New Delhi: The government will soon constitute a panel, headed by PMEAC Chairman C Rangarajan, to look into the issues pertaining to bailout of highway developers.Rangarajan, who heads the Prime Minister’s Economic Advisory Council, is expected to announce the constitution of the three-member panel soon, a source told the agency, adding that it could be as early as Thursday.
The government last week approved a proposal for the postponement of premium payments by highway developers and has referred the matter to the Rangarajan panel.
The move is likely to provide relief to players such as GMR, GVK and Ashoka Buildcon. Their projects have been facing delays on account of high premium — the payment made by the developer to National Highways Authority of India under the build, operate and transfer (BOT) mode.
The premium, which is offered by companies during the bidding stage, is based on projected returns from tolls.
The Ministry of Road Transport and Highways had sent a proposal to the Cabinet seeking its nod for rescheduling of premiums of about Rs 1 lakh crore in case of 23 awarded BOT (Toll) projects.
Pic for representational purpose. – A Veeramani/DNA
After contemplating the idea of having an elevated road between Bandra and Dahisar, the Maharashtra State Road Development Corporation (MSRDC) now plans to build an elevated rail and road link between Thane and Kalyan.
Speaking todna, SM Ramchandani, the joint managing director of MSRDC, said, “There is a plan to have an elevated road along National Highway 3, that is the Thane-Bhiwandi Bypass Road, for which we have floated bids for consultancy services.”
The consultant is likely to be appointed by the end of this month, who in turn will carry out a feasibility study including a ground survey, cost estimation, financial model, among other things.
In fact, even the Indian Railways has expressed interest in being part of the project by stating that the elevated road corridor can also accommodate a railway line.
The planned elevated link will be around 22-25km long, with entry and exit ramps in between.
The purpose of the project would be to decongest the increasing traffic due to rising population in the far-flung areas of Mumbai.
The state has been focusing on creating new Central Business Districts in the Mumbai metropolitan region, keeping the larger picture of decongestion of Mumbai in mind. However, due to the large cost associated with this elevated rail and road project, it is unlikely that it will be constructed in the near future.
Another official said that the plan is currently in the nascent stage and it should not be considered that the project will take off in the next couple of years.
A stretch of the Pezielietsie-Keyake road in Kohima has remained unrepaired for 10 years now. (Morung Photo)
Kohima might be the centre of Nagaland’s government enterprise, but its roads tell a different tale of governance. With the President of India geared to visit and take some of the disabling routes that connect Kohima city, and the city to other districts, work to touch some of them up has been promised to begin. For instance, news of the Pezielietsie –Keyake road stretch via Don Bosco Higher Secondary, Ziekezou, being repaired has arrived.
The Kohima Village Youth Organisation (KVYO) met Border Roads Task Force (BRTF) officials on October 14 to take up the repair of the road. Over the past 10 years KVYO has reportedly sent a number of written requests to the BRTF, by whom the road is maintained, to repair the damaged route but has been met with a standard response: the lack of funds. Though an old road, connecting Kohima to Phek and Kiphire, it has not been repaired for 10 years now. In that time, the KVYO has widened the road through private means though it could not be ‘black topped’.
Now, some government funds have been made available. While ‘metalling’ of the road will not be possible, according to BRTF officials, due to “no sanction of funds for the same,” the BRTF has promised to “cover up the bad patches with a mixture of stones and soil as soon as possible.”
The news of the repair works has brought some relief from the daily grime for people who have to regularly take this essential route, which includes students of Kohima College, Don Bosco Higher Secondary school, TM Govt. High School and Christ King School in addition to employees of the Department of Youth Resources and Sports.
“It is funny the road has been left unattended for so many years and now with news of the President taking this route, the BRTF is finally paying attention to it,” said a resident of Ziekezou colony, who wished not to be named. “We do not know whose fault the deplorable road condition is but we are happy that the road will be repaired after a long period.”
Another resident commented, “I regularly ply on this route to go to work; my vehicle has to be repaired every three months due to the bad road condition. I dread this road but am left with no choice,” adding, “It is like driving on a river bed; at times I feel like I am participating in an off-road event.” Officials of the KVYO, meanwhile, have appealed to the State Government to look into the matter, stating that they would also send appeal letters to other authorities concerned regarding the issue.
KOCHI: The traffic police, National Highway Authority of India (NHAI), public works department (PWD) and related authorities have to make concerted efforts if they are to going to bring down road accident casualties in the city. Despite their tall claims, the city still witnessed a marginal increase in road accident deaths this year compared to the previous one till September. If road accidents claimed 109 lives in 2013 from January to September, it stood at 102 deaths for the same period last year.May turned out to be cruelest month for pedestrians and motorists this year with 20 dying on city roads. Last year, May in contrast reported only 10 road accident deaths. April was not far behind with 17 deaths reported this year compared with 15 the year before.
Though there has been an overall increase in accident deaths, it has decreased since July compared to the same period last year. While seven died in accidents in July against nine in 2012, it was 10 in August against 14 the previous year, and nine in September compared with 14 in 2012.
“A majority of those who died in road accidents this year were pedestrians. Lack of proper crossings and barricades have been a problem. To address the issue, we have conducted awareness programmes for private bus drivers and auto drivers,” said P P Shams, assistant commissioner, traffic east. He added that NHAI was asked to erect barricades on the median in the NH47 bypass, where most of the pedestrians died in accidents, and to restrict pedestrian crossings to selected points.
While around 40 pedestrians died in road accidents in the first nine months of the year, 20 two-wheeler riders and 15 pillion riders died till October. More people died in accidents that occurred during day time.
Even though accident deaths have gone up this year, there has been a marginal decrease in the number of road accidents. It has declined from 1,732 in 2012 to 1,718 in 2013. According to police, two-wheelers were involved in more than 500 reported accidents.
NEW DELHI: Soon after West Bengal chief minister Mamata Banerjee wrote an angry letter to the PM complaining about norms being flouted in allotment of funds to states, rural development minister Jairam Ramesh wrote to the CM saying his department had finalized funds for 421 roads covering 1,887 km in the state.
While Banerjee wrote to the PM on October 5, Ramesh’s missive came three days later.
In his letter, Ramesh said road work in Bankura, Purulia and Pashchim Medinipur districts would be taken up under the Pradhan Mantri Gram Sadak Yojna (PMGSY) and an agreement would be signed between the PSUs undertaking the job and the Centre and the state government within the next 30 days.
Interestingly, Ramesh mentioned in the letter that funds were usually disbursed through central PSUs doing the work but it was now decided to hand over the funds directly to the state government. “I have been of the view that we should encourage state governments to exercise more direct control on project execution so that quality standards are maintained. Hence, we have decided that for West Bengal, we will release the funds directly to the state government who will then deal with the central PSUs,” Ramesh wrote.
“I am sure you will agree with me that West Bengal has received unprecedented level if cooperation in the matter of PMGSY roads as it has for other rural development programmes. This reflects the central government’s continuing priority to the welfare and well-being of the rural people of West Bengal,” he wrote.
Traffic is a synonym of Mumbai. Coupled with narrow roads and the potholes, which now I am beginning to believe are a part of an idea to help people save a trip to the moon or perhaps Mars.
– DNA
What is it about the financial capital of India that the basic infrastructure of roads is in such a state? And if this is the state of roads in the so-called ‘best urban centre in the country’ I can’t even begin to imagine the state of roads in other parts.The blood-boil is coupled by the fact that the moment you step out of the cities and hit the highways the roads are butter-smooth, although still dangerous. Our roads are such beautiful pieces of gems that they deserve to awarded the ‘best imitation of the moon’s surface’. And the irony that the minister for road transport and highways is Mr ‘Oscar’ Fernandes is just not a coincidence.
Just for the sake of the tone of this column, I decided to check the website of this ministry. Describing itself, the ministry states, “An apex organisation under the Central Government, is entrusted with the task of formulating and administering, in consultation with other Central Ministries/Departments, State Governments/UT Administrations, organisations and individuals, policies for Road Transport, National Highways and Transport Research with a view to increasing the mobility and efficiency of the road transport system in the country. e Ministry has two wings: Roads wing and Transport wing.”
Nowhere the epitaph speaks about the basic task of building roads. Unless the government believes that our roads are already built and are in order. Just like how the government has brought down poverty in India to 22 per cent by formulating an ingenious policy of lowering the Below Poverty Line (BPL).
Also, read the last sentence of ministry’s self-description closely. The first word is ‘e’. I believe they wanted to write ‘The’ but ‘Th’ must have fallen in the depth of the potholed roads.
Now let’s read what the “Road Wing’ of the ministry actually states as its objectives: ‘Deals with development and maintenance of National Highway in the country.’ The road to development manoeuvres through the highways, touches the cities, misses it till it catches the next highway. After all, India lives on the highways. Cities and villages are too hipsterisque.
The main responsibilities of the ministry again begin with the importance given the national highways through planning, development and their maintenance. By now I am hoping the government should also form a ministry to look into a direct helicopter services from cities to these highways because clearly those are only roads the government is interested in.
The second and the only point that talks anything about the roads that makes our insurance premiums payments cry, it says, “Extends technical and financial support to State Governments for the development of state roads and the roads of inter-state connectivity and economic importance.” If the conditions of our city roads are anything to go by, then NASA should contract the Indian government to supply the technology to recreate the moon and its craters on Earth.
As you can read in this article of 2010, Prime Minister Dr. Manmohan Singh outlined the spending on India’s infrastructure to the tune of $1 trillion in the 12th five year plan currently underway.
In the current and the second year of this five year plan, Singh finalised a spending of Rs 1,15,000 crore on the infrastructure sector, or roughly one-fourth of the total target of $1 trillion in these five years.
However, the impetus, as you can see, is not on the roads sector.
The road ministry had set an ambitious target of building 20 km of roads a day in 2009. However, in 2011-12 the average road construction, as this story suggests, was just half of it.In 2012-13, the road ministry failed to even meet the half way mark of 4400 km in awarding road projects.
Even in the current fiscal, the bickering between the ministry and the National Highway Authority of India (NHAI) continues on the model that the government should adopt to award the road projects. As per thisstory, a ministry official commented, “Just because PPP projects have not taken off in the recent past doesn’t mean we junk the model and switch over to cash-contracts. We need to innovate and try all options before taking such a step.”
This indicates, if nothing else, continued delays in the road construction in India. And if this is what is happening to the government’s blue-eyed highways which are just a tiny fraction of India’s vast road network, us city dwellers and village folk can continue to save our amusement park money by enjoying the bumpy ride every day.
(Shubhashish is a journalist who is now pursuing Masters in International Studies and Diplomacy in London. )
NEW DELHI: A week after the government approved a bailout of the highways sector and set up a committee that will draft its details, developers told Prime Minister Manmohan Singh that the rescue plan shouldn’t end up being similar to what they described as the “flawed exit policy” that has failed to attract takers.
The committee headed by C Rangarajan, chairman of the Prime Minister’s Economic Advisory Council, is expected to give its recommendations on the premium restructuring in a month. The final decision will be implemented by the highways ministry after it is approved by finance minister P Chidambaram.
“The guidelines for the rescheduling of the premium for the highway projects are required to address the concerns raised by the sector as a whole, otherwise it will not only defeat the purpose of the policy but also not help in the revival of the road sector,” the National Highway Builders’ Federation (NHBF) said in its letter to Singh. “In the past it is a known fact that because of the flawed exit policy for the road sector announced by the government, it has not been able to attract even a single investment.”
The road developers sought a reduction in costs they have to pay for deferring the premium. According to the Cabinet note sent by the highways ministry, which included suggestions of the finance ministry and the Planning Commission, developers need to pay 12 per cent on the premium as well as a penalty of up to 0.5 per cent of the total project cost in case the default was attributed to them. The concessionaires would also have to give a bank/corporate guarantee to the extent of the maximum difference between the premium promised at the time of bidding and that under the revised payment schedule, according to the cabinet note.
The NHBF letter, also sent to Chidambaram, Rangarajan and roads minister Oscar Fernandes, argued that deferral of premium payments should be allowed at a 9.75 per cent discount rate, the rate at which Cabinet last year allowed telecom operators to stagger spectrum fee payments. NHBF explained that “the proposal of highway sector’s deferment of premium is similar to telecom sector on contract terms and conditions on period of contract and cost involved…”
“A case for some form of relief can be made and the 12 per cent rate needs a relook in the current context.The situation in some sense is similar to the telecom sector relief because they too were going through stress at the time,” said Arvind Mahajan, partner at KPMG, who added that both sides needed to make some sort of concessions. “Many companies involved in projects are highly leveraged. They are also facing execution challenges because of delays on part of NHAI and escalation in project cost,” Mahajan said.
NHBF has argued against the penalty clause saying the viability of most of these projects were eroded because of delays in environmental clearance, land acquisitions, a ban on the procurement of aggregates and so on. NHBF has also opposed the corporate or bank guarantee clause saying most concessionaires are either undergoing corporate debt restructuring and are over-leveraged or bankers are not willing to lend to them.
The Sep quarter too will see earnings of most infrastructure firms being weighed down by high interest and depreciation costs
(The government’s desire to give a push to infrastructure projects may result in some relief from the problems of poor order inflows and low financial viability of existing projects. Photo: Ramesh Pathania/Mint)
Last week’s decision by the government to reschedule the premium payable by developers to the National Highways Authority of India (NHAI) is aimed at giving jammed road projects a new lease of life. The decision to reschedule the premium arose out of the fact that many developers quoted a hefty premium to win orders, as competition increased between fiscal years 2012 and 2013, which led to some projects turning financially unviable.
No doubt, the decision to reschedule will not change the profile of projects overnight. Analysts’ data indicates that more than 80% of the build-operate-transfer (BOT) projects awarded in fiscals 2012 and 2013 have not started construction yet. It is now widely known that land acquisition and environmental clearances, highly leveraged balance sheets, poor cash flows on existing projects and high interest rates are key reasons for a slowdown in the roads sector.
Around 23 projects caught in a quagmire will be examined on a case-to-case basis. However, a note by Citi Research says that one of the conditions to ensure smooth payments by developers after rescheduling is that the firms should furnish bank guarantees. “Given the tightening lending standards to road projects and leveraged balance sheet of developers, it may be difficult to furnish the bank guarantee,” it says.
As has been the case during the past several quarters, the September quarter too will see earnings of most infrastructure firms including roads being weighed down by high interest and depreciation costs. A report by IDBI Capital Market Services Ltd expects companies such as Hindustan Construction Co. Ltdand IVRCL Ltd to be in the red during the September quarter. And, others such as Simplex Infrastructures Ltd, Nagarjuna Construction Co. Ltd and IRB Infrastructures Developers Ltd are likely to see a decline in earnings compared to the year-ago period. Revenue expansion is likely in some cases where execution is on track.
But analysts’ data reveals that against a normal road completion time of 48 months, most projects awarded in fiscal 2009-10 are complete to the extent of only 50-60%.
Complicating the imbroglio is the fall in order inflows, which could get worse in the near term, given that elections typically see major decisions being postponed. This would stymie revenue expansion too. This fiscal year till date, NHAI has awarded only 479km of road projects costing Rs.2,700 crore, compared to the road ministry’s target of 5,000km of both EPC and BOT projects. EPC stands for engineering, procurement and construction.
Now, the orders that have already been given can mean healthy order book for some firms, giving decent revenue visibility for the next one or two years. Among the mid-sized firms, Sadbhav Engineering Ltd and Ashok Buildcon Ltd are better off than some of their peers.
The government’s desire to give a push to infrastructure projects may result in some relief from the problems of poor order inflows and low financial viability of existing projects. But the pace leaves a lot to be desired and it may be many more quarters before actual and substantial movement is visible. For now, nothing seems to have changed for the roads sector.
BHUBANESWAR: The central government has sanctioned Rs 1,493 crore for construction of 2,982-km road in the state under Pradhan Mantri Gram Sadak Yojana (PMGSY).
Union rural development minister Jairam Ramesh communicated the Centre’s decision to chief minister Naveen Patnaik on Tuesday. Ramesh said last year the Centre had sanctioned Rs 2,445.75 crore to Odisha for construction of 5,189-km road. Earlier, this year proposals worth Rs 1,067 crore were sanctioned for 1,184-km road. Jairam’s letter said the state government could send more proposals for road construction before December.
While unhesitatingly approving road construction projects for Odisha, the Union minister expressed doubt over the state government’s ability to execute them. “The execution capacity is a major concern. The state will have to establish a minimum of 20 more project implementation units (PIUs) for expediting the sanctioned road projects. The state is having a workload of about Rs 6,000 crore and has engaged only 50 PIUs, whose capacity is only about Rs 3,125 crore,” Ramesh’s letter reminded Naveen. He also said the state government should send proposals for road connectivity to villages having more than 100 population in 18 IAP districts soon so that they could be approved ‘in the next couple of months’.
Ramesh said Odisha had ‘received unprecedented assistance’ from the Centre in the matter of rural roads. “However, around 13,000 km still remains to be sanctioned, which indicates the magnitude of the challenge,” the Union minister said, adding, the centre was ready to approve projects ‘provided the state government is able to submit the DPRs and expand contracting and implementation capacity expeditiously’.
Urban Development Ministry sets up committee with IIT-Delhi for road safety
GREATER NOIDA: The Urban Development Ministry with the help of IIT-Delhi and other institutes has set up a committee to find ways and means for sustainable transportation and reduce fatal road mishaps.
“Road accidents leading to fatalities and disabilities are increasing at an alarming rate of more than eight per cent in the country. MoUD has set a five-year target for reversing the accident growth rate to negative,” Sudhir Krishna, Secretary, Union Ministry of Urban Development (MoUD) said today.
“The Urban development Ministry with the help of IIT Delhi and other institutes in the country has set up a committee to find ways and means to traffic calming, sustainable transportation and road safety,” Krishna said while speaking at the ongoing conference and exhibition on road safety ‘Intertraffic’ at India Expo Centre here.
The measures to check fatal road accidents include improving road engineering, having separate cycle lanes, construction of lays on highways after every 50 kilometres, proper signages and improving public transport system, he said.
The Ministry has already provided more than 10,000 buses to various major cities in the country, Krishna said.
During the conference, experts stressed on the need for having zero tolerance on roads for accidents. They said roads should be made in such a way that no accidents take place.
“They should not only be developed for vehicles but safety of people,” an expert said.
