Highways rev into the fast track

March 1, 2008

Fasten your seat belt and get ready to zoom on Indian highways. The FM has increased the outlay for the National Highway Development Programme from Rs 10,867 crore in last Budget to Rs 12,966 crore this time. With the surface transport ministry just having finalised new model concessionaire agreements and other policies, it is set to put implementation in the higher gear. “We have a big implementation plan for next fiscal that includes six or four laning of highways. The progress will be at a very fast pace now as the Budget gives NHDP a big push,” said Brahm Dutt, secretary, ministry of surface transport and roads. Among the ongoing projects that will get a push — finishing the 5,846-km golden quadrilateral linking Delhi-Mumbai-Chennai-Kolkata that’s already 96.48% complete and making progress on the 7,300-km north-south and east-west corridors that are 23.36% ready. The FM laid emphasis on Northeast and said the existing 180 km would go up to 300 km in 2008-09. Source: http://timesofindia.indiatimes.com

Written by ITW Editor · Filed Under Uncategorized

Government falls short on its promise to build roads

February 29, 2008

The government has fallen short on its promise to build roads in 2007-08. The Economic Survey revealed that while the flagship Golden Quadrilateral connecting the four metros was 96% complete at this time, only 21% of the north-east and south-west corridors were finished till November 2007. This means the end-2009 completion target for the project is unlikely to be met. The port-connectivity projects, which envisage linking major ports with national highways, are also way behind schedule.

Work under the National Highways Development Project (NHDP)-III has also fared terribly with only 274 km completed by November 2007. The project envisages four and six-laning of 12,109 km of highways on the build, operate and transfer (BOT) basis. While the first phase covering 4,815 km was expected to be completed by end-2009, the National Highways Authority of India (NHAI), which spearheads the construction and upgradation, finished only 5.69% of the target.

The NHDP-III is estimated to cost Rs 80,626 crore and 30 contracts covering more than 1,900 km have been given out so far with another 3,000 km to be awarded during the current financial year.

Lackadaisical implementation notwithstanding, highway connectivity among Indian cities, however, remains a priority. The Survey has stressed the need to connect all cities by national highways in the medium term.

Source: economictimes.indiatimes.com

Written by ITW Editor · Filed Under Default, Investment and Finance

TWO-LANING OF NHS ACROSS THE COUNTRY

February 28, 2008

There is no proposal of two-laning of all single-lane NHs across the country on BOT basis, which are not covered under approved phases of NHDP. However, NHDP-Phase-IV, involving upgradation of NHs to two-lane standards with paved shoulders primarily on BOT basis, is yet to be approved by the Government.

The Eleventh Five Year Plan (2007-12) endorsed by the National Development Council (NDC) during its meeting held on 19.12.2007 recommended that the targets for stretches other than NHDP have to be prioritised according to their importance to the national economy so that the available resources are not spread thinly among competing projects. The major targets for non-NHDP components include:

i. Accelerated efforts to bring NHs network to a minimum of two-lane standard within the next ten years and four-laning small segments of non-NHDP stretches.

ii. Removing existing deficiencies, like inadequate capacity, insufficient pavement thickness, etc. in the road network by strengthening the National Highway network/improving riding quality.

The condition of the National Highways (NHs) is monitored on regular basis. Further, the development and maintenance of NHs is a continuous process to keep them in traffic worthy conditions and are taken up as per the availability of funds, traffic intensity and inter-se priority.

This information was given by the Minister of State for Shipping, Road Transport and Highways, Shri K.H. Muniyappa in a written reply in the Rajya Sabha today.

Source: pib.nic.in

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NHAI awards projects worth Rs 109.12 bn

February 23, 2008

The National Highways Authority of India (Q, N,C,F)* (NHAI) awarded 5 projects, worth Rs 109.12 billion, of six-laning of highways under the National Highway Development Programme Phase-V (NHDP-V), reports Business Standard.

NHAI awarded projects to infrastructure developers, including Larsen & Toubro, Emirates Trading, IRB, Isolux Corsan, and Soma Enterprises among others. These 882 kilometres of sections for six-laning of highways are under the Golden Quadrilateral (GQ) and North-South Corridor. Under the NHDP-V, 6,500 km of existing four-laned national highways (NHs) have to converted into six-lane highways through a build-operate-transfer (BoT) basis. Of the total length, 5,700 km is on GQ and 800 km on other sections.

The five awarded projects include 43.4 km on the Chennai-Tada stretch on NH-5, 225.6 km on the Gurgaon-Kotputli-Jaipur stretch on NH-8, 239 km on the Surat-Dahisar stretch on NH-8, 291 km on the Panipat-Jalandhar stretch on NH-1.

These are the first batch of projects which have been awarded on a new model concession agreement (MCA) approved by the Committee of Infrastructure recently. The new agreement will work on revenue-sharing model where the private developers will share 17% – 48% of their toll-revenue with the NHAI within 180 days of signing the agreement. Under the old agreement, the NHAI projects were awarded on the bidding parameter of positive or negative grants.

Source: myiris.com

Written by ITW Editor · Filed Under Investment and Finance

Land crunch, Green nod weigh down NHDP

December 15, 2007

NEW DELHI: The UPA government’s flagship programme, the National Highways Development Project (NHDP), has been delayed due to various reasons, including the government’s inability to acquire land. While no contracts have been awarded so far under phase-V, a few stretches under NHDP-III have been offered to developers.

The government offered contracts for only 278 km of highways up to October 2007 against the target of awarding 3,278 km under NHDP-III in 2007-08. Even for NHDP-II projects, consultants could not be appointed.

The government is, however, taking steps to bring all NHDP projects on track, an official said. The department of road transport and highways (DoRTH) has prepared a manual for four- and six-laning of highways and it would be finalised soon in consultation with the Planning Commission, he said. He attributed the delays in highway projects to slow progress in land acquisition and hurdles in getting environment clearances.

The department has identified 5,000 km of additional stretches to be upgraded on BOT basis under NHDP. The department would soon send the upgradation proposal to the Cabinet committee on economic affairs (CCEA) for approval.

DoRTH would also put 5,370 km more under NHDP-III and 1,760 km under NHDP-V for the approval of the public private partnership appraisal committee (PPPAC) by the end of the fiscal. On the proposed expressway between Noida and Ballia, the department would send its comments to the Planning Commission by the end of this month.

The government had earlier launched initiatives to upgrade and strengthen the national highways under various phases of NHDP. Over the next 4-5 years, these projects are estimated to cost around $40 billion.

Meanwhile, the government is setting up the directorate of road safety and traffic regulation. “Based on the recommendations of the Sundar committee, we would send the policy to the Cabinet for its approval. It should be finalised before the forthcoming Budget,” road transport and highways secretary Brahma Dutt said last week.

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CRISIL assigned IPO Grade 3/5 to KNR Constructions

December 6, 2007

Leading credit rating agency, CRISIL assigned IPO Grade 3/5 (pronounced `three on five`) to the proposed initial public offer of KNR Constructions (KNRCL). The public issue of 7,874,570 equity shares of face value Rs 10 targeting an issue size in the range of Rs 1,500-Rs 1,750 million. This grade indicates that the fundamentals of the issue are average, in relation to other listed equity securities in India.

The grading reflects KNRCL`s strong track record of project execution in both roads construction and operations and maintenance (O&M). The company has executed many projects as part of the NHAI`s NHDP program and has had a 7-year relationship with Patel Engineering as a joint venture partner.

The KNR-Patel JV has won 10 road construction projects so far. These include two BOT annuity projects as a part of NHDP Phase II, the combined value of which is Rs 9.6 billion. As of September 2007, KNRCL`s order book stood at Rs 16.25 billion, of which the roads sector constituted 89%.

The grading is however constrained by the relatively underdeveloped state of the company`s operating system, which in turn, could constrain its ability to augment the size of its operations. The grading also reflects the uncertainties associated with company`s plans to diversify into the power generation and real estate sectors.

Source: myiris.com

Written by ITW Editor · Filed Under Default, Investment and Finance

Govt approves Rs 16,680-cr NHDP Phase VII

December 6, 2007

NEW DELHI: The government on Thursday approved development of road projects including construction of ring roads, bypasses and tunnels under Phase VII of National Highways Development Programme at a cost of Rs 16,680 crore.

“The Cabinet Comittee on Economic Affairs (CCEA) today gave its approval for construction of ring roads, bypasses, graded intersections, flyovers, elevated roads, tunnels, road over-bridges, underpasses and service roads at a cost of Rs 16,680 core,” an official spokesperson said after the CECA meeting.

The total project would be executed on build, operate and transfer (BOT) basis.

Of the total money, the government would fund Rs 6,302 crore and Rs 10,378 crore would be ensured through private sector participation, she said.

Under NHDP-VII, Rs 10,500 crore will be spent on constructions for 700 km of ring roads and bypasses and the remaining money would be utilised to construct grade separated intersections, road over-bridges, elevated roads, tunnels, underpasses and service roads, the spokesperson said.

These constructions will improve traffic safety and ensure faster movement of vehicles with improved riding quality time.

“This will lead to reduction in vehicle operating cost and significant reduction in fuel consumption for the vehicles resulting in energy conservation,” she said.

The works on stand-alone ring roads and bypasses are likely to be awarded by March 2011 and is to be completed by December 2014.

Source: economictimes.indiatimes.com

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CONSTRUCTION OF STAND ALONE RING ROADS, BYPASSES, GRADE SEPARATORS, FLYOVER, ELEVATED ROADS, TUNNELS ETC. UNDER NATIONAL HIGHWAYS DEVELOPMENT PROJECT PHASE VII

December 6, 2007

The Cabinet Committee on Economic Affairs today gave its approval for Construction of Ring Roads/Bypasses (including improvement of NH links in city), Grade Separated Intersections, Flyovers, Elevated roads, tunnels, Road Over Bridges, Underpasses and Service Roads at a cost of Rs.16,680 crore (Rs. 6,302 crore from Government + Rs.10,378 crore from Private Sector), on BOT (Toll) basis. Out of Rs.16,680 crore of NHDP Phase – VII, Rs.10,500 crore will be spent on constructions for 700 km of ring roads and bypasses. The remaining amount of Rs.6,180 crore on stand alone Grade Separated Intersections, Road Over Bridges, Elevated Roads, Tunnel, Underpasses and Service Roads.

Construction of ring roads, bypasses, grade separators, flyovers, Elevated roads, tunnels, Road Over Bridges, Underpasses, service roads, etc. will improve traffic safety and improve faster movement of vehicles with improved riding quality and time. This will lead to reduction in vehicle operating cost and significant reduction in fuel consumption for the vehicles resulting in energy conservation.

The works of stand alone ring roads & bypasses are likely to be awarded by March, 2011 and is likely to be completed by December, 2014.

Written by ITW Editor · Filed Under Investment and Finance

Toll policy change may rationalize annual hikes

December 4, 2007

Under the proposed policy, only 40% of the WPI will be taken into account while revising the rates

New Delhi: Even as tolled roads are becoming a norm in the country with the government handing over more highway projects to the private sector, a new tolling policy is seeking to limit the annual increase in toll rates.

As of now, toll rates are revised every year and concessionaires are compensated in full as per the increase in the wholesale price index (WPI). But under the new policy, which is yet to be placed before the cabinet for approval, only 40% of WPI will be taken into account while revising the toll rate. This is apart from a fixed component of a 3% increase every year.

As many as 54 highway construction packages of around 320 projects awarded under the National Highway Development Programme were “build operate and toll” projects. According to Planning Commission member Anwar-ul-Hoda, the idea behind changing the structure of toll revision was to ensure that the concessionaires are paid only their due share while fixing annual hikes on toll.

“The input costs of the concessionaire mostly occur many years before they begin to collect toll. So why should the toll revision be based on the wholesale price index of the current year?” asks ul-Hoda.

An official with the National Highways Authority of India (NHAI) also said that many components of WPI did not directly affect the highway construction industry.

The CEO of the roads division of the GMR Group, Rajan Krishnan, said his company was neutral to the proposal as WPI was difficult to predict. “Even the best economists cannot clearly track the movement of WPI. This is just a matter of mathematical modelling,” said Krishnan.

According to Krishnan, however, concessionaires stood to gain from the new policy so long as WPI was less than 5%. But when WPI moves beyond 5%, the toll rate to be charged under the new proposal would be lower than what is currently collected, he added.

Nirmaljit Singh, member, technical, NHAI, said the proposal was with the ministry of road transport and highways, from where it would be sent to the cabinet for clearance.

“I just think you are increasingly reaching a situation where the risk-reward equation is being changed against the government,” said an analyst with a consulting firm, who did not wish to be identified. “The government is taking more and more of the risk. You don’t need to guarantee a 3% increase every year when concessionaires had already accepted the earlier policy (where fee revisions were tied only to WPI),” the analyst said.

According to accepted wisdom, the government passes on fewer risks—such as those associated with traffic—to the concessionaire when evolving a public-private partnership policy and as the market evolves, passes on more of the risks. However, this administration is doing the opposite, the analyst said.

The analyst cited the example of the recent move away from “negative grants”, a term for upfront money paid to the government for the privilege of winning a concession, over and above the cost of the project. Mint had earlier reported plans to do away with negative grants in favour of a revenue-share model, where NHAI would derive a percentage of revenues from toll roads. “By going for revenue sharing, the government is taking more risks,” the analyst said.

Source: livemint.com

Written by ITW Editor · Filed Under Investment and Finance

Expressway toll may soon be linked to distance travelled

October 25, 2007

NEW DELHI, OCTober 24: In a move that is likely to benefit consumers just as much as it would India’s premier road development authority, National Highways Authority of India (NHAI) has said that expressways scheduled to come up under the National Highway Development Project (NHDP) would follow a ‘closed tolling’ system, which would charge users a toll calculated on the basis of distance travelled.

Under the format, access to every entry and exit point of these expressways would be controlled allowing the road operator to monitor distance traversed and accordingly charge the levy. “All the expressways which will come up under phase VI of NHDP will be implemented on a closed tolling format as these will be access-controlled roads,” said a senior NHAI official. “While users will have to pay only for the stretch of the road used, the road developer will also benefit from improved revenue collections from toll.”

According to the official, at present a significant number of expressway users — especially local ones — skirt the levy by entering and exiting expressways before coming to a toll point. Hence, collection efficiency on many of these ‘open-toll’ highways and expressways ranges between 70-80 per cent.

The 1,000 km of Build-Operate-Transfer (BOT) toll expressways envisaged to come up under the closed toll format, at an indicative cost of Rs 15,000 crore, would not only help private developers maximise earnings but also induce more customers to ply through them by enabling them to pay a more ‘realistic’ toll, says the official.

One of the first expressways slated to come up under the format is Haryana State Industrial Development Corporation’s 135-km Kundli-Manesar-Palwal (KMP) expressway, also known as the Western Peripheral Expressway. The Rs 1,800 crore expressway, the largest in the country, would provide a high-speed link between northern Haryana and its southern districts like Sonepat, Jhajjar, Gurgaon and Faridabad and sport hi-tech toll plazas at a number of points en-route.

“All entrances to the KMP expressway would be controlled and a ‘token’ — a smart card encoded with the issuing station’s information — would be provided to motorists at the time of entry into the system,” said Rafi Khan, general manager of DS Constructions, one of the concessionaires for the project. “The motorist can exit from any of the controlled locations and will be required to pay only for the distance travelled.”

A total of 10 such exit and entry points, including two main toll plazas at Kundli and Palwal, are planned on the expressway. With the closed tolling format in place, the developer expects to see 30,000 passenger car units roll on the road every day, with a projected robust growth of around 9-10 per cent every year once the project is completed in 2009.

With closed toll roads like the Ahmedabad-Vadodara expressway already operational and others like NHAI’s 134-km Eastern Peripheral Expressway in the offing, the stage seems set for a more consumer-centric toll system to become the norm on the country’s fast roads.

Consumer-Friendly

•Extension of 95-km Baroda-Ahmedabad expressway by 400 km to Mumbai

•Delhi-Agra

•Delhi-Meerut

•Chennai-Bangalore

•Kolkata-Dhanbad

Source: indianexpress.com

Written by ITW Editor · Filed Under Investment and Finance

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