IRB Infra project cancellation just a one off case: NHAI
December 27, 2011
The National Highways Authority of India cancelled the Goa road project that it had awarded to IRB Infrastructure in January 2010 due to the inability to acquire land for the project.
In an interview to CNBC-TY18, AK Upadhyay, chairman of NHAI says, this is just one off case. “I don’t think this is a serious concern,” he adds.
He expects land acquisition costs to rise going forward.
Upadhyay expects awards of close to 7,000 km by year-end.
Below is the edited transcript of his interview with CNBC-TV18’s Latha Venkatesh and Sonia Shenoy. Also watch the accompanying videos.
Q: The most disturbing news we heard lately was the cancellation of Goa road project given to IRB Infra because of the inability to acquire land. Can you just confirm this for us? How disturbing it is that you are not able to acquire land?
A: This is just one off case. In some states, we do face problems, but you don’t take it as a repetitive case. The other projects are going on very well. It is just one-two projects, out of 40-50 projects that we are going to bid this year. So, I don’t think this is a serious concern.
Q: What went wrong? Where did the resistance and the inability to acquire land come from?
A: The state government has solutions. Because the alignment was passing through some fishermen’s areas and they wanted to have an elevated highway for a very long stretch, it made it difficult to fund it. We had to restructure the project. So, the project as it was structured that could not go ahead. So, we had to cancel the bid. I would again say this is a one off case.
Q: What kind of interaction have you had with IRB on this and penalty that you may have to pay them?
A: I don’t think so because this is not at the award stage, so no liability has yet occurred. But I don’t think there should be any major penalty.
Q: How much are you expected to raise via the bond issue? hHw much demand do you see for these kind of tax free issuances at this point?
A: Our perception is that the bonds will be highly in demand. We hope to have full subscription. We are going for first tranche of Rs 5,000 crore with option to retain up to Rs 10,000 crore. From whatever feedback we have got, our impression is that this is going to be very successful.
Q: How many projects in 2011 went on a premium?
A: Let me talk of this fiscal starting from April 1, out of 33 projects, we have awarded so far of over 4300 km, 22 have gone on premium.
Q: In that case, would you consider increasing the viability gap funding for those that did not go at a premium?
A: Viability gap funding has 40% cap. If you over 40%, you might as well fund it entirely from public funding. Therefore, it is a rational limit. We don’t think it’s necessary to increase that. But what it means is that the funds we are getting it would help us in case of any increase land acquisitions cost. After the viable projects under BoT toll are exhausted, we will have to go for more and more EPC projects. That would be almost entirely public funded. So, therefore, this premium is good for us, it has cushioned for future years.
Q: From now, up until FY13, what is the order target that you have? How many have been awarded? How many you expect government to approve?
A: To give you a picture of this financial year, the total target we had set was 7,300 km. This was about 40% more than last year’s target. We are on course. We have awarded over 4,300 km. Another 1,000 km of the bids are in the pipeline either in evaluation or the bids have to come shortly. So that means that very shortly we will be crossing 5,300 km. Another 2,000 km of 14 projects are in various stages of evaluation and approving process.
Source: moneycontrol.com
Plan panel questions four-laning of some national highway sections
December 12, 2011
NEW DELHI: The Planning Commission has kicked off a fresh debate, questioning how National Highways Authority of India ( NHAI) has gone ahead with four-laning of national highways even when the daily traffic volume on these stretches did not qualify them to be widened beyond two lanes.
In a recent letter to highways minister C P Joshi, deputy chairman of Planning Commission Montek Singh Ahluwalia raised questions on five projects, including the 70-km Lucknow-Rai Bareli section. Ahluwalia said there were standards – daily traffic volume – set by the Indian Road Congress (IRC) for considering widening of roads to two lanes, four lanes and six lanes. The letter said these standards were bypassed to push certain projects for four-laning under the build-operate-transfer (BOT) model.
Moreover, Ahluwalia mentioned that such a move could have adverse bearing on the finances available for the highway development programme in the country since the allocated budget could get exhausted in less number of projects.
The letter came despite the recent experience of how government had to start six-laning of the Golden Quadrilateral project only 6-7 years after its construction because of the high increase in traffic. “We will always compare our infrastructure development with China to push the need to go on overdrive, but we are caught in issues like this. We have seen how four-lane roads built in the past 10 years are becoming inadequate to handle huge traffic. Are we building roads for the next five years or for decades,” asked a senior ministry official.
Engineers working with IRC said it was not mandatory for the government to follow the recommendations set by the professional body. “But we can see how the Planning Commission uses our recommendation as per its convenience. It has downplayed the views of IRC so far as making safe roads are concerned,” said a senior retired engineer from the ministry who is associated with IRC.
In fact, Ahluwalia reiterated the views of his colleagues in the plan panel on such issues. In his letter to Joshi, he wrote that all highways should be at grid (surface) level without any flyover. Besides, he said there was no need to construct service roads all along the highways in rural areas, though accidents are on the rise in these areas. His juniors have been raising these issues, which have been termed impractical and compromises safety aspects.
A source in IRC said they had told the government that it could “downsize” the plan if it did no have “enough funds” rather than build unsafe roads and those which don’t meet operational needs. “Here, the Planning Commission does not find the merit of IRC’s recommendations,” a senior IRC member said.
Source: http://articles.timesofindia.indiatimes.com
New road projects boosts Ramky Infrastructure
December 12, 2011
Ramky Infrastructure surged 7.19% to Rs. 220 at 14:35 IST on BSE after the company said it has secured two road projects aggregating Rs. 2240.65 crore from National Highways Authority of India. |
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Radio Frequency Identification
November 30, 2011
The Government has a proposal to introduce Radio Frequency Identification (RFID) Smart Tag on certain highways in the country National Highways Authority of India (NHAI) has adopted Public Private Partnership (PPP) mode as the preferred mode of delivery. Two variants of PPP model i.e. Build, Operate and Transfer (BOT) (Toll) and BOT (Annuity) have been adopted. So far 149 projects of length 13791.25 km have been awarded on BOT (Toll) and 29 projects of total length 3311.42 km have been awarded on BOT (Annuity).
It is proposed to extend the scheme to other parts of the country also. The Electronic Toll Collection scheme shall be implemented on all India basis.
It is also proposed to build toll roads on Public Private Partnership (PPP) model in various parts of the country. The specification for Radio Frequency Identification (RFID) transceivers, RFID Tag & Data Exchange format between Toll Plaza server and the Central Electronic Toll Collection (ETC) System for implementation of national wide interoperable ETC system based on RFID technology on National Highways has been finalized. RFID will be based on EPC Gen-2, ISO 18000-6C standards for Electronic Toll Collection on National Highways in India.
This information was given by the Minister of State of Road Transport and Highways, Shri Jitin Prasada in a written reply in Lok Sabha today
Source: http://pib.nic.in
Banks lend 200% of road project costs, govt worried
November 28, 2011
NEW DELHI: If you were to buy a house, banks would give you a loan of 80-85% of the value of the property. If you were to build a road, though, you could get double the project cost computed by the highways authority.
On an average, banks lend 39% more than the project cost arrived at by the National Highways Authority of India, the agency that hands out bids across the country. A key reason is the huge gap between the cost arrived at by NHAI and the estimate drawn up by developers who bag the contracts.
With private developers bidding aggressively for highway contracts and willing to fork out a significant premium (an annual amount paid upfront to National Highways Authority of India), the road transport and highways ministry decided to examine 66 projects where funding has been tied up.
Source: indiatimes.com
Atlanta bags order worth Rs. 10435.1mn
October 31, 2011
Atlanta has registered a cumulative revenue growth of 30% during the last two years.
Mumbai-based infrastructure and real estate firm, Atlanta in consortium has bagged around Rs. 10435.1mn order from National Highway Authority of India (NHAI), the flagship road building programme of the Ministry of Transport and Highways. Atlanta along with a Joint Venture partner Essar Projects has bagged the order for four laning of Lucknow-Sultanpur road widening project of around 126 kilometres in Uttar Pradesh. The project has a concession period of 23 years, which includes two-and-a-half years of construction time and is based on Public Private Partnership (PPP) mode on Design, Build, Finance, Operate & Transfer (DBFOT) basis. The debt equity ratio is proposed at 3:1
“We expect to bag additional road project orders worth Rs. 20bn in this fiscal,” said Rajhoo Bbarot, MD, Atlanta. He declined to divulge details of the fund raising.
A total of 34 players, including Gammon Infrastructure, L& T Infrastructure, HCC Concessions and IL&FS Transportation, had shown interest in the project.
Atlanta has registered a cumulative revenue growth of 30% during the last two years. The current order book of Rs. 1,950 crore is seven times its FY11 sales, while the average execution cycle is three years. This gives good visibility of revenues for the coming three years.
Atlanta recently secured an order of 117 km Mohania-Ara for Rs. 9170mn in Bihar and another one in Punjab for Rs. 2200mn. The Bihar project entails four laning of Mohania -Ara section on National Highway 30 under the public-private-partnership mode for a length of 117 km.
Currently Atlanta has two operational road projects. First is Mumbra bypass on NH 4 and the second is Nagpur Kondhali on NH 6. Other than this it is pre-qualified for projects worth Rs. 400bn. So far, the company has done 225 lane kms and 600 lane Kms are in pipeline.
Atlanta’s focus areas for EPC business comprises highways, bridges, railways, and other urban infrastructure projects across the country. It has over 3 decades of experience in Engineering, procurement, Construction (EPC) and Realty.
Atlanta is credited with successfully commissioning India’s first greenfield BOT project on National Highways – Udaipur Bypass within the record time of 18 months as against stipulated time of 36 months. Atlanta has already developed three projects on DBFOT basis on Public private partnership basis.
Source: www.indiainfoline.com
Highway investment 11% short of XIth Plan estimate
October 31, 2011
Investments in road and bridges during the XIth Five Year Plan would be 11% lower than the initial estimates on account of poor performance by the private and central sectors, according to the Planning Commission.
Railways is also set to miss the investment target during the ongoing Plan.
The revised projected investment in roads is Rs278,658 crore as compared with the initial projections of Rs314,152 crore.
“The investment from the Centre is expected to decline due to award of lower than projected road projects by National Highways Authority of India (NHAI) during the first three years of the Plan,” said a plan panel report.
In the Railways, the investment projection has been lowered to Rs200,802 crore as against the initial aim Rs258,439 crore.
“The investment by the private sector is also expected to go down due to award of a lower number of BOT (build, operate and transfer) projects in the first three years of the XIth Plan,” the report said.
A senior NHAI official attributed the development to economic recession in 2008-09.
“Highway tendering came to a grinding halt during that year as bidders turned away following a funding freeze. Out of the plans to award 45 highway projects worth around Rs60,000 crore during that year, the authority could barely manage to award eight,” the official said.
In case of Railways, the basic tenets of the public-private partnership have not been yet decided, which is delaying the mega locomotive and coach factory projects.
The downward revision of investments projections in the Railways is in both central and the private sectors.
“As per latest estimates, only Rs8,316 crore is expected by way of private investment, which is only 16.5% of original projections,” said the report.
Source: www.dnaindia.com
Govt approves Rs 1,835 cr road projects in AP
October 31, 2011
New Delhi: The government on Tuesday approved two projects of widening of National Highways in Andhra Pradesh and Orissa entailing a total investment of about Rs 1,835 crore under its flagship road building programme NHDP.
The Cabinet Committee of Infrastructure (CCI) on tuesday approved projects for four laning of Vijayawada-Machlipatnam section of NH 9 in Andhra Pradesh and four/two laning of Birmitrapur-Barkote section on NH 23 in Orissa under National Highways Development Project (NHDP) phase IV-A, an official release said.
“The total estimated cost of the project (Andhra Pradesh) is Rs 736 crore. The total estimated cost of the project (Orissa) is Rs 1,098.90 crore,” the release said.
On land acquisition, resettlement, rehabilitation and pre-construction, Rs 130 crore and Rs 320.75 crore will be spent on Andhra Pradesh and Orissa projects, respectively.
Both the projects will be built on design, build, finance, operate and transfer (DBFOT) basis in BOT (Toll) mode of delivery.
“The total length of the project is 64.611 km. The concession period is 20 years, including construction period of 24 months,” the statement said about the Andhra Pradesh project, located in Krishna district.
“The project will reduce the time and cost of travel for traffic, particularly heavy traffic, plying between Vijayawada and Machilipatnam. It will also increase the employment potential for the local labourers for the project activities,” it added.
On the Orissa project, which is based in Sundargah and Deogarh districts, it said the concession period is 23 years including construction period of 30 months for 125.61 km scheme.
“The project will reduce the time and cost of travel for traffic, particularly heavy traffic, plying between Birmitrapur-Barkote. It will also increase the employment potential for the local labourers for the project activities,” it said.
Source: zeenews.india.com
New Land Acquisition bill to raise land acquisition costs for road projects
October 31, 2011
The new Land Acquisition and Rehbliltation Bill is expected to increase the government’s spending on land acquisition by up to 30 per cent from the current level of about 8-11 per cent as the road projects are not exempt from the provisions under the resettlement and rehabilitaion part of the Bill.
NHAI spends about Rs. 25,000 crore every year on land acquisition and other related activities.
Land acquisition has always been a major roadblock for road projects. As per norms, NHAI has to acquire 80 per cent of the land for the private developers building roads under the Build operate transfer or BOT route. Most of the delays in road projects have been primarily due to land problems and the new Bill, sources say, is expected to make things worse for the road sector.
Hassles in acquiring land for road projects have been the reason for delays in 30 per cent of road projects. In 2010, after aggressive measures by the then road Minister Kamal Nath, NHAI had managed to acquire 8,533 hectares against 6,000 hectares acquired in 2009. But clearly 2011 is expected to be a bad year.
In fact, NHAI’s land acquisition record has been abysmal in states like Goa, Kerala, West Bengal, Tamil Nadu and Haryana with barely an inch of land being acquired in Goa for road projects. With the new Bill soon becoming an Act, it could be a tough road ahead for the road sector.
Source: profit.ndtv.com
Roadblocks for NH-widening in Goa
October 24, 2011
PANAJI: While nationally highways are being added at the rate of 11km-per-day, in Goa the national highways authority of India’s project to widen NH 4-A is yet to take off, a year-and-a-half after it was tendered. In fact, a status update of the project shows it is fast heading towards being re-tendered. The latter is already the fate of Goa’s other national highway-NH 17.
The delays in both projects are courtesy the state government’s demand for flyovers, realignments, toll exemptions for light motor vehicles, and overall delays in handing over the required land. These demands, in fact, led to the cost of widening NH 17, estimated and tendered in 2010 at 3,100 crore, to shoot up by over 806 crore. NHAI sources say the project may be retendered.
Similarly, when IRB Infrastructure Developers Ltd, Mumbai, was awarded the contract to widen the 65km-long NH 4-A in early 2010, the cost was estimated at 471 crore. Now, additional demands by the state government to construct more flyovers, more underpasses and change the alignment has raised the project cost by 106 crore, sources said. “The work is already awarded and there is no way the NHAI is going to bear such a high additional burden,” sources in the authority told TOI.
Incidentally, the land for widening the highway that connects the state to Karnataka via Ponda has also yet to be handed over to NHAI in both, North and South Goa.
Sources in the land acquisition section of the South Goa collectorate confirmed non-acquisition of land in the district. Clearances from the state wildlife board for the 10km-stretch that falls in deeply forested areas between the Mollem National Park and Bhagwan Mahavir Wildlife Sanctuary are also pending.
The lack of clearances led to the NHAI proposal being sent to the ministry of environment and forests in May 2007, only to be returned without approval. “The project was initiated by NHAI in 2003 and is only 65km long. But it is still dragging,” sources lamented.
From P1
The last nail in the NH 4-A coffin is probably the demand by the state government that non-commercial LMVs should be exempted from toll. “This demand cannot be accepted. Toll policy on national highways is finalized by the central government. This is a BOT (build-own-transfer) project being built under the public-private-partnership model. Toll is the only source of revenue for the contractor. If it is exempted, nobody will want to come to Goa,” said an NHAI source.
Sources in the authority further added that the economic evaluation of the project showed benefits that include reduction in vehicle operation cost, reduction in travel time and reduction in accident cost. Analysis period was taken as 30 years from the date of operation.
The Goa-Belgaum road is considered very important. There is a substantial movement of iron ore on the road. Other necessities like vegetables, fruits, etc, from Karnataka to Goa are also transported via this route. The road witnesses about 50 or 60 accidents every year due to mining traffic. If it is widened, this will stop, sources said.
The NH 17 widening project connecting Patradevi to Polem has long been bogged in controversy and delayed over proposed demolitions along the route in Goa. As reported earlier, the land acquisition procedure for widening NH 17 lapsed in the first week of April. tnn
Source: timesofindia.indiatimes.com
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