Highway projects picking up as Centre's drive makes land acquisition easier

The Rs 110-billion Eastern Peripheral Expressway inaugurated by Prime Minister Narendra Modi on May 27 is one of the many highway projects that could see the light of the day only due to the easing of the land acquisition process.

Incentivizing state government officials, flexible approach adopted in highway contracts and creation of land bank were some of the measures that yielded the desired results in the land acquisition department. This, in turn helped the National Highways Authority of India (NHAI) construct 9,829 km of roads in 2017-18.

According to data with the Ministry of Road Transport and Highways, the construction targets for 2018-19 have been set at 16,418 km, including 9,698 km to be constructed by the road ministry and 6,000 km by NHAI.

“The flexible approach in contracts and creation of land bank helped a lot in completion of highway projects, which were otherwise getting delayed due to delays in land acquisition,” said Vishwas Udgirkar, partner, Deloitte India.

The Road Ministry has asked project executing agencies to take up 100 per cent completion of the projects awarded pre-2014 and those awarded in 2014-15 and 2015-16. The target for award has been set at 20,000 km during the current year (2018-19), about 25 per cent more than the 17,055 km awarded during 2017-18.

According to government data, a total of 73 projects totaling 8,310 km and worth Rs 1 trillion had been languishing for years due to various reasons. Schemes were brought in the government to put these projects back on track -- One Time Fund Infusion Scheme (OTFIS), where financial assistance is provided by the NHAI to the concessionaire in the form of a working capital loan for projects that have achieved at least 50 per cent physical progress.

Ratings agency Icra had said in a report that land acquisition is likely to become a major hurdle for the Centre's ambitious Bharatmala project that involves building around 83,000 km of national highway by FY22.

Fragmented land holdings, lack of clear land titles, dependence on local authorities, inadequate land acquisition plan at the time of preparing detailed project reports and lack of methodology for compensation are the major difficulties faced during land acquisition, the report had said.

Another major challenge for Bharatmala according to Icra is compliance to the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 which led to increase in compensation by four times the market value in rural areas and twice the market value in urban areas.

For NHAI, the compensation paid for acquisition per hectare was Rs 23.79 million in 2016-2017, compared to Rs 13.5 million  per hectare in 2014-15.

Another important decision was allowing 100 per cent equity divestment two years after start of operations – private developers were allowed to take out their entire equity from all operational BOT (build-operate-transfer) projects two years from start of operations. Premium deferment in stressed projects allows rescheduling of premium committed by concessionaires during the bid stage.

Some experts also feel that not just the initiatives taken by the central government but the desire to have better infrastructure was felt by the state governments.

“The states have also realized that it is in their own interest to have good roads. The state government officials have started working more harmoniously after they started receiving the financial incentives, which were earlier not given,” former road secretary Vijay hhibber  said.

Competent Authority Land Acquisition (CALA) is now suitablyincentivized, which was earlier missing, which has resulted in improvement of results on the ground.

“Even though CALAs were there earlier also, the problem was with the compensation,” Udgirkar said.

Single CALA account has been opened to improve financial efficiency. NHAI regional offices have been empowered to appoint supplementary arbitrators in high load districts for speedy resolution of disputes.

Sector experts believe that the ironing out of land acquisition is one of the reasons government is confident of achieving the project award target of 20,000 km this year. 

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