Article

Roadways Investment

INVESTMENT in roads has not been upto the desired levels. It can be gauged from the fact that plan expenditure in this sector, which was in the range of five per cent of the total plan expenditure during the initial four Five Year Plans, fell below five per cent during the Fifth Five Year Plan and further declined to less than three per cent by the Seventh Five Year Plan.

The need for expanding the road network systems primarily on account of the growth in number of vehicles as well as in the growth of freight and passenger traffic.

In order to cope with the additional burden on roads due to the increasing movement of freight and passengers, it is estimated that the country would require 66,000 km long national highways and 1,45,000 km long state highways network in the next couple of years. Towards this purpose, an investment of Rs.60,000 to Rs. 80,000 crore is proposed to be made for National Highways and Rs.30,000 crore for State Highways. To fund this mammoth investment programme, the government plans to tap several financing avenues such as external borrowing from World Bank, Asian Development Bank and OECF, create a Road Fund by levying cess on petrol and diesel as well as through budgetary allocations, float special purpose vehicles and raise funds from markets and more importantly involve the private sector in the roads projects on build, operate and transfer (BOT) basis.

In a bid to attract the private sector investment into the roads sector, the union government has taken series of policy measures such as The National Highway Act, 1956 was amended in 1995 and private individuals and companies were allowed to develop roadways and collect toll charges.

Government will carry out all preparatory work including land acquisition and utility removal, right
of way (ROW) to be made available to concessionaires free from all encumbrances.

The Housing and Real Estate development corporation which is an integral part of the highway project will be treated as infrastructure and will be entitled for tax benefits.

NHAI permitted to participate in equity in BOT projects upto 30% of total acre. Duty free import of modern high capacity equipment of highway construction.

As of May 2000, there were 184 road projects entailing an aggregate investment of Rs.46,386 crore. Central and State government projects account for a major portion of the projects proposed in this sector. The share of private sector currently involved in projects worth Rs.7,800 crore, is bound to pick up in the near future.

The National Highway Development Project (NHDP) involves the Golden Quadrilateral project and North - south and East - West Corridor. In all, the plan envisages strengthening and four-laning of high density corridors of 13,252 km in three phases over a period of ten years. The entire project is proposed to be executed under the overall supervision of National Highways Authority of India.

The Golden Quadrilateral project connects the four metropolitan cities of Delhi, Mumbai, Chennai and Calcutta. The Delhi-Calcutta stretch covers a route length of 1,496 km. Of this 160 km has already been four laned and 172 km is under implementation. About 137 km is being undertaken on BOT basis and project preparation is underway for balance 1,000 km. for the Delhi-Mumbai stretch covering a route length of 1,436 km, about 253 km has already been four laned and work is in progress for 236 km. Project work on the 1,745 km Calcutta-Chennai stretch and the 1,302 km Chennai-Mumbai stretch has not been substantial with only 38 km and 63 km respectively having been completed. The World Bank had recently sanctioned a loan of Rs.$ 516 million for the four-laning of the Delhi-Calcutta stretch of National Highway 2 passing through Uttar Pradesh and Bihar.

The North-South-East-West corridor project involves four and six-laning of various road stretches of the National Highways passing through Jammu,Jalandhar, Delhi, Mathura, Agra, Gwalior, Jhansi, Nagpur, Hyderabad, Bangalore, Hosur, Salem and Kanyakumari on the North-South axis and Silchar, Guwahati, Siliguri, Punia, Muzaffarpur, Lucknow, Kanpur, Jhansi, Udaipur, Palanpur, Rajkot and Porbandar on the East-West axis.

As of May 2000, there were over 20 road projects worth Rs.7,800 crore proposed by the private as well as joint sector. However, the government’s plan to involve the private sector has not been a smooth affair with each of the projects being embroiled in controversies.

The Rs.2000 crore Bangalore-Mysore expressway is the largest project being set up in the private sector. To implement the project a new company, Nandi Infrastructure Corridor Enterprises, was formed by Bharat Forge of the Pune-based Kalyani group with the state-owned KSIIDC. The project would be implemented in two phases in six years and the Rs.1,000 crore first phase is expected to be completed by June 2002. In the first phase, a 41 km peripheral road, 9 km of link road and 12 km long expressway between Bangalore and Bidadi would be developed. Work on the project commenced in April 1999 but in January 2000, the project got entangled in a controversy as the special infrastructure committee constituted by the Karnataka government directed that the entire project be completed within two years instead of six years and opined that the promoters were viewing the project as a real estate venture rather than a road project.

The 92.85 kms Ahmedabad-Vadodara expressway project has been held due to a row over the award of the contract. NHAI had invited bids for the project in September 1999 and the consortium of Punj Lloyd-Sumber Mitra Jaya was short-listed. However, the whole bidding process got bogged down when it was discovered that there were certain irregularities in the disclosures made by Punj Lloyd and NHAI decided to award the contract to the next lowest bidder, LG Constructions.

The 93 kms Jaipur-Kishangarh NH-8 project also has not made much progress, initially on account of changes in the bidding norms and later after the re-bidding, the short-listed bidders insisting on changes in the project parameters. Likewise, the Andheri flyover project in Mumbai, which was initially to be commissioned in November 1999, had got enmeshed over a dispute to utilise the space below the flyover for a shopping mall. The project promoter, V.M. Jog, refused to go ahead with the project unless the proposal of shopping mall was cleared or alternatively given the Rs.72 crore which has been spent on the project so far. Latest report suggests that a settlement is likely to be made wherein the V.M. Jog will be paid Rs.72 crore and that project be completed within eight months of payment.

The success rate of private sector in this sector has been notable in small bypass and bridge projects. L & T successfully implemented the Coimbatore bypass project and is currently implementing a 1.36 km long two-lane bridge project across the Narmada river. Similarly, Noida Toll Bridge is constructing a bridge over Yamuna river connecting Delhi and Noida on a 30-year BOT basis.

The state governments through their PWD departments and special purpose vehicles (SPV) are involved in 72 projects with an aggregate investment of Rs.18,280 crore. Of the total projects, 21 are under implementation. The Rs. 1,645 crore Mumbai-Pune six lane expressway is the largest state sponsored project currently under implementation. The project has partially been completed and has been opened for public and is expected to be fully completed by April 2001. Apart from Maharashtra, the other states with large capital outlays in roads are Gujarat with 105 projects involving an investment of Rs.19,951 crore and Tamil Nadu with 30 projects worth Rs.4,500 crore.

The Uttar Pradesh State Industrial Development Corpn, has also proposed to set up three highways at a total cost of Rs.5,000 crore.

— Courtesy: CMIE