Rate of growth in building national highways hits speed bump in 2017-18

National Highways Authority of India
The rate of growth in building national highways slowed in 2017-18 even though more than 9,000 km is expected to be built by March.
In 2015-16, 6,061 km was constructed, an improvement of 37 per cent over the 4,410 km in the previous year. In 2016-17, 8,231 km was constructed, an increase of 36 per cent in comparison to 2015-16.

However, the length achieved in this financial year is about double of what it was around four years ago, when the National Democratic Alliance came to power in May 2014.

According to the latest official data, the length of roads built during the current year stood at 5,680 km in the nine-month period till December 31, 2017.

Union Finance Minister Arun Jaitley in his Budget speech on February 1 said the length constructed during the current year would be 9,000 km but even if this projection is achieved, growth would be about 10 per cent.

Experts said this was because awarding contracts had slowed over the past two years. “No substantial pipeline of projects was created in the past two years and there were issues in getting clearances and utility shifting,” said Adil Zaidi, partner-economic development and infrastructure advisory, EY.

Zaidi said there should be a single-window clearance for infrastructure projects. On average, completing a project takes 36 months.

According to another sector expert, the slack was owing to laxity on the part of the National Highways Authority of India (NHAI).

At present, a number of clearances have to be obtained, including approval from the National Green Tribunal and other state authorities, before project execution.

Union Road Transport Minister Nitin Gadkari recently said the government was confident of constructing 40 km a day next year. However, the expert said, “That looks difficult.” 

While small- and mid-sized companies such as Ashoka Buildcon, MEP Infrastructure Developers, and Sadbhav Engineering have been aggressive in bidding for contracts, experts are of the view that the pace of construction and awarding contracts will not improve unless bigger infrastructure companies like GMR, GVK, and Larsen & Toubro, who have shied away from bidding for highway contracts in recent times, come back.

“Since bigger players burnt their fingers in the public-private partnership projects earlier, they refrained from participating in recent tenders. The momentum can pick up once they start bidding,” Zaidi added. It is, therefore, important for the government to focus on awarding more contracts — both on EPC (engineering, procurement, construction) and HAM (hybrid-annuity) modes — in the next financial year.

According to an NHAI official, HAM projects will form 65 per cent of the awarded projects in 2018-19, followed by EPC (25 per cent). The remaining 10 per cent will be awarded on build-operate-transfer. Former road secretary Vijay Chhibber said this would be a right mix for awarding projects.

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