Now road toll can be paid without stopping at plazas

April 20, 2012

Union Minister for Road Transport and Highways C.P. Joshi on Thursday unveiled India’s first Radio Frequency Identification (RFID) technology-based Electronic Toll Collection (ETC) Plaza at Chandimandir here. He also inaugurated the four-lane Zirakpur-Parwanoo section of National Highway 5 passing through Punjab, Haryana and Himachal Pradesh.

Calling for coordinated efforts by the Central and State governments for making India a developed nation, Dr. Joshi said: “A qualitative infrastructure development is the need of the hour.”

Stating that a thrust to infrastructure development had been given in the 11th and coming 12th Five-Year Plans to increase the national Gross Domestic Product, he said the endeavour was to facilitate the common man with new technology and better road transportation facilities.

Dr. Joshi said all the highways in the country would be enabled with RFID technique that “helps users to pay the toll tax without stopping at toll plazas and reduces traffic congestion and commuting time.”

“Toll statements can also be made available online to the road users and they need not stop for the receipt,” he added.

He said his Ministry would consider giving exemptions and concessions to a certain category of users as per the request of Haryana Chief Minister Bhupinder Singh Hooda and his Punjab counterpart, Parkash Singh Badal, besides that of Union Culture Minister Kumari Selja and Haryana PWD Minister Randeep Singh Surjewala.

Dr. Joshi, however, asserted that the need of the hour was to rise above populism as the companies which had created huge infrastructure had to recover their costs through toll collection.

Referring to the “bottlenecks” faced by residents of Panchkula, he said these would be technically examined.

He disclosed that the National Highways Authority of India (NHAI) has completed projects worth Rs. 1,913 crore in Haryana, Rs. 1,419 crore in Punjab and Rs. 50 crore in Himachal Pradesh. He added that the NHAI would take up major road projects measuring 1,167 km in Haryana, Punjab and Himachal Pradesh during the current financial year.

Mr. Hooda said this project would benefit the people of Haryana, Punjab and Himachal Pradeshas they would not have to face traffic jams on the highway. He urged the Union Minister to formally approve various roads in Haryana as National Highways which had been approved in-principle.

Local MP Kumari Selja demanded the conversion of the Saha-Ambala stretch into a national highway.

Mr. Badal stated that the payment of toll, though unpalatable to the public, had become a necessity and there was no way out.

RFID tags

Meanwhile, ICICI Bank officials said the bank was working with the toll operators for issuing RFID tags to road users to be read at the toll plazas. Users, who need to register themselves, could use the tags across multiple toll plazas; they could be updated and would act as a record for settlement of financial transactions of the toll operators.

Written by ITW Editor · Filed Under Uncategorized

KNR Constructions completes NHAI project in record time

April 19, 2012

HYDERABAD: Hyderabad-based construction firmKNR Constructions has completed the Bijapur-Hungund toll road of National Highways Authority of India (NHAI) nearly 11 months ahead of schedule and claimed it a record in the history of Indian highways.

The four lining of 97.22 kilometres of road project, valued at Rs 905.5 crore, was completed in 582 days as against the scheduled duration of 910 days.

NHAI had awarded the project on design, build, finance, operate and transfer (DBFOT) basis to a special purpose vehicle of Sadbhav Engineering, which in turn awarded the project to KNR Constructions, an EPC (engineering, procurement and construction) contracting firm.

“The primary motivation to complete the project much ahead of schedule was the attraction of earning a bonus of Rs 16 lakh per every single day of early completion. In the process, we ended up with earning a bonus of around Rs 50 crore for early completion,” Executive Director K. Jalandhar Reddy told ET.

As a part of achieving the target, he said, the company has paid additional compensation to the land owners towards expeditious land acquisition, apart from deploying modern imported construction equipment and adopting best sourcing and keeping a strong supply chain of raw material.

“Most of the concessionaries are bagging the road projects these days at very thin margins owing to aggressive bidding and early execution of projects by EPC contractors will significantly help them improve their financials,” said Reddy.

Further, he said in the backdrop of not securing BOT road projects from NHAI owing to not so aggressive bidding strategy, KNR will now focus largely on EPC road contracts and help the BOT players with its strong execution skills.

KNR, with Rs 1,051 crore revenue last fiscal, now has an order book of Rs 3,396 crore comprising of Rs 3,253 crore of road EPC contracts, said Reddy.

Source: http://economictimes.indiatimes.com

Written by ITW Editor · Filed Under KNR Constructions

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.

Written by ITW Editor · Filed Under Uncategorized

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

Written by ITW Editor · Filed Under Uncategorized

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 Uncategorized

NHAI awards Rs 2,815 cr project to GVK

August 18, 2011

With private companies growing interest in the road sector, the National Highways Authority of India (NHAI) today awarded a Rs 2,815 crore contract in Madhya Pradesh to infrastructure player GVK that will fetch it an annual premium of about Rs 190 crore for 30 years, more than the total project cost.

With this award, the income to NHAI would be over Rs 870 crore per annum from four projects which it bid out within last few days.

“We have successfully awarded Rs 2,815 crore project in Madhya Pradesh for four-laning of Shivpur-Dewas section to GVK Transportation. NHAI will get a premium of Rs 189.9 crore per annum on this for 30 years, with a provision of an increase of five per cent every year,” a senior Road Ministry official told PTI.

The 330 km-project will be built under phase IV of the National Highways Development Project (NHDP) on BOT (build, operate and transfer) basis on DBFOT (design, build, finance, operate and transfer) pattern.

GVK was selected out of 14 major bidders that included players like GMR, Gammon, Essar and Punj Lloyd, the official said, adding that the “contract was proposed to be bid out on 15 per cent viability gap funding (VGF).”

The development comes close on the heels of NHAI bidding out its first mega project — Kishangarh-Udaipur-Ahmedabad at Rs 636 crore annual premium for 26 years to Bangalore-based GMR Infrastructure on July 29.

Further, the highway authority, which awarded projects worth over Rs 12,000 crore in the last four days, got about Rs 50 crore premium on Hospet-Bellary stretch in Karnataka and Orissa border-Aurang section.

Highways developers bid premium if they find the project lucrative; the private companies are confident that the toll revenue accruing to them would be more than their total cost.

Earlier, NHAI virtually used to provide grants on schemes to road developers to make the projects viable.

NHAI has announced to award 59 projects– involving 7,994 km, with a total cost of about Rs 60,000 crore– this fiscal.

India has a network of 3.3 million km roads out of which national highways constitute only 70,548 km. To augment it, the government plans to build 35,000 km of roads by 2014.

Source: business-standard.com

Written by ITW Editor · Filed Under GVK

We will be awarding 7300 km minimum this year: NHAI

June 9, 2011

In an interview with ET Now, Dr. JN Singh , Director Finance, NHAI, talks about the NHAI’s future projects and future strategy. Excerpts:

ET Now: Could you outline for us the quantum of new orders you have released in the first two months of this financial?

Dr. JN Singh: Around 1000 kms is what we have already released this year so far in the first two months. We are geared for around say 700-800 km in the next quarter as well per month.

ET Now: So can I safely assume that you will meet your guidance of awarding new contracts of at least 7500 crores?

Dr. JN Singh: Yes, 7300 km is what we definitely feel that we will be achieving this year. Most of the awards we expect right now that will be completed by December-January itself and we are fully geared for that. The feasibility reports are very well prepared. The land acquisition is substantially in place, and the things look okay right now.

ET Now: But lately we have seen that there have been several issues as far as land acquisition is concerned. Recently there has been widespread violence in Uttar Pradesh over land acquisition. How is NHAI looking to tackle this problem?

Dr. JN Singh: Fortunately as far as NHAI is concerned, we have not experienced such type of opposition so far. Maybe this opposition is because the UP projects are also taking commercial ventures along with the road and that’s what angers farmers or the land holders. As far as NHAI is concerned, it is doing purely a road building. It is not so far at least is mixing commercial ventures with the roadside. So that’s why though there would be some complaints about the lower rate that we are offering or at times people would like to go to arbitration for land acquisition but there has been no concerted move at any place, anywhere in the country that land acquisition as far as NHAI is concerned is a problem. It is of course an issue.

Click here to read full conversation

Written by ITW Editor · Filed Under Uncategorized

Infrastructure sector set to receive

April 26, 2010

More bank credit will soon flow to build infrastructure in the country with the Reserve Bank of India (RBI) on Tuesday reducing the level of provision against substandard loans to the sector from 20 per cent to 15 per cent.

The central bank’s decision to treat annuities and toll collection rights under build-operate-transfer (BOT) road and highway projects as tangible securities has also come as a major relief to infrastructure companies.

Banks and institutional lenders said the move on provisioning would enable lenders to loosen their purse strings for the infrastructure sector where long gestation projects often end up with issues that are beyond the control of both the lender and the borrower.

“There are many uncertainties in the infrastructure sector. Often there are delays due to reasons such as obtaining environment clearances and delay in equipment supplies that lead to assets becoming substandard. The RBI move will definitely encourage banks to go ahead and provide more advances to the infrastructure sector since it will provide a comfort factor,” SS Kohli, chairman and managing director of India Infrastructure Finance Company (IIFCL), the government’s flagship infrastructure finance company, told Financial Chronicle.

SBI chairman O P Bhatt said the announcement on infrastructure lending would help banks to finance such projects. “The treatment of annuities as tangible securities under BOT scheme will help attract private equity and give a boost to infrastructure sector,” he added.

UCO Bank chairman and managing director SK Goel echoed the view. “RBI move will reduce the burden of banks since loans to infrastructure projects often become substandard due to technical reasons. With only 15 per cent provisioning requirement, banks will be encouraged to lend more,” he said.

CMD of Bank of Maharashtra (BoM), Allen C A Pereira, said banks have been raising concerns over project delays and asset-liability mismatches in their infrastructure portfolio.

“Infrastructure projects are long gestation projects and several times things do not work out the way it was originally planned. Therefore, there was a strong case for easier provisioning norms for substandard assets. The RBI move is to ensure that banks do not suffer,” Tourism Finance Corporation of India CMD Archana Capoor said.

According to the planning commission, projected investment in infrastructure such as ports, airports, railways, power, irrigation, water supply and sanitation during the 11th plan (2007-11) is Rs 20,54,205 crore. The huge demand for funds can be gauged from the fact that the road ministry alone plans to award projects to build around 18,000 km during this financial year worth more than Rs 1,50,000 crore. Of this, 65 per cent of projects would be on BoT toll basis, 20 per cent on annuity and remaining 15 per cent on engineering, procurement and construction (EPC) model.

However, bankers said the RBI move was not to make banks meet their overall credit growth target when of offtake to sectors such as real estate has slumped. “These issues are not linked. The slowdown in overall lending and to the housing sector may be due to other reasons. Housing loan borrowers may be adopting a wait-and-watch approach,” Pereira of BoM said.

UCO Bank’s Goel agreed: “This is purely to encourage flow of funds to infrastructure sector. Overall credit growth and trends for specific sectors cannot be linked.”

Meanwhile, infrastructure companies have welcomed the decision to treat annuities and toll collection rights under BOT projects as tangible securities, saying the decision would give private road developers easier access to funds at lower interest rates.

At present, in BOT road projects, there is nothing that can be considered as tangible asset. This is because the concessionaire has to transfer the land either to the National Highways Authority of India (NHAI) or the state government after about 30 years of the agreement. Toll collection is also uncertain and therefore treated as an intangible asset. This makes it difficult for developers to obtain loans under the secured category.

“Now that the RBI has allowed annuity and toll collection rights as tangible securities, where there are provisions to compensate the project sponsor if a certain level of traffic is not achieved, it will make banks pro-active to lend to the sector,” Issac A George, chief financial officer of GVK Power and Infrastructure, said.

In its credit policy, RBI said annuity and toll collection rights should be treated as tangible securities subject to the condition that banks’ right to receive them is legally enforceable and irrevocable.

“Most banks offer loans to road developers under secured categories. However, there are lots of provisions and agreements that the parties work out among themselves. The developers also pay a higher interest rate of up to one and a half per cent for unsecured loans. The RBI announcement will help developers to save the additional interest cost and avoid legal troubles,” said Vishwas Udgirkar, an executive director at PricewaterhouseCoopers.

The move is also expected to lower the cost of road projects. “The RBI move to treat annuities and toll collection rights as tangible securities will create a healthy market for securitisation of toll portfolio, thereby reducing the cost of road projects after construction,” said Hemant Kanoria, chairman and managing director of Srei Infrastructure Finance.

Source: mydigitalfc.com

Written by ITW Editor · Filed Under Uncategorized

TEXT-Fitch affirms SNBTPL ‘s bank loans at BBB-(ind)

April 19, 2010

April 16 – Fitch Ratings has today affirmed SEW-Navayuga Barwani Tollways Pvt Ltd.’s (SNBTPL) senior long-term project bank loans aggregating INR5,474m at ‘BBB-(ind)’, and subordinated bank loans of INR300m at ‘BB+(ind)’. The Outlook is Stable.

SNBTPL enjoys an 18-year concession from National Highways Authority of India [NHAI.UL] (NHAI, ‘AAA(ind)’/Stable) to design, engineer, build, finance, construct, operate and maintain on a Build, Operate and Transfer (BOT) basis an 82.8km road stretch on the National Highway 3 (NH-3) in the state of Madhya Pradesh. The estimated cost of the project is INR7.9bn, with the scheduled commercial operations date (COD) in May 2011.

The affirmations follow SNBTPL’s reasonable progress over the last year in achieving different project milestones during the critical construction phase. Fitch does note however that the company is slightly behind plans. The entire right of way (ROW) required for the project is reportedly in the company’s possession, with the exception of a three-km stretch of forest land; however, first-stage approvals have been received from the forest department.

As of March 2010, the project has received equity infusions (61.3%), and has been drawing down on term loans – 58% of senior debt and 57% of sub-debt – as per schedule.

The ratings are constrained by the residual completion risk, although a fixed-price construction contract with SEW, whose terms mirror those in the concession, offer protection. Base-case debt service coverage metrics are extremely modest and vulnerable to various deep stress tests Fitch performed. A three-year tail in the concession allows the banks to restructure the loans, if necessary. Some liquidity support is available in the form of a fully-funded debt service reserve account (DSRA), equivalent to three months’ principal and interest payment.

Fitch has factored into its rating the operational track record and financial strengths of the sponsors. This includes the credit enhancement value of their undertaking to finance the cost and time overruns, to replenish the senior and subordinated DSRA and to provide unconditional and irrevocable bank guarantees if event project cash flows are inadequate to create the DSRA. Additionally, SEW has executed a letter of undertaking to the senior to infuse INR100m, after the COD, to augment debt payment capacity and to inject additional funds in case operations and maintenance expenses exceed the base case projections submitted to the banks.

The agency believes that the road has long-term economic potential, and that its locational advantage should have a beneficial impact on tollable traffic. Also, it is situated on the highway that represents the shortest distance between Mumbai and Agra.

SNBTPL is a 74:26 JV between SEW infrastructure Ltd (SEW, ‘AA-(ind)’ / Stable) and Navayuga Engineering Constructions Ltd (NECL). Following inter-se adjustments among the sponsors, SEW has increased its equity stake in the project to 74% from the 51%, resulting in a reduction in NECL’s holding to 26%.

Applicable Criteria available on Fitch’s website at www.fitchratings.com: “Rating Criteria for Infrastructure and Project Finance”, dated September 29, 2009.

Source: in.reuters.com

Written by ITW Editor · Filed Under Investment and Finance

17 states pledge cooperation for highways projects

April 19, 2010

New Delhi, April 13 (IANS) Seventeen states and the union territory of Chandigarh Tuesday assured support to the centre for timely execution of highways projects in the build, operate and transfer (BOT) mode.

The governments of Andhra Pradesh, Arunachal Pradesh, Assam, Chhattisgarh, Haryana, Himachal Pradesh, Jharkhand, Maharashtra, Madhya Pradesh, Manipur, Meghalaya, Nagaland, Punjab, Rajasthan, Tripura, Uttarakhand, West Bengal and the union territory of Chandigarh signed the State Support Agreement (SSA) with the ministry of road transport and highways.

The agreement was countersigned by the National Highways Authority of India (NHAI).

For the development of highways, support of the state governments is essential in the matter of land acquisition, removal of encroachments, shifting of utilities, rehabilitation and other local law and order related issues.

“The SSA aims at formalising the cooperation arrangement with the state governments to the implementation of the extensive programme of development of national highways on public-private-partnership (PPP) through the NHAI,” an official statement said.

Five states — Karnataka, Kerala, Goa, Puducherry and Sikkim — will also sign the SSA soon, it said.

However, Uttar Pradesh has indicated its desire to withdraw from the SSA it signed earlier.

“Discussions are going on with the government of Uttar Pradesh to resolve the matter,” the statement added.

Source: sindhtoday.net

Written by ITW Editor · Filed Under Uncategorized

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