MANGALORE: Unable to bear the pathetic condition of road at the Nanthoor Junction, the residents of Nanthoor, Bikarnakatte, Bajjodi and Jayashree Gate staged a protest at the Nanthoor Circle here on Thursday.
The unscientific construction of the circle; the road without proper gradient and footpaths have made the lives of the road users and residents miserable. If its slush and pot holes during monsoons, it is dust bath during other times the users have to put up with.

NEW DELHI: In a sharp rebuke to the highways authority, the road transport and highways ministry has directed the National Highways Authority of India (NHAI) to sort out the buy-back of the contentious Delhi-Gurgaon expresswayproject through the legal process on its own instead of involving the government in a contractual dispute.”It is now for the NHAI to pursue the matter through the legal process as buying back the concession is the first step before other options can be examined,” said a letter sent by the ministry on Thursday to NHAI chairman RP Singh.

The ministry sent the letter, a copy of which was reviewed by ET, after the authority recently wrote to the government asking it to buy back the concession instead of getting into litigation.

Suspecting criminal liability on part of the concessionaire, the ministry has also requested the Central Vigilance Committee to investigate and refer the matter to the Central Bureau of Investigation if a criminal case is made. “There is no point in referring the matter to the government as it is essentially a contractual dispute which is to be resolved and pursued to its logical end by the NHAI,” the letter said.

The NHAI had on Wednesday stated that the case, which is in Delhi High Court, was being prolonged on “one pretext or the other” while the lenders and the concessionaire, DGSCL, were raising extraneous issues and diverting the main issue. It also called upon the Haryana government for “finding fault with NHAI” instead of taking over by paying Rs 335 crore termination payment under political force majeure (unforeseeable circumstances).

But the ministry believes this would be more expensive than if they took over the project at a cost of Rs 130 crore. “It is patently clear that the government of Haryana is not pursuing its earlier intention of buying out this project. The only logical option therefore before the NHAI is to buy-back the concession as provided for in the agreement, at the earliest,” the ministry said in the letter.

The 28-km Delhi-Gurgaon expressway project has been embroiled in controversy over various issues including substandard service provided to commuters. The NHAI served the concessionaire with a termination notice, which was challenged in the Delhi High Court. The ministry has sought the assistance of the Attorney General to represent the NHAI in the court.

“The lenders, led by IDFC, extended Rs 1,600 crore to the concessionaire although this was not approved by NHAI. The concessionaire is not sharing details of the escrow account from where they have withdrawn Rs 676 crore by way of an inter-corporate deposit. We have asked the Enforcement Directorate to inquire if this contravenes any law of the land,” said a ministry official.

NEW DELHI: Highways regulator NHAI has set a an expenditure target of Rs 11,885 crore for 2013-14 on its many projects, including flagship road building scheme NHDP.The NHAI is tasked to implement various road projects of about 50,000 kms, of which widening of about 21,000 km has already been completed.”The National Highways Authority of India(NHAI) has earmarked Rs 11,885 crore on the projects for this fiscal,” a Road Transport and Highways Ministry official told PTI.

The total cost of about 50,000 km projects is about Rs 2 lakh crore and about half of which has already been spent, the official said.

The National Highways Development Project (NHDP) aims to build 34,108 km in four phases and it has so far completed widening of 7,501 km while work is under way for 11,459 km more.

The balance of 15,148 kms are still to be awarded, the official said.

NHDP is a project to upgrade, rehabilitate and widen major highways in India to international standards.

Projects worth Rs 3 lakh crore are likely to be bid out under its seven phases.

Concerned over the slow progress of projects under NHDP, a Parliamentary panel had recently asked the ministry to take steps for expediting them in order to attract private investment.

The official said as far as other ambitious projects like North-South & East-West Corridors are concerned, only 372 km has been left for award of work as 611 km is under implementation, while the major chunk 6,159 has already been completed.

The North-South (NS) Corridor connects Srinagar with Kanyakumari, while the East-West (EW) corridor connects Porbandar with Silchar. The total length of the NS-EW network is 7,142 km.

The project was originally scheduled to be completed in 2009 but as per officials the same was delayed due to problems in land acquisition and law and order in some parts.

The Ministry has already taken the issue with state governments asking their support for expediting the project.

Source-http://economictimes.indiatimes.com

Should financially-strapped highway developers be allowed to ‘reschedule’ the annual premiums they had offered to pay while successfully bidding for projects? This is becoming a classic case where several government arms want to escape the burden of saying a clear ‘no’, even though they do not want to say ‘yes’.

With a ‘no’, the UPA-2 government risks staining its report card on the highway development front at a time when it — and the economy — badly needs projects taking off the ground. Developers dumping projects isn’t good news when elections are barely months ahead. But a ‘yes’ could also mean taking decisions that the Government’s audit arms may question in future.

For almost six months now, a proposal to permit highway developers to postpone their premium payments in a manner that keeps the net present value of these obligations constant over the entire contract period, has been doing the rounds. It has been, to use official language, “under consideration”, with the Government neither accepting it nor rejecting it categorically.

THE GENESIS

The entire “under-consideration” exercise started as an attempt by the National Highways Authority of India (NHAI) to prevent developers walking out of road projects that they had won only two-three years ago.

They had done so by quoting high premiums payable to NHAI in return for getting the right to develop or widen highway stretches, maintain these and collect toll from users over a pre-determined period of 20-30 years.

Those were, of course, roaring times when everything seemed to be going right for the economy. So, instead of seeking a subsidy — viability gap funding — most developers raced to bag ‘design-build-finance-operate-transfer’ concessions by offering ever high premiums.

But with economic growth slowing down — from 8-9 per cent at the time of the award of contracts to 4-5 per cent now — and high inflation pushing up project costs, many developers have ‘discovered’ the same projects to be financially unviable and not capable of realising the toll revenues that they had originally projected. And luckily, they have found solace in Government’s inefficiencies, such as inability to get regulatory clearances on time.

Thus, the likes of GMR, GVK and Ashoka Buildcon have laid the blame on environmental/forest clearances and land acquisition. These clearances were delayed to such an extent as to change the entire project finance equations. Besides these developers, there are others too watching from the fringes as of now, although they haven’t served any termination notices on the NHAI.

Currently, there are some 15 highway projects that were awarded in 2011 but are yet to achieve financial closure.

DOING THE ROUNDS

In January, GMR announced its decision to seek termination of a 555-km, six-laning project between Kishangarh and Ahmedabad, while officially citing delays in obtaining regulatory various nods.

The infrastructure company had committed to pay a premium of some Rs 32,000 crore over the project period of 26 years. Interestingly, the Comptroller and Auditor General of India pulled up the NHAI on GMR’s threatened pull-out, saying that it would jeopardise potential premium revenues of Rs 32,000 crore from the project.

It was in this context that the NHAI Board, in March-end, approved a proposal by GMR for premium rescheduling. The approval, however, came with a dissent from the Expenditure Secretary R.S. Gujral and concerns raised by the Planning Commission Secretary Sindhushree Khullar. Both are members of the Board.

Since then, the Ministry of Road Transport and Highways has suggested some changes to frame a common policy for all such cases, involving premium rescheduling.

It sent a note to the Law Ministry for approval. The latter, in turn, turned the proposal down on grounds that it would amount to renegotiation of contracts.

The NHAI Chairman R.P. Singh, on his part, has sought an informed decision from all concerned Ministers. A ‘no’ to the proposal would ultimately endanger potential premium revenues aggregating about Rs 98,000 crore over 26 years, having a net present value of Rs 26,000 crore.

Following the NHAI Chairman’s intervention, the Law Ministry seemingly diluted its stance on the issue, while referring the matter to the Finance Ministry.

The latter, while proposing some riders, agreed to a one-time renegotiation, subject to concurrence from the Law Ministry.

The Road Ministry has since floated a Cabinet note listing all the available options. But what will emerge from all this isn’t clear. This rigmarole was only to be expected, since the proposal eventually involved reworking the norms of a contract that private firms had already entered into with the NHAI.

Contract renegotiation is not an area government officials are comfortable with, more so, given the potential risk of attracting audit scrutiny. And the timing — with elections around the corner and a government already under attack for Coalgate, Spectrum, Commonwealth Games and whatnot — couldn’t be worse.

THE ROAD AHEAD

The Government’s indecisiveness is due to lack of confidence, and there’s some over-defensiveness born out of previous scams.

At the same time, what it needs to also bear in mind is the fact that by not going in for renegotiation and instead allowing developers to exit, it jeopardises potential premium revenues in the future. That is something even the CAG has alluded to.

In other words, for the Government, it is a case of damned if you do and damned if you don’t.

The best way out of this mess is to follow some basics. If the Government decides to renegotiate a contract, it is important to not lose sight of the core aim of such an exercise.

In this case, the purpose clearly is to salvage highway development contracts that are on the whole favourable to the Government — those that can be physically executed on the ground, while protecting the Government’s financial interests.

Second, assuming clarity in regard to the core aim, the renegotiating conditions have to be transparent.

So, if the different arms of government arrive at a consensus proposal, they should discuss the final form of proposal with the developers before taking it to the Cabinet, to get an idea of whether the rescheduling proposal has any takers.

Unilaterally presenting a ‘take-it-or-leave-it’ proposal that developers don’t find viable defeats the very purpose of renegotiation. Else, the Government should have the spunk to say a simple ‘no’ (to any renegotiation)!

Source- http://www.thehindubusinessline.com

The union ministry for road transport and Highways may yield to a request by the National Highways Authority of India to consider 16 more projects for premium rescheduling if the Cabinet Committee on Economic Affairs decides to provide a one-time relief to 23 projects for rescheduling their premium.

The Cabinet Committee on Economic Affairs would soon be considering a proposal to reschedule premium payment worth Rs 98,000 crore to be paid by private concessionaires to NHAI for 23 road projects. If 16 more projects are approved for rescheduling then another Rs 53,000 crore premium payment due to be paid to NHAI would need to be rescheduled.

Companies including Larsen & Toubro, IDFC, Ashoka Buildcon and Oriental Structural Engineers are among the 16 companies looking to be considered for premium rescheduling for various projects, said an official. NHAI has been repeatedly holding meetings with officials in the ministry to take up the case of 16 projects as they fear a backlash from the project concessionaires.

“We can look at providing relief to the projects if CCEA agrees to reschedule premium in the first place. This is a one-time relief and not a policy, so we are hoping that they agree to it”, a senior official at ministry of Roads told Business Standard.

The issue of rescheduling for 16 projects emerged since these project developers had achieved the appointed date. It is the date on which the contract period begins. According to the norms, once a project is awarded to a concessionaire, it has to complete land acquisition and take clearances from the environment and forest ministry. The developer has to tie up funds besides meeting other norms. Once these norms are achieved, an appointed date for start of construction is said to have been achieved.

Meanwhile the official also added that the Finance Ministry has recommended that a stress test be conducted to find out the number of projects that are seriously affected due to various reasons before rescheduling their premium.“The finance ministry has recommended that we conduct a stress test to find out who are in real trouble and they have a valid point. With regards to the 16 projects, we feel that they need some help and we will see what we can do from our side”, the official added.

Premium is an amount that concessionaires pay to NHAI for a BoT (Build-Operate-Transfer) project as they feel that the returns from the project are expected to be very high and is usually decided on the basis of future traffic flow at the time of bidding.

The ministry is considering a premium rescheduling in a bid to give a breather to companies for a few years considering a slowdown in the economy. According to the premium rescheduling plan, concessionaires are expected to pay lesser premium for a few years and then subsequently increase their premium without affecting the total payment.

“Basically, it’s a breather so that we can kick start the projects and once traffic picks up, they can pay back higher amount in the future. At this point, we need these measures to encourage private sector investments”, an NHAI official said.

NHAI had in their board meeting proposed that 23 projects be considered for premium rescheduling and forwarded the request to the ministry of roads. Following concerns raised by the remaining project concessionaires, NHAI then requested that the remaining companies be added to the list.

The move to restructure premiums were proposed against the backdrop of some private infrastructure firms pulling out of road projects due to delays in regulatory clearances like land acquisition and environment clearances.

“Except a few cases, there is actually no need for premium restructuring. The government has actually taken a number of steps to ensure that the private sector is not affected and it is the companies who are at fault as they anticipated that the economy will continue to grow at the same pace as it did. There are some genuine cases where for reason such as a ban on mining, the traffic flow has fallen, But otherwise there is no genuine.

Source-http://timesofindia.indiatimes.com