The New Road to Development
With the road sector growing at 28 km per day in this fiscal, the government believes that the target would be 40 km per day in 2018-19, adding a renewed pace to India’s growth story
Two lakhs kms of highways and 12 expressways is under various stages of planning around the country, according to Union Road Transport & Highways Minister Nitin Gadkari, putting a spotlight on the growing network and focus of the government in connecting every nook and corner of the country. While the country has been witnessing robust infrastructural activity all across, the Roads & Highways sector has definitely been getting that special little support as the sector plays a key role in pushing the overall infrastructure growth of the country. And that is the reason why the second largest road network in the world at 3.3 million km has been witnessing key policy changes, increased investment activity and a strong demand for growth.
The National Highways have been seeing tremendous appetite from the market to draw investments in them. With the Centre planning to lease out 10 more national highways to raise Rs. 6,600 crore, the roads & highways development in the country is seeking newer pastures. Government’s estimated budgetary and extra-budgetary expenditure on infrastructure for 2018-19 was increased to Rs. 5.97 trillion against the estimated expenditure of Rs. 4.94 trillion in 2017-18. The National Highways Authority of India (NHAI) has created a blueprint of building 50,000 km of roads worth $250 billion by 2022 as part of its long-term vision of doubling the length of the national highway network to two lakh kilometers. “Money is pouring into the roads sector and we can see the revival of the space and the end to a lot of the legacy issues faced by some of the top players. This is also alleviating stress on the banks and we are starting to see a better attitude on debt funding in some areas. Private money should also follow suit – the industry, especially the Private Equity market has been disappointing so far and have an obstinate view on the space even though strong fundamentals are presenting across the board,” says Ben James, CEO & Founder, Global Road Technology.
As on December 2017, the Ministry of Road Transport & Highways (MoRTH) including NHAI had been able to construct highways at an average of around 23 km daily as against the target of 41.09 km/day. According to MoRTH and PIB, in Financial Year 2017-18, NHAI has awarded 150 road projects of 7,400 km worth Rs. 1,22,000 crore. In last 5 years, the average length of road projects awarded by NHAI was 2,860 km with 4,335 Km awarded in the last financial year. In comparison, the length of projects awarded in FY 2017-18 is an all-time high and a record achievement by NHAI since its inception in 1995.
According to MoRTH data, over 9829 kilometres National Highways were constructed during the year 2017-18. This represents 20 per cent growth over the last year, when 8231 kilometres were constructed. 17055 kilometres road length was awarded in the year, against 15948 kilometres last year. Expenditure of Rs. 1,16,324crore was incurred on construction of National Highways during the year 2017-18.
Data from the National Highways Authority of India (NHAI) showed that the awarding of highway construction projects went north 70 per cent to an all-time annual high in fiscal 2018, spanning ~7,400 km and valued at Rs. 1.2 lakh crore. These figures compared with ~4,300 km projects worth Rs. 59,000 crore awarded in fiscal 2017. According to a CRISIL Research the award and execution of projects will be even faster in fiscals 2019 and 2020 if the NHAI manages to source funds on time, and over and above the budgetary allocation.
The research further indicated that of the total length awarded by the NHAI in fiscal 2018, ~51 per cent was through the engineering, procurement and construction (EPC) mode, ~46 per cent through the hybrid annuity model (HAM) and the balance through build-operate- transfer (BOT)-toll mode. Whereas in fiscal 2017, the proportions of these projects stood at 34 per cent EPC, 56 per cent HAM and 10 per centunder BOT-toll. The research also depicted how competition stood on the higher side in the EPC mode, and went from low-to-moderate under the HAM model.
According to Prasad Koparkar, Senior Director, CRISIL Research: “Majority of the EPC projects were bid out at par or well below the NHAI’s request for proposal (RFP) cost – in some cases, even 20-25% lower. On the other hand, under HAM, most of the projects were won above NHAI’s RFP cost, some even 45-50% higher.”
Bharatmala pushing for growth
The ambitious and much-awaited Bharatmala scheme, under which 34,800 km of highways would be constructed at the spent of Rs. 5.35 lakh crore will also have 9,000 km of economic corridors across the country that will be constructed by the Road Transport & Highway Ministry.The project is slated to give the Roads & Highways sector a major boost in the country. According to the MoRTH data, a total of around 24,800 kms are being considered in Phase I of Bharatmala. In addition this also includes 10,000 kms of balance road works under NHDP. Estimated cost is Rs. 5,35,000 crore for Bharatmala Phase I which is to be implemented over 2017-18 to 2021-22. The primary features of the programme are 9000 km long Economic Corridors, Inter-corridor & Feeder Roads- 6000 km, improving efficiency of National Corridors by building flyovers, ring roads, logistics parks and clearing congestion points – 5000 km; Border& International Connectivity Roads- 2000 km, Coastal & Port Connectivity Roads- 2000 km and800 km long Expressways.
As reported earlier by EPC World, Bharatmala project, as a comprehensive program, aims to increase transportation efficiency by reducing and bridging infrastructure gaps. The ambitious project covers all the possible gamutsthat includes the creation of network in green field areas through development of economic corridors, providing connectivity to missing links and far flung areas through inter corridor and feeder link development, border road development and international connectivity, enhancing efficiency through its commitment on national corridor efficiency improvement component for 5000 km and also subsuming the balance length coverage from NHDP. Ring roads for various towns and cities are also included in this project with an aim to contributing towards a better safety and environment.
The targets and perceived outcomes of the Bharatmala project for the sector point at a gamut of opportunities for the various players involved. The ambitious project is also expected to generate around 100 million man-days of jobs during the road construction and subsequently 22 million jobs owing to the increased economic activity across the country. Bharatmala project is expected to be rolled out by the government by the end of 2018.
The pace of construction of National Highways has gathered substantial push. Till three years back, the country had just 96,000 km of national highways, but this has grown to nearly 1.7 lakh km, and is soon expected to reach a length of 2-lakh km.
North East ahoy
Putting its focus on development and improvement of road infrastructure in the northeastern region of the country, the government has announced a slew of measures following the clarion call of Prime Minister Modi in calling the northeast the new engine for India’s growth in the recent past. According to a reply to the Parliament, According to the details of road widening projects provided by the Minister of State for Road Transport and Highways Mansukh L Mandaviya, the work on Imphal-Moreh section of NH-39 in Manipur and another section Shangshak to Namphisa are also on the anvil.In Meghalaya, the plan is to improve Shillong-Dawki section of NH-40 Tura-Dalu section of NH-51.
Along with this, Baghmara-Rongra-Mahdeo-Ranikor and a section from Assam-Meghalaya border to Dalu via Baghmara will also be developed.In the state of Mizoram, the plan is to develop sections “Seling-Zowkhathar and on NH-302 from Lunglei to Tlabung and state road from Tlabung to Kawarpuchhiah.”The ‘North East Road Connectivity Project (Phase 2)’ aims at improving the connectivity in the region by upgrading roads and bridges. Japan International Cooperation Agency (JICA) has entered into an agreement with the Government of India to facilitate official development assistance (ODA) loan of 38,666 million Japanese Yen (to the approximation of about Rs. 2,500 crore)
This assistance from JICA will help in laying bypasses for NH-40 in Meghalaya and NH-54 bypasses in Mizoram, which are the targeted sections in the project. According to the details by the ministry, the targeted section of NH-40 is from Shillong to Dawki in Meghalaya with the length of 81km. The project entails widening roads to two-lane highways of 35.8 km and to four-lane highways of 10.19 km (46 km in total length), constructing five new bypasses of 21.4 km in total.
NH-54, located in central Mizoram, includes four bypasses from Aizawl to Tuipang in Mizoram, covering a length of 24.04 km.These projects will also improve connectivity with neighboring Bangladesh and Myanmar.
While delays and hurdles stall some of these developments, making them miss their deadlines, the sector at large is looking at brighter and prosperous destinations and landmarks to be achieved in the coming times.
@EPC World Media