highway Authority of India (NHAI) awarded about 4,375 km of roads in first 9 months of 2012, which can be compared against 4,553 km during 2011, 3,338 km during 2010, and 643 km in 2009. Q3 of 2012 saw ~1,898 km of projects awarded. Projects for road construction sector were awarded under public-private partnership programs, and Indian construction industry is surging via flow of funds and EPC (engineering, procurement, and construction) contracts in 2012.
source: http://news.thomasnet.com
Ministry plans sops for road developers
November 5, 2012
NEW DELHI: The highways ministry will soon seek Cabinet nod to allow private road builders to “exit” from projects soon after construction is over. The move comes after the proposal mooted by NHAI remained unresolved even after several rounds of discussion in an inter-ministerial group on highways.
National Highways Authority of India (NHAI) has formulated the plan to speed up the exit of contractors, who take up projects under the build-operate-transfer (BOT) route, claiming that this would unleash substantial capital kept in finished projects as companies’ equity. It has also claimed that this flow of capital would help cash-strapped developers take up new highway stretches.
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