Centre avoids Mayawati, rolls out roads on its own

October 24, 2011

NEW DELHI: With the Mayawati government refusing to play ball with the Centre on road development, the highways ministry is increasingly taking a short-cut. The ministry has been pushing for more projects under the engineering-procurement-construction model, under which it can get to work right away without state support. With elections ahead, it is becoming the road most taken.

The UP government has not yet signed the umbrella state support agreement (SSA) to facilitate highway development work, citing a “conflict of interest” with state highways. Under SSA, the state gives a commitment to maintain the law and order situation and to refrain from constructing any competing road.

NHAI has already invited tenders for pre-qualification for two EPC contracts in Sonia Gandhi’s constituency – Rae Bareli to Banda (140km) costing Rs 525 crore and Rae Bareli to Tanda (165km) costing Rs 692 crore. In these cases, the contractor will have to complete the projects within a stipulated timeframe and will also be responsible for their maintenance for at least one year.

Sources said there was a proposal to develop two more stretches under the same model, considering the slow progress any national highway development work has shown under the Mayawati regime. The NHAI, however, has favoured a build-operate-and-transfer (BOT-annuity) model for these stretches. “This is a tactical move and suits both Congress and NHAI. Since state support is crucial for annuity projects, the blame of any failure to take up the work will go to the state government or the contractor. On the other hand, this suits NHAI since it cannot escape accountability if any EPC contract gets delayed in such a VIP constituency,” said an industry insider.

NHAI has floated a tender for the two-laning project with paved shoulder for Rae Bareli-Jaunpur section of NH-231 (165.5km) on BOT (annuity) mode with an investment of Rs 626 crore. Two more projects will be taken up soon.

Under the new EPC model that is being used for two projects, NHAI will pay the entire amount to the contractor during construction period on a turnkey basis. In the case of BOT (annuity), the contractor raises investment for the project and the government pays back the principal amount with interest in instalments to the contractor.

“Since the SSA has not been signed with UP, we can’t delay the development work of highways in the state. We are hopeful of the state signing the agreement soon or at least extending support for early completion of these projects. We don’t see any reason why the state would not cooperate with the land acquisition process when the Centre is bearing the entire cost,” said a senior NHAI official.

Prior to Kamal Nath’s taking over as highways minister, the Centre used to sign SSA for each individual project. Nath had come out with the umbrella agreement plan to get it signed for all NH projects at one go. But UP had opposed this since it planned to build its own expressways including the Ganga expressway. Citing “conflict of interest”, the state government told the Planning Commission that a parallel NH would wean away traffic from state highways.

Source: timesofindia.indiatimes.com

Written by ITW Editor · Filed Under NHAI, Road

Higher qualification bar lowers bid response for UP highway projects

October 24, 2011

New Delhi, Oct 20:

The number of bidders appears to have gone down for two highway development projects in Uttar Pradesh (UP) due to higher qualification and threshold criteria set by NHAI.

A broad indicator of this is the comparison between the number of bidders for these two projects and other projects that have recently been bid out, or are under bidding.

For these two projects, to be implemented on an engineering procurement contract (EPC) model, there are about seven bidders for one project and 10 for the other seeking qualification to be able to submit financial bids.

About 15-50 bidders have qualified to submit financial bids for other highway development projects, for which the earlier qualifying criteria exist.

UP PROJECTS

For developing the 165.5-km stretch between Tanda and Rae Bareilly in UP, the bidders who have applied at the technical qualification stage are HCC, IVRCL, Leighton-Welspun, Isolux, Soma, Alsim Alarko Sanayi and L&T.

To develop the 140-km stretch between Rae Bareilly and Banda, 10 bidders have applied. – GPL-Punj Lloyd, HCC, IVRCL, Galfar, Leighton-Welspun, Isolux, Soma, Alsim Alarko Sanayi, L&T and Gammon.

OTHER PROJECTS

The response is in contrast with other projects to be implemented on build-operate-transfer (BOT) – annuity basis, for which NHAI has invited bids.

This is despite the fact that BOT-annuity projects are usually riskier for a road developer compared to EPC projects. Various factors including project model, time of bidding, geographical location also affect the bid response for projects.

For developing a 289 km stretch on the Jabalpur-Rajmarg Crossing-Bareli-Bhopal section, 14 bidders have technically qualified to submit financial bids.

For developing a 66 km stretch on the Jhalawar-MP/Rajasthan border section in Rajasthan, 52 bidders have qualified.

Similarly, for developing the Dahod-Padhi section in Rajasthan, 49 bidders have qualified to submit financial bids.

In fact, the highway builders lobby – National Highways Builders Federation — which has 70 contractors as its members has represented to the Highways Ministry and Competition Commission of India against various clauses in the new ‘model concession agreement’ for EPC projects.

These clauses limit competition by raising the bar for qualifying norms, NHBF had contested.

Source: www.thehindubusinessline.com

Written by ITW Editor · Filed Under NHAI, Projects

NHAI to seek bids for 4,000 km highways in the next fiscal year

October 18, 2011

New Delhi: The National Highways Authority of India (NHAI) will seek bids for 3,000-4,000 km of highways for operations, maintenance and tolling (OMT) contracts in the next fiscal year, said J.N. Singh, member (finance), NHAI.

This will be in addition to the 2,900 km the authority has already put on the block since August this year. Under OMT contracts, private contractors are allowed to collect tolls on the highways they maintain. These contracts are typically for a concession period of four to nine years. Contractors share a part of the revenue with NHAI as concession fee, which grows 10% annually.

At least 80 companies have participated in bids this year, according to Ernst and Young. These include Relcon Infraprojects Ltd, IRB Infrastructure Developers Ltd, Oriental Structural Engineers Pvt. Ltd, Gayatri Projects Ltd and HDPL Infrastructure Ltd, according to the consultancy’s data.

“The highways in question are those that were laid in the 1990s on a build-operate-transfer (BOT) basis, and whose concession periods have ended,” said M. Murali, director general, National Highways Builders Federation (NHBF), an industry lobby. Under BOT financing, a private developer finances, builds the road and maintains it for a specified period in exchange for rights to levy tolls.

Murali, however, said NHAI is unlikely to seek bids for 3,000-4,000 km to private contractors. “The figure should be in the range of 2,000 km, as that is the road length that is going off concession next year.” NHAI simplified the bidding process this year by allowing companies to submit documents just once in a calender year, instead of asking them to submit these separately for each project.

Mint reported on 2 February 2009 that private developers could be allowed to maintain NHAI’s highways.

When B.C. Khanduri was highways minister (from 2000-2003), the authority had engaged ex-servicemen as toll collection agents on stretches maintained by the agency.

NHAI’s Singh said discrepancies in revenue collection had occurred over time.

By offering contracts for bids, the government will get a fixed income from private contractors, said Murali of NHBF.

“The profit or loss, as the case may be, would be borne by the contractor,” he said.

Abhaya Agarwal, executive director, Ernst and Young, said awarding maintenance contracts to private contractors is beneficial for NHAI as it typically leads to timely execution of projects.

Agarwal said the process enhances private participation in the sector, thereby increasing competitiveness as bidders either seek a lower grant or offer a higher concession fee.

Source: livemint.com

Written by ITW Editor · Filed Under Highway, NHAI

Ashoka Buildcon To Raise Upto $150Mn For Road Projects

October 18, 2011

Ashoka Buildcon is selling stake in it’s newly formed road development subsidiary to raise upto $150Mn.

The company has formed a holding company for eight of its road projects, which are together worth around Rs 6,000 crore. The holding company currently includes six projects of National Highways authority of India (NHAI) that the company is executing on build-own-operate basis, and two state road projects.

Ernst & Young is advising Ashoka Buildcon on the deal.

Given a typical 75:25 debt equity funding structure for highway projects, it will need Rs1500Cr as equity for the holding company.

Nashik based Ashoka Buildcon mainly constructs and operates roads and bridges on a BOT basis. It also undertakes EPC Contracts to construct distribution transformers and electricity substations.

Ashoka Buildcon On BSE

According to it’s website, it currently has a portfolio of 23 BOT road projects totalling approximately 3,498.35 kilometres of lanes in Maharashtra, Madhya Pradesh, Chhattisgarh, Karnataka and Orissa, of which 17 are in operation and six are under construction.

GMR Infrastructure is also planning to raise upto Rs960Cr for it’s road projects. It recently won a road project involving six-lane conversion of the existing Kishangarh-Ahmedabad highway.

Source: dealcurry.com

Written by ITW Editor · Filed Under Ashoka Buldicon, NHAI

NHAI readies blueprint on RFID cards tags to help drive through toll gates nationally

October 11, 2011

NEW DELHI: Motorists can say goodbye to excruciating queues and road rage at toll gates, save precious fuel that burns in idling engines and avoid the risk of being given soiled or fake currency notes as smart cards will replace clumsy cash payments on highways in the next couple of years.

You will be able to buy a smart card for Rs 100 at a gas station or bank, top it up with cash, and use it like a debit card on highways without even stopping the car. The card will send a radio signal to pay the toll and automatically open any toll gate from Kashmir to Kanyakumari without the trouble of paying awkward amounts like Rs 27 or any human interaction.

Fuel savings for truckers will be phenomenal. A long-haul drive from Delhi to Mumbai is interrupted by some 20 toll gates and the average time at each gate can be as much as 10 minutes. This translates to over three hours of idle run, which is enough to run the truck for another 100 km. According to an estimate, fuel worth $2-3 billion is wasted on highways and check-posts annually, a significant part of which is due to toll stops.

The National Highways Authority of India is doing its bit to jazz up highway driving. It is planning to set up complexes equipped with amusement parks, ATMs, food courts and fuel stations every 50 km. It also has a buzzing Facebook page, although some of its posts are amusing — this summer it shared tips on driving in foggy weather.

The NHAI now plans to prepare a blueprint for the implementation of Radio Frequency Identificationtechnology-based smart cards in making traffic movement across toll gates hassle free.

“A committee has been constituted under YK Sharma of National Informatics Center constituting members from NHAI and ministry. The recommendations shall be submitted to the government shortly,” said an NHAI official.

The RFID scheme is expected to be launched on a few highways before it is gradually expanded.

Apart from saving fuel, the use of tag is expected to cut pollution, decongest toll gates, bring down operating costs for concessionaires and help increase toll collection. An executive at a leading infrastructure company said some toll-collection operations are run by powerful local politicians, who do not pass on all the toll to the infrastructure firm.

The NHAI official added that the move is likely to discourage circulation of fake notes which is usually a problem during cash collection in peak hours with dim lights.

The approximate cost for setting up the infrastructure for RFID on one lane is estimated to be about Rs 10 lakhs. Government is looking at petrol pumps, post offices, banks and other potential sites where tags can be sold.

“The cost of tag starts from Rs 100 and since tags work on a common protocol, same tag will work all over India,” said Ashish Bhutani, MD of Omnia Technologies, a leading manufacturers of tags.

Source: articles.economictimes.indiatimes.com

Written by ITW Editor · Filed Under CCH, NHAI

Reliance Infra’s Delhi-Agra road upgrade still in cul-de-sac

October 10, 2011

Reliance Infrastructure’s Rs1,928 crore national highway upgrade project between Delhi and Agra has been stuck over clearance from the Ministry of Environment and Forests (MoEF) for more than a year now – a development that is likely to lead to cost escalation in the project.

The 180 km project spanning Haryana and Uttar Pradesh is part of the Phase Five of the National Highways Development Programme, which envisages expansion to six-laning of 6,500 km of highway network.

The phase assumes significance as upgrade of the entire golden quadrilateral (5,846 km) to six-lane standards is a part of it.

Reliance Infrastructure bagged the project from the National Highways Authority of India (NHAI) in May 2010. The company, however, has still not been able to start construction on the road.

The project is being developed on a build, operate and transfer (BoT), toll basis. Analysts, on conditions of anonymity, peg the cost escalation at round 10% as of now.

NHAI, meanwhile, has said that the issue will be resolved in the next one month. Explaining the matter, a NHAI official said, “The clearance involves an area where a toll plaza will be coming up. The clearances happen in two stages. In the first stage, the terms of references are approved by the Union environment ministry. In this project, the MoEF has approved the terms of references four months back.”

In the second stage, public hearing takes place. It is here that the matter is stuck for Reliance Infrastructure. “The public hearing has been completed in Uttar Pradesh. In Haryana, the hearing is scheduled for October 13. Once that is done, the report will be submitted to the MoEF,” said the official.

The company has a portfolio of 11 road projects spanning 970 km, worth Rs12,000 crore. Of these, at least seven will become operational by the end of the current financial year.

Source: dnaindia.com

Written by ITW Editor · Filed Under BOT, NHAI, Reliance

GVK arm bags NHAI road project in Madhya Pradesh

October 10, 2011

GVK Power and Infrastructure Ltd has announced that GVK Transportation Private Ltd, a wholly-owned company subsidiary, has been chosen through an international competitive bidding process to take up the four-laning of Shivpuri-Dewas section of National Highway No 3 in Madhya Pradesh.

The road project is to be executed as BOT (Toll) project on Design, Build, Finance, Operate and Transfer pattern under the National Highways Development Programme (Phase IV) of NHAI. The company has received the Letter of Award from NHAI and expects to ink the Concession Agreement shortly.

The project entails the widening and strengthening of the two-lane highway to a four lane highway over a 332 km stretch. It has a concession period of 30 years including a construction phase of 30 months.

ANOTHER MILESTONE

Mr G.V. Krishna Reddy, Chairman, GVK, in a statement said, “the winning of this major road project in Madhya Pradesh marks yet another milestone for GVK. With this new project, we will develop one of India’s busiest highways to meet the growing road transport needs in Central and Northern India.”

The project road on National Highway No 3 is one of India’s major corridors referred to as Mumbai-Agra highway. It is a vital trade link connecting Western and Central India to Northern India and passes entirely through Madhya Pradesh carrying predominantly long distance freight traffic.

The Hyderabad-based infrastructure company has implemented India’s first six-lane toll road project 90 km long between Jaipur-Kishangarh on NH 8, part of NHAI’s Golden Quadrilateral and is developing two toll road projects. The company has a portfolio of four toll road projects of over 600 km.

Source: thehindubusinessline.com

Written by ITW Editor · Filed Under GVK, NHAI

Gayatri Projects to form 100% arm for Orissa road project

September 12, 2011

The project is to be executed on a BOT (Toll) basis on DBFO Pattern under NHDP Phase III as per the Letter of Award sanctioned by the NHAI, Gayatri Projects said.

Gayatri Projects Ltd. said on Tuesday that its Board of Directors has accorded its consent for incorporation a Wholly Owned Subsidiary called Sai Maatarani Tollways Ltd. for executing the four-laning of Panikoili— Rimull section of NH-215 in Orissa.

The project is to be executed on a BOT (Toll) basis on DBFO Pattern under NHDP Phase III as per the Letter of Award sanctioned by the NHAI, Gayatri Projects said.

Source: http://www.indiainfoline.com

Written by ITW Editor · Filed Under BOT, Gayatri, NHAI

Rs 8kcr highway projects on anvil

September 12, 2011

NEW DELHI: The ministry of road transport and highways (MoRTH) has asked the National Highways Authority of India (NHAI) to award 3,000 km of roads on a cash contract basis during the current fiscal year to step up road construction.This would mean that projects worth Rs 7,500 crore-Rs 8,000 crore would be up for grabs for private road developers in the next few months. So far, NHAI has been awarding projects either through the BOT (toll) or BOT (annuity) mode, but this is the first time the authority has been asked to award large stretches under the cash contract scheme.While toll road projects have been mostly bagged by big players in the sector, cash contract projects may help small and medium-level players. “The focus of cash contract works will be more in the hinterland areas, which have remained untouched. These stretches have less traffic, and hence are not viable to collect toll,” said an NHAI official.The cost of construction is estimated to be in the range of Rs 2.5 crore and Rs 3 crore per km. The ministry is also considering whether these projects can be rolled out without acquiring additional land by using space available along the existing roads. Under this scheme, only extended two-lane roads would be built.Officials said this method would help expedite project execution. They said Uttar Pradesh, which is going for election early next year, is likely to get a bulk of such projects. Since the projects would be funded by the NHAI or the ministry, the Union government will have greater control over these projects that could help complete the work on time.In the first phase of this scheme, the highways ministry has started floating tenders for 540 km of highways in UP. Some officials in the ministry say the timeframe of one year for the maintenance of these roads by private contractors may lead to poor quality, and they want this to be extended to three to five years.

Source: http://articles.timesofindia.indiatimes.com

Written by ITW Editor · Filed Under Highway, NHAI, Road

Premium income to ease NHAI annuity burden

August 23, 2011

The National Highways Authority of India (NHAI) says it will be able to take care of its current annuity payment of Rs 1,871 crore following the recent rise in premium income from highway projects.

The highways’ authority recently awarded 10 projects with a premium of Rs 1,628 crore annually that will increase at the rate of five per cent per annum for 25 years. This amount is over and above the Rs 300-crore premium NHAI is already earning.

“Our current annual premium will take care of our annuity payment but whether this trend will continue or not will depend on the kind of response we get for the upcoming projects,” said a senior NHAI official, who did not want to be identified

PREMIUM HIGHWAYS
Project (Rs cr)	Concession period (yrs)	Premium*
Kota-Jhalawar	25	3.51
Ahd-Vadodara	25	309.60
Barwa Adda- Panagarh	20	106.00
Nagpur-Wainganga	18	106.00
Beawar-Pali- Pindwara	23	251.01
Kishangarh-Udaipur -Ahmedabad	26	636.00
Shivpuri-Dewas	30	180.90
Gwalior-Shivpuri	29	66.60
Orissa Border- Aurang	28	29.70
Hospet-Bellary	30	18.00
*Premium increases @5% per annum

Quoting premium amounts to committing an annual payment to the government over a period of time, instead of seeking a grant for building roads. Companies bid premium if they are confident that the toll revenue accruing to them would more than offset their costs.

The official said these new projects would start paying in six to eight months, where the contractor can start collecting toll the moment it starts work on the project.

Some in the construction industry say companies are going overboard in quoting premium to bag projects. “The premium payments in some of the projects are actually unrealistic but, nevertheless, it is a respective company decision. But the NHAI needs to upgrade its mechanism for traffic projections, as their projections are not realistic most of the times,” said an executive of a Mumbai-based infrastructure company.

Analysts also think the bigger problem is a large number of companies chasing a few projects. “A company takes into account a lot of things before bidding for a project and no company will bid to make loss in a project. The bigger problem is that there are no projects in the market and people are bidding for the few available,” said Sanjay Sethi, senior executive director and head of infrastructure group at Kotak Investment Banking. Sethi added it was imperative that the government should release more and more projects.

NHAI has announced to award 59 projects covering 7,994 km with a total cost of around Rs 60,000 crore in the current financial year. It has a huge annuity liability of Rs 24,386 crore so far for 41 projects.

Among the 41 projects awarded on annuity, eight are under the first phase of the National Highways Development Programme (NHDP), 20 under the second phase of NHDP, 11 under the third and one under the fourth phase. The one remaining project is under the Special Accelerated Road Development Project for the North-East. NHAI makes the payment for all annuity projects except for those in Jammu & Kashmir and North-East which are taken care of by the central government directly.

In the case of premium income, the amount first goes into the consolidated fund of India and is accounted for in the internal external budgetary resources of NHAI. “All the money that includes cess income, toll income and premium income that comes to us is kept in a central pool and then spent according to our needs,” said another senior official, who did not want to be identified.

The official added that earlier they used to keep toll income for maintenance of highways and repaying loan tranche to Asian Development Bank but later this practice was stopped.

NHAI awards projects on two Public-Private Partnership (PPP) modes. One is BOT (annuity) and the other is BOT (toll). Unlike the BOT toll model, where the private operator takes on the risk of toll collection, the government mitigates the risk of toll income in the annuity model by guaranteeing six monthly payments over the concession period. This increases its liability but with premium becoming attractive, NHAI officials are hopeful that the annuity burden would be taken care of to a large extent

Source: business-standard.com

Written by ITW Editor · Filed Under NHAI, Projects

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