Government Approves Rs 6,429 Cr Road Projects in 4 states including J&K

July 23, 2012

The government has approved eight highways projects worth Rs 6,429 crore in four states including the strategic Z-Morh tunnel in Jammu & Kashmir connecting Leh to Srinagar.

“Public Private Partnership Appraisal Committee in its meeting last night has approved eight highways projects in four states – Jammu & Kashmir, Rajasthan, Karnataka and Uttar Pradesh, mostly to be built under build, operate and transfer (BOT) toll mode,” a Highways Ministry official told PTI.

These eight projects include 6.5 km long Z- Morh tunnel on Srinagar–Leh highway, the fourth strategic tunnel in Jammu & Kashmir to be built at a cost of Rs 773 crore, he said.

The tunnel would provide all-weather connectivity to the people of the Ladakh region, he added.

 

The other approved projects include three highway schemes in Rajasthan including Rs 668-crore Rajsamand-Bhilwara, Rs 530-crore Rajasthan border-Salasar project and Rs 332-crore Jodhpur-Pali highways scheme.

The official said of the remaining four projects, three schemes — Rs 1,282-crore Chakari-Allahabad, Rs 909-crore Hadia-Varanasi and Rs 605-crore Kashipur-Sitarganj – for widening of roads are in Uttar Pradesh.

Besides, the PPEAC also approved four-laning of Hubri-Hospet 77 km stretch in Karnataka to be built at a cost of Rs 1,330 crore.

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

Government Set to Award 3,000 km Road Projects under EPC this fiscal

July 23, 2012

To accelerate highway building process, Road Transport Ministry is all set to bid out at least 3,000 km of projects this fiscal and 20,000 km by 2017 under EPC mode that minimises risk to developers.

Finding that 20,000 km of National Highways of the total about 74,000 km are single, low density traffic lanes, not viable on PPP (public private partnership) basis, the government is ready with the final draft of EPC (engineering, procurement and construction) that would be sent to the Cabinet by the month-end.

“We are ready to award over 3,000 km on EPC mode this fiscal to accelerate the road building process. The Ministry has decided for upgradation of 20,000 km highways to two-lane standards on EPC basis during the XIIth Five-Year Plan (2012-17), a Road Transport and Highways Ministry official said.

 

EPC mode would not only minimise time and cost overruns but would also result in increased bidding by developers, the official added.

In EPC projects, the government pays the developer for constructing the highway while the toll revenues accrue to the government.

The other two modes through which the highways projects are bid are build operate transfer (BOT-toll) and BOT-annuity. and EPC. In the BOT mode, the developer has to operate the highway for several years.

The model draft for EPC said, “Experience also suggests that annuity based projects are comparatively expensive, while conventional contracts (BOT) are prone to time and cost overruns. It has, therefore, been decided to adopt the EPC mode of construction.”

The draft quoted a sample analysis of 20 NH projects executed on item-rate contracts that took, on an average, 61 months to complete as against 29 months taken by projects executed through PPP which generally adopted the EPC mode for project execution.

“Further, these projects had cost overruns of an average 48% (ranging from 25 to 183%) besides large volumes of foregone toll revenues on account of delayed completion,” the draft said.

With a view to enabling a transparent, fair and competitive roll out of highway projects, the model draft incorporates international best practices and provides a sound contractual framework that specifies the allocation of risks and rewards, equity of obligations between Government and the Contractor, precision and predictability of costs etc, the draft added.

On selection of contractor, the draft said it will be based on open competitive bidding and “the bidder who seeks the lowest payment should win the contract.”

On defect liability period, it said that same has been made two years from the earlier specified one year to “in order to provide additional comfort to the Government.”

The draft has been finalised by an inter-ministerial panel against the backdrop of differences between the Road Transport Ministry and the Planning Commission over some issues including the defect liability period.

Road Transport Secretary A K Upadhyay last week said that the Ministry after obtaining stakeholders comments on draft EPC would send it for Cabinet nod by July 30.

The EPC mode is expected to accelerate the pace of awards as the National Highways Authority of India (NHAI), which has not awarded a single project in the last quarter.

Last month, Prime Minister Manmohan Singh had set a target of award of 9,500 km of road projects in FY13 for the Ministry.

SOURCE: http://business-standard.com

3i completes Rs 200 cr deal in Supreme’s BOT road projects

July 10, 2012

Supreme Infrastructure today said it has completed the Rs 200-croe deal with 3i India Infrastructure Fund for a minority stake in its portfolio of road BOT companies.

“3i India Infrastructure Fund has completed its Rs 200 crore investment for a minority stake in a portfolio of our road BOT companies,” Supreme Infrastructure said in a statement. The transaction was signed and announced on January 30 and Ernst & Young was appointed as the financial advisor to the deal for this fund raise, it said.
Supreme Infra is focused on roads, bridges, power, water, railways and civil construction and infrastructure.

The company’s current order book stands at Rs 5,800 crore of which unexecuted order book is Rs 3,900 crore.

SOURCE: http://ibnlive.in.com

RInfra’s Haryana road project becomes operational

July 4, 2012

Reliance Infrastructure (RInfra) today said its Rs 800 crore road project in Haryana for widening of Gurgaon-Faridabad-Ballabhgarh-Sohna road has become operational.

The project was executed by the company through its special purpose vehicle GF Toll Road Private Ltd, the company said in a statement.

The project is RInfra SPV’s first state road project, executed on BOT and has a concession period of 17 years, during which time the road will be operated and maintained by RInfra’s SPV, it added.

The project involved four laning of Gurgaon-Faridabad stretch and two laning of Ballabhgarh-Sohna road, it said.

Commenting on the development, the Reliance Infrastructure CEO, Mr Lalit Jalan, said: “This will increase commuting convenience and connect centers of tourism, International airport, industrial zones and places of economic importance.”

The project includes 14 lanes toll plaza at Gurgaon Faridabad road and six lanes toll plaza at crusher zone. Also, two toll plazas of six lanes each are located on Ballabhgarh Sohna stretch, the company said.

“With current order book of eleven road projects, we will generate from next financial year revenues of Rs 1,200 crore a year with 15 per cent y-o-y growth rate,” Mr Jalan said.

SOURCE: http://www.thehindubusinessline.com

Road development, a major achievement in Rajasthan

June 28, 2012

Roads make a vital contribution to India’s economy and to infrastrutural development overall, and, the state of Rajasthan has not lagged behind in this endeavor, implementing various development projects worth Rs.4549 crore to improve over 30,000-kilometers of roads.

The Rajasthan Government’s commitment towards infrastructure development took shape with the setting up of the Road Infrastructure Development Company of Rajasthan (RIDCOR).

This project involves improvement and maintenance of 1053 kilometers of road across 13 districts of the state, at an investment of Rs.12 billon.

Under the Ashok Gehlot regime, road connectivity in Rajasthan has improved considerably.

In the last 36 months, the state government has activated projects of road repair, renewal and re-carpeting. It has upgraded and strengthened highways and other main district roads at a cost of Rs.750 crores.

The state government has also sanctioned the construction of 2420 km of roads at a cost of Rs.517 crores.

Under the Mahanarega Scheme, more than 2900 villages with population of 250 to 500 will be developed and get their roads connected to the nearest roadways bus service.

In first phase (2012-13), 3302 kilometers of road will be developed. A sum of Rs.832 crores has been given to NABARD for the completion of this work.

Roads of the remaining 1400 villages will also be developed with the help of the World Bank.

At least 16 mega highway projects are under construction, the objective being to connect important roads in the state.

Under this scheme, 2631 kilometers of roads will be developed and re carpeting at a cost of Rs.3590 crore. About 28 main roads are to be developed under PPP/BOT/BGF scheme.

Plans include developing roads between Jaipur and Falodi via the Jobner-Kuchaman-Nagore stretch (a distance of 360 kilometers).

Work on the Kotputli-Neem ka Thana-Sikar-Kuchman road corridor of 193 km is also expected to be developed soon at a cost of Rs.285 crores.

The Bharatpur-Alwar-Bahrod-Narnoul road corridor of 167 km will be developed at a cost of 249 crore rupees.

The state government also plans to connect 610 important religious places with the main roads (1156 km).

Development of these identified corridors will also include development and support environmental, community, social, educational and tourism initiatives along the road projects. Improvement works of these corridors have been divided into many packages for implementation.

Having good road infrastructure can make the roadways better and transport system would become faster, because roads and transport are interrelated for the development.

A massive development plan has been undertaken by the department of the transport to strengthen its infrastructure in the state.

The government has also been trying to raise public awareness about safe road travel.

Road development in the state is expected to highlight the Gehlot regime’s move to the high growth path. (ANI)

SOURCE:http://www.newstrackindia.com

IRB`s Ahmedabad Vadodara Project achieves financial closure

February 20, 2012

IRB Infrastructure Developers (IRB) one of the largest Road BOT developers in India, has declared that its Ahmedabad Vadodara Project has achieved financial Closure.

IRB Ahmedabad Vadodara Super Express Tollway, SPV for Ahmedabad Vadodara Project has tied up Project finance of Rs 33 billion. The total cost of this project is Rs 4.88 billion, out of which equity contribution by the Company will be approx. Rs. 1.58 billion and remaining will be funded through Project finance of Rs 33 billion. Out of thisProject finance, approx. Rs 11 billion can be drawn as ECB and remaining Rs 22 billion as Rupee Term Loan. The weighted average blended cost of this Project finance is approx. 10.5% p.a.

A Consortium of Lenders comprising of Infrastructure Development Finance Company (IDFC) – Lead Institution, India Infrastructure Finance Company (IIFCL), Andhra Bank, PunjabNational Bank, Indian Overseas Bank, Bank of India, Union Bank of India and ICICI Bank have financed this project.

Announcing this, Virendra D. Mhaiskar, Chairman & Managing Director of IRB said, “This is the largest debt tie-up in the Highway Infrastructure Sector till date in a pure play toll based BOT project. With this, IRB has achieved financial closure for all the projects awarded to it by NHAI and there is no project pending financial closure.“

Shares of the company declined Rs 2.25, or 1.31%, to settle at Rs 169.05. The total volume of shares traded was 269,294 at the BSE (Monday)

Source: www.myiris.com

Govt to finalize new model for bidding road projects soon

February 20, 2012

The Road Transport and Highways ministry will shortly finalize a new model to be used for bidding out 20,000 km of two laned highways worth Rs 50,000 crore that it plans to build during the next five years.

Under the new EPC (Engineering Procurement Construction) model, projects would be awarded on a turn key basis. The ministry will specify the project requirement including its cost and pay the entire amount to the lowest bidder at one go. It differs from the earlier EPC model, which was executed on item rate basis, where the ministry separately tendered and billed for every item of expenditure.

The old system was infamous for cost escalation, time overruns and too much official interference.

At a meeting on Monday attended among others by CP Joshi, road minister and Montek Singh Ahluwalia, Planning Commission deputy chairman, some of the sticky provisions of the EPC document including the duration of defect liability period (DLP), subcontracting clauses, bonus to be given to contractors for early completion of projects, etc. were discussed.

“It was decided to sort out all issues within the next fortnight and get the final EPC document approved by the Inter Ministerial Group by month end,” said a official.

The duration of DLP had become a major bone of contention between the plan panel and the road ministry. While the ministry wanted the DLP of 5 years, the plan panel has decided on two years. “The ministry has finally come on board on the issue,” said a official.

Another issue involves subcontracting by the developer. While the ministry wants that not more that 50% of the total length of the highway can be sub contracted, the plan panel wants it to be 70%. The plan panel also wants a bonus of upto 5% of project cost for the contractor for early completion. However, road ministry wants the bonus clause to be deleted.

The model document, which is being prepared by the plan panel, has already undergone six revisions.

The ministry presently adapts two other models for awarding highway projects –BOT (toll) where a developer builds roads and recovers investment through toll collection during the contract period which usually runs upto 20 years and BOT (annuity) where the developer builds the roads and the government pays it in installments.

 

Source: http://www.hindustantimes.com

Road annuity payments may be linked to inflation

February 9, 2012

To align the annuity outgo by the National Highways Authority of India (NHAI) with inflation, the government is likely to link the payments to the wholesale price index (WPI). Currently, the payments are fixed and made every six months.

“The Planning Commission has asked us to link annuity payments to WPI, not on the basis of fixed payments. This could increase our annuity payment burden by 1.5 per cent in the long run. We are discussing it at various levels,” said a senior NHAI official, on the condition of anonymity.

Build, operate and transfer (BOT) annuity and BOT toll are the two public-private partnership modes through which NHAI awards projects. Unlike the BOT toll model, in which the private operator collects toll, the government mitigates the risk of toll income in the annuity model by guaranteeing six monthly payments through the concession period, which usually lasts up to 18 years.

 

So far, the government has awarded 41 road projects worth Rs 24,386 crore, with an average annual annuity outgo of Rs 5,263 crore. A senior Planning Commission official confirmed the proposal, saying the recommendation was being discussed by various government departments. “Why do you think power projects are seeing a cash crunch? No one can predict inflation, and any rise and fall affect projects. That is a risk companies cannot take,” he said.

Power projects are experiencing a cash crunch because input costs have increased by up to 50 per cent in recent times. Analysts, however, feel this could be good for new companies. “In a way, this is good because new companies would have one less variable to worry about, as linking the payment with WPI would take care of any increase. This is because inflation would only increase in the near future,” said Parvesh Minocha, managing director (transport division), Feedback Infrastructure Services Pvt Ltd.

The annuity mode of building roads has been opposed by various government departments on the ground that it was more expensive for the government. The public-private partnership appraisal committee, an inter-ministerial committee that approves subsidy for pay-outs to infrastructure projects through viability gap funding, is also opposed to the BOT annuity mode of bidding and prefers engineering procurement contracts. A new model concession agreement for engineering procurement contract projects is being prepared by the government.

Source: www.business-standard.com

Vinayak Chatterjee: The high road to efficiency

January 16, 2012

For a historically capital-starved and infra-deficient nation, we have rightfully been obsessed with asset creation in the public-utility space. Little emphasis has been paid, however, on the maintenance of these assets or the delivery of pre-determined service levels from these assets. Take, for example, our roads and highways. Highway users continue to be a frustrated lot in spite of massive investments in this sector. Waiting-time at toll-plazas, safety aspects, ride quality and haphazard lane-management continue to bedevil even newly constructed roads.

Highway operators must eventually get prepared for regulatory raps as well as individual and “class action” litigation for failing to provide desired levels of service. They will have to wake up to the reality that toll cannot be charged merely for the privilege of being allowed to use a particular stretch of road. The “purchase consideration” inherent in charging a toll has to come bundled with the commitment of a smooth ride at a designated average speed, with full consideration of safety and highway amenities. Failure to ensure this should attract penalties and damages.

In this cauldron of frustrations and rising aspirations, it is interesting to note that the responsibility for operations, maintenance and tolling (OMT) is gradually shifting from the developer or the contractor group to independent and professional OMT service providers. Simultaneously, the focus is also shifting from merely reducing capital expenditure to optimising life-cycle cost, as well as, providing an accountable delivery of services.

My friend and colleague, Vivek Rastogi, who has a deep knowledge and insight on these issues, likes to draw out lessons from Brazil’s experience.

Brazil, with emerging-economy demographics much like India, has faced similar challenges in highway operations. Brazil embarked on its public-private partnership (PPP) highway development programme a decade ago. Its journey in developing national highways on a build-operate-transfer (BOT) basis has been equally successful. The operations and management (O&M) for these highways started the same way as where India is today — a toll revenue leakage as high as 25 per cent, below par patrolling and unsatisfactory maintenance and traffic management.

What is remarkable is that in the last 10 years Brazil has improved the O&M performance to reach close to world standards. There are four main reasons for this success:

  • An independent governance and regulatory body: the Brazilian Agency for Land Transportation (ANTT) was set up in 2001 to monitor the performance of concessionaires. ANTT sets aggressive service-delivery standards. These include mandatory electronic tolling, patrolling every 90 minutes, fixing pot-holes in 24 hours and replacing damaged safety signals in three days. It has a monthly monitoring mechanism for each concession. Any major gaps in performance are severely penalised.
  • Electronic tolling accounts for 60 per cent of the collections. This has significantly improved the productivity for heavy transport vehicles and also resulted in more accurate toll collection.
  • There is a strong and time-bound legal support for issues affecting the concessionaire. Users paying toll are answerable to the legal system and these cases are closed within 30 days. Major accidents and erring drivers are also referred to the same legal set-up. This level of processing is possible since the legal set-up directly reports to ANTT.
  • The police is extremely responsive and officers are actually stationed in the control rooms of the concessionaire. This support from the police has helped the concessionaires in reducing revenue leakage to near-zero levels.In essence, Brazil has created a virtuous circle in which concessionaires have near-100 per cent toll collection and thereby have adequate funds and motivation for O&M. They have strong legal and police support to ensure this is an ongoing process. In case they do not deploy adequate funds or do not perform activities in a timely fashion, the regulator ANTT has the stick ready. The same is the case in other developed countries with large PPP highway development programmes — such as Portugal, Spain and Malaysia.In contrast, India has a vicious circle – one that reduces the value and impact of the new asset – and this, unfortunately, starts from the design and construction phase.

    Sarkari authorities often “under-design” to reduce project costs and sometimes to save “viability-gap” funding. The under-provisioning of service-lanes, under-passes and pedestrian facilities are simply obstinacy to recognise genuine consumer needs. The state also often abdicates its role in removing encroachments and ensuring hassle-free right of way. Many Indian concessionaires have their roots in the construction business. They enter BOT highway projects for the construction revenue and not for operating a long-term asset. As a result, profit maximisation during construction is often in conflict with the desired asset lifecycle longevity. The concessionaire has little legal or police or state support to make all users pay. This is one of the reasons 20-30 per cent leakage in toll collection is not uncommon.

    These three aspects – poor design parameters, short-sighted development and collection difficulties – together create a financial pressure on the concessionaire. This is the start of the slippery slope — a story with which we all are very familiar across most Indian roads. The resultant poor O&M of roads leads to more headaches and accidents.

    Similar to ANTT of Brazil, the National Highway Authority of India (NHAI) is currently performing the role of setting O&M requirements in the concession agreements and monitoring implementation. The NHAI role in follow-up and corrective action often lags intent, leading to the known “chalta-hai” attitude.

    Is there hope for the Indian highways? Yes. There are well known, implementable solutions. However, most of these are systemic solutions requiring states and NHAI to play a bigger coordinated role:

  • NHAI needs to be strengthened for O&M supervision and related penal action. The authority should go to the extent of displaying the service levels on the road and invite comments from users of the highway. In case of continued low service levels, either the toll rate could be reduced or NHAI should appoint a third party to manage the O&M of the highway.
  • State governments need to find an effective mechanism for providing better police support.
  • A separate legal tribunal for highway-related cases should be considered.
  • NHAI and the Ministry of Road Transport and Highways need to ensure the implementation of electronic tolling systems that will not only improve throughput, but also lead to more accurate toll collection.
  • The bureaucracy will have to get used to a widely different nature of contracting. From the centuries old, lowest capital cost tender system, the bureaucracy will have to define service-level agreements and choose parties that will deliver agreed levels of service at “minimum” cost to the citizen.With 

    all these in place, the romance of a long-road journey can surely be brought back. All we need is 21st century attitudes, technologies and systems in place.

Source: business-standard.com

 

Government approves road projects of Rs 5,388 crore in three states

January 16, 2012

NEW DELHI: The government on Thursday approved three road projects in the states of Himachal Pradesh, Haryana and Andhra Pradesh entailing a total investment of Rs 5,388.36 crore.

The Cabinet Committee on Infrastructure cleared widening of Kiratpur-Ner Chowk section in Himachal Pradesh at a cost of Rs 2,356.20 crore, six-laning of Vijaywada -Gundugolanu section in Andhra Pradesh worth Rs 2,011 crore and Rs 1,021.16 crore scheme for four-laning of Uttar Pradesh/Haryana border- Panchkula section in Haryana.

“The main objective of the project is to expedite the improvement of infrastructure in Himachal Pradesh and also in reducing the time and cost of travel for traffic, particularly heavy traffic, plying between Kiratpur and Ner Chowk,” an official statment said about the Himanchal Pradesh project.

The widening of 84.38 km stretch on National Highway (NH) 21 in state will be implemented under NHDP phase III on design, build, finance, operate and transfer (DBFOT) basis in BOT toll mode of delivery, it said adding of the entire cost, Rs 537.37 crore will be spent on land acquisition, rehabilitation, etc.

The project, on completion, will reduce the time and cost of travel for traffic, particularly heavy traffic, plying between Kiratpur and Ner Chowk. It will also increase the employment potential for the local labourers for the project.

NH 21 is not only an important link connecting national capital and tourist destination of Manali in Himachal Pradesh but is a major link to Leh in Ladakh.

About Andhra Pradesh project comprising 103.59 km, the statement said it will be implemented under NHDP Phase V on DBFOT basis in BOT (Toll) mode of delivery.

“The total project cost estimated will be Rs 2,011 crore out of which Rs 327 crore will be for the land acquisition, rehabilitation, resettlement and pre-construction,” it said.

It added, “The main objective of the project is to … increase the capacity of Golden Quadrilateral (GQ) corridor and also to reduce the time and cost of travel for traffic, particularly heavy traffic between Vijayawada- Gundugalanu.”

NH 5 is an important link connecting Kolkata to Chennai, which is part of the GQ Corridor. This will facilitate road users, particularly traffic on Chennai-Kolkata section of GQ passing through Guntur, Krishna and West Godavari districts and Chennai- Hyderabad and Kolkata – Hyderabad sections.

Out of the total cost of the 104.7-km Haryana project on NH 73 under NHDP Phase-III on DBFOT basis in BOT (Toll) mode, Rs 86.23 crore will be for land acquisition, rehabilitation, resettlement and pre-construction.

The project, on completion, will reduce the time and cost of travel for traffic, particularly heavy traffic, plying between UP/Haryana border – Yamunanagar – Saha – Bawala – Panchkula. It will also increase the employment potential for the local labourers for the project activities.

Source: articles.economictimes.indiatimes.com

« Previous PageNext Page »