Work on four expressways races ahead — on paper

The transport ministry is nowhere near a position to invite bids for the four proposed expressways. But on paper, work on these projects is continuing at a brisk pace.

The four expressways, spanning 1,000 km and envisaging investments worth Rs16,680 crore, are Vadodara-Mumbai (400 km), Delhi-Meerut (66 km), Bangalore-Chennai (334 km) and Kolkata-Dhanbad (277 km). All the four are greenfield expressways, with new alignment.

As per transport ministry claims, the alignment study of Vadodara-Mumbai expressway has been completed and the detailed project will be ready by the end of this month, detailing the amount of investment required. Feasibility study in case of Delhi-Merut and Bangalore-Chennai has been completed last month.

However, a senior ministry official said, “We are not yet at a stage when bids can be invited for these projects.”

“There are a number of issues associated with it. First, we do not have a comprehensive land acquisition policy. Since these are greenfield projects, policy support on this front is paramount. Secondly, the projects are cost intensive and would require long concession period and higher toll to break-even, something lending agencies would also not like to go for,” the official said, hinting that invitation of bids may be at least a year away.

The biggest hurdle appears to come from the government’s own ranks. UPA constituent and railway minister Mamata Banerjee has been spearheading a campaign against the land acquisition amendment Bill, which seeks to entitle the government to acquire 30% of the required land once the private party has bought 70%.
Out of a total of 70,000 km of national highway network in the country, expressways comprise a mere 200 km.

Construction of expressways is part of Phase Six of the National Highways Development Programme, where the viability gap funding (VGF) has been capped at 10% of the entire project cost.

Asked if the government would consider raising the VGF, the official said, “Definitely, we will examine that aspect. But more critical issues are land acquisition norms and a suitable funding model as per km cost could go as high as Rs25 crore a km.”
On the funding model, experts feel the traditional model of auctioning the toll, or clubbing it with property rights to developer, may not work in case of expressways.

“We need to issue long-term bonds, ranging from 30-40 years and having sovereign guarantee, because a task having such a large scale cannot be taken up on toll and upfront property monetisation will also not be possible,” said Abhaya Aggarwal, leader (PPP), Ernst & Young.

Interestingly, despite the hiccups on the expressways front, the ministry appears set to take up two more greenfield corridors —- Delhi-Jaipur and Delhi-Chandigarh.

The Planning Commission too seems to be convinced. “We have highway to both the places but they will outlive their utility in the next six seven years, which is roughly the time by which the greenfield expressways will come up,” said a senior Planning Commission official.