Govt must focus on infrastructure project planning: Louis Berger Asia

Union Minister Nirmala Sitharaman at Parliament, during the Budget Session in New Delhi
The Centre should concentrate its resources on the planning phase of large infrastructure projects; their implementation onus is on private-sector players. Speaking to Business Standard, Kshitish Nadgauda, senior vice-president and managing director-Asia, Louis Berger, said, “The government needs to be involved in the planning of dedicated freight corridors (and similar projects). This is because strategic plans have to be drawn up by the central government and planning agencies; they cannot be entrusted to any one private entity.”

Louis Berger is a global infrastructure advisory firm.

“There will have to be a national spatial strategy, which is first the economic blueprint against which the infrastructure blueprint has to be developed. That can only be done by government agencies. When you start drilling down to the actual implementation, that is where the private sector could be brought in,” said Nadgauda.

This approach can be adopted for the Centre’s asset monetisation push. In the Union Budget 2021-22 speech, Union Finance Minister Nirmala Sitharaman said, “Monetising operating public infrastructure assets is a very important financing option for new infrastructure construction.”

Sitharaman said Indian Railways would monetise dedicated freight corridor assets for operations and maintenance, after commissioning. The next lot of airports will be monetised for operations and management concession. She also listed highways, gas pipelines, railway infrastructure assets, among others, under a national monetisation pipeline.

“Infrastructure projects tend to be capital-intensive. The costs are very high in comparison with potential revenue that one may realise. For example, for an underground Metro project, the cost of tunnelling is high. But in urban areas, that is really the preferred solution. While the Metro projects are being done on elevated viaducts in many cities, that is primarily a cost-driven situation,” said Nadgauda.

“So taking the Metro projects as an example, the government could step in and do the civil infrastructure. All the systems work, rolling stocks can be done on a public–private partnership model. There is room for privatisation, but the planning stage should be in the hands of planning bodies,” he added.

Commenting on the implementation hurdles while developing large infrastructure projects, Nadgauda said, “Land acquisition and availability is an issue, especially in urban areas. One has to come up with innovative solutions to optimise expanse of land required. The client agencies (usually government agencies or special purpose vehicles) have become better with experience. It is a complex process, with the multiplicity of agencies and rules involved.”

“Today in a lot of the National Highways Authority of India tenders, 90 per cent land acquisition has to be in place, without which it cannot award tender for construction,” he said.

“If not all land, at least a high degree of certainty that the balance 10 per cent would be acquired over a one year period or so, from the start of the project. Otherwise one runs the risk of projects being delayed, the costs will pile up because of claims for idle resources,” he added.

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