The road transport and highways ministry has been busy lately, particularly the December-February period. Data till date reveals a five-fold increase in highway project disbursals this fiscal compared with 2008-09.
As per the ministry, 36 projects spanning 3,166 km have been awarded by the National Highways Authority of India (NHAI) up to February, compared to eight projects spanning 643 km in 2008-09.
The is the highest since 2007-08, when 14 projects connecting 1,234 km were awarded, according to data received from the ministry.
Nine projects worth around Rs 8,000 crore were finalised in January alone. The ministry is upbeat with the show. “A total of 38 more projects covering 3,820 km are undergoing evaluation. Bids for these have been invited,” said an official.
Speaking on the last three months’ show, Amrit Pandurangi, partner (infrastructure), PricewaterhouseCoopers, said: “This is certainly a turnaround year for the ministry of road transport and highways. Also, most of the development has happened between December last year and February this year.”
Pandurangi said financing for the projects should not be a problem, as there is liquidity in the system. However, the government needs to spread the award through the year so that financial closure does not become a problem.
Another encouraging trend is that bidders are quoting comparatively lesser viability gap funding (VGF) component. “As the year has progressed, bidders have started quoting lower VGF. The demand has been reasonable, except some projects in West Bengal. The demand has come down to 18-22%, compared with 37-38% last year,” said an NHAI official.
VGF is financing from the government to make a project viable and help the developer meet capital cost. The current regulations allow a private developer to seek VGF up to 40% of the capital cost of the project.
With these projects being finalised, the transport ministry will inch closer to Nath’s target in Work Plan I, to award 125 projects connecting 12,000 km by June this year. The initial target for the plan was this fiscal-end.
Experts, however, feel capacity constraints will be a major dampener once execution of the projects begins. “Around 100 projects are likely to be awarded by the middle of this year. Construction on those projects will begin simultaneously by the end of this year or early next year, considering a minimum of six to 9 months required for financial closure. The real problem will begin that time due to lack of engineers and technicians and skilled workers,” said Parvesh Minocha, MD (Transport), Feedback Ventures.
A KPMG report on infrastructure, too, has highlighted capacity constraint a major roadblock in the infrastructure sector. “Over the past two decades, the flow of talent in infrastructure has been gradually drying up as resources have sought alternative — often more lucrative — career options.
This is felt across various stages of project implementation.” The report further said 53% of those polled agreed that non-availability of skilled labour was the root cause of the delay, while 16% strongly agreed this was an area of grave concern.
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