Highway construction goes into top gear

April 2, 2012

NHAI hastens award of projects covering 5,400 km this financial year, road construction increases to 7 km a day
The pace of road construction in the first three years of the United Progressive Alliance (UPA) government’s second term has increased to seven km a day, compared with 4.1 km a day in the previous three years. However, this is still below the ambitious 20-km a day target set by the government.

Officials said so far, the National Highways Authority of India (NHAI) has awarded projects covering about 5,400 km in this financial year, against a target of awarding 59 projects covering 7,300 km, with a total cost of about Rs 60,000 crore. The authority is expected to hasten the award of projects in the next few days to come as close to the target as possible

In the last three years of UPA’s first term — 2006-07, 2007-08 and 2008-09 — NHAI constructed 4,522 km of highways. This increased to 7,758 km in the first three years of the current term.
At about 2,100 km, 2011-12 would see the lowest national highway construction in the last four financial years. A senior NHAI official said, “We will be able to construct 2,100 km of roads this year. This year’s construction is low because of less number of awards in 2008-09. Our award plans went haywire in 2008-09 because of the recession in the global market.” He added the completion of projects by the authority was below the target of 2,500 km of highways in the current financial year.

The award and construction of road projects had slowed during the first term of the UPA government. While the economic slowdown and the ensuing liquidity crunch had hit performance and kept companies away, T R Baalu’s record as the road transport minister was also not satisfactory.

In mid-2009, UPA came to power for the second time and Kamal Nath was appointed surface transport minister. He had set a target of 20 km a day, increasing it from the target six km a day in 2008-09. During his tenure, Nath had come up with project plans for two financial years and had set a target of awarding a little over 200 projects, worth Rs 200,000 crore. The pace of awarding road projects and construction of roads improved under the new minister, C P Joshi.

The highways authority has also awarded over 21 projects on premium that is expected to fetch around Rs 3,000 crore a year. A company offering a premium shows it is committing to an annual payment to the government over a period of time, instead of seeking a grant for building roads. Companies bid a premium if these are confident the accruing toll revenue would more-than-offset their costs.

The premium income is also set to bring down NHAI’s borrowing. It would now have to borrow only Rs 83,000 crore till 2030-31. The B K Chaturvedi committee, appointed in 2009 to examine the National Highways Development Programme and related aspects (it gave its second report last year), had said NHAI would need to raise Rs 191,000 crore by 2030-31.