The N38 Highway (representational image) | Flickr
FM Nirmala Sitharaman said the government will undertake 'accelerated development of highways'. | Representational image | Flickr
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New Delhi: The Prime Minister’s Office (PMO) has received suggestions that the National Highways Authority of India (NHAI) should stop constructing road projects and has sought a response on the matter from the Ministry of Road Transport and Highways headed by Nitin Gadkari.

The PMO is peeved about road infrastructure having become “financially unviable” and is concerned over “unplanned and excessive expansion” of roads declared as ‘national highways in principle’.

It also wants the road ministry to examine whether the NHAI should instead become a road asset management company.

The suggestions that the PMO has received about the road sector were flagged by Nripendra Misra, Principal Secretary to PM Narendra Modi, in a letter to Highways Secretary Sanjeev Ranjan, dated 17 August. Misra’s letter, accessed by ThePrint, did not specify where the suggestions came from.

“Road infrastructure has become financially unviable, private investors and construction companies withdrawing from greenfield road projects. Model hybrid annuity and EPC (where the government funds 100 per cent of the project cost) mode, with all investment made by government, is unsustainable. Reform needed,” Misra’s letter states.

The letter also directs the highways secretary to examine the suggestions from the point of view of adoption/feasibility, and send his response by 23 August. Ranjan could not be contacted despite repeated attempts, and ThePrint could not independently confirm if he has responded to the PMO.

Fund crunch

Misra’s letter comes close on the heels of the PMO putting on hold all ‘in-principle approvals’ given to state roads that were to be declared as national highways.

ThePrint had reported on 20 August that following a review meeting taken by Misra, a high-level inter-ministerial panel headed by Cabinet Secretary P.K. Sinha has been formed to vet a new set of comprehensive guidelines before a state road is declared a national highway.

The PMO had stepped in as it was alarmed at the unplanned expansion and the impact on the exchequer at a time when the ministry is facing fund constraints.

The NHAI’s debt, as on March 2019, stands at Rs 1.78 lakh crore.

The problems of the sector have been further compounded by the fact that private developers are not showing interest in bidding for highway projects.

Take, for instance, the ambitious Bharatmala phase-I project, under which 34,800 km of highways have to be developed. Until March 2019, 255 projects with an estimated cost of Rs 10,000 crore have been awarded. Of these, just two projects have been awarded on the public-private-partnership model.

Other suggestions

Another suggestion the PMO has received is to prepare national highway grid blueprints and sanction it for all roads that actually need to be taken up as national highways until 2030.

The PMO also wants the road ministry to examine the suggestion that the NHAI needs to re-look the commercial orientation of projects.

“For each financially unsustainable project to take a conscious decision thereafter on how to meet the gap, if project is to be taken up. Viability gap funding by the government for these projects, if considered, should be done upfront,” Misra’s letter states.

There is also a call for aggressive monetisation of NHAI assets by auctioning completed highway projects to private players for operation and maintenance.


Also read: India’s national highways have ‘black spots’ and they are dangerous


 

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9 Comments Share Your Views

9 COMMENTS

  1. AS per the economic condition as stated by PMO , NHAI should immidately STOP , such projects , which are not so necessasry, like Dwarka Expressway pakage -1 , as this will involver , land acquisation at very high Rates , and the number of Trees to be cut are more than 15,000.
    The construction of Dwarka Expressway pakage -2 , has already started , and will conect at Dwarka RUB at Sect-21 , therefore , there is NO NEED to extend it to Shiv Moorty or to Vasant Kunj, which will be mere wastage of Public Money and well grown GREENERY.

  2. Investment in Road projects has multiplier effect in the economy which drives many industries hence sudden brake on Road project will have a repercussions on Road Equipment, CV and other material supplier’s. Road Ministry should have well thought Model when it switch over to EPC & HAM mode from DBFOT where there is no taker as Bankers do not approve the viability of the project to fund the Debt portion. MoRTH has to find ways and means to attract private investment under DBFOT projects which are viable. notifying the State HW, MDR to NH’s to be made judiciously.

  3. NHAI should stop the construction of new roads having the width of 45 meters in kerala. kerala state is Very thickly populated state and huge evacuation is needed for the proposed construction. To solve the ongoing traffic problem the state government can implement 30 meter road of four lanning using the existing road.

    • The new road projects are for 10,000 crores 3000 crores round figures. How could it be so. Are budgets allocated for the need on ground, or projects prepared for funds allotted?

      Recently in Madurai they are proposing 3000 crores 83 kilometers Northern Ring Road.

      Same stretch there is already alternate State Highway. State Highway is project for lanewidenjng for 30 crores.
      Whereas NHAI has already undertaken 3000 crores new road project. Irony is that the NHAI rushed with notification after 1 month since State Highways notified.

      Infact the central Government can direct the investments on building enviornment friendly mass economical transports by laying new Rail lines.
      Rail lines will help cheap and mass transport.
      Whereas these roads with individualized car traffic will harm by carbon emissions.

  4. Market borrowing of NHAI has been taken to unsustainable levels. Now NHAI is borrowing just to service it’s earlier debts. Road cess was introduced by the GOI way back in 2000 to give NHAI funds required to construct highways. There was specific formula under which specific amounts used to be granted to NHAI. NHAI was created to do away with the lucrative agency system under which the ministry was getting projects done through state PWD’s.. NHAI completely stopped agency system awards and started doing all NH projects itself.
    Money coming through corrupt PWDs stopped. In 2012-13, the MORTH, wanting to get back its milch cow, set about transferring to itself funds allocated to NHAI. Then the ministry reintroduced the same agency system which was done away with, with the creation of NHAI and started directly awarding projects. The ministry also created another company by an executive order NHIDRCL, which started doing the exact work allocated to NHAI under a parliamentary mandate, thus cocking a snook at the parliament itself. Gradually all cess flows to NHAI was reduced and NHAI was compelled to resort to market borrowing of unsustainable magnitude. Thus the Ministry of Road Transport and highways destroyed the parliamentary mandate given by the passing of NHAI Act, 1988

  5. Declaration of NH should be based on certain traffic criterion of present and expected traffic
    The already declared NH if not fitting in the criterion May reviewed and may be de notified to avoid recurring expenditure and NHAI should take up four lane, six lane , and expressway only and majority of the projects should be developed under HAM / DBFOT

  6. In state of Kerala density of population is very higher than other states. Also 75 percent of land in Kerala is affected by recent flood and availability of inhabitable land is very less. Already 30 metres width of land is available for development of NH-66 in majority of the stretches. NHAI should consider alternate to build stretches of NH-66 in Kerala in 30 metres which can save lots of money for acquisition and avoid hurdles in acquiring more land due to public resistance due to non availability of inhabitable land in Kerala and it’s high density of population.

  7. The NHAI should be instructed to complete the balance four lanning of Delhi to Chennai via Nagpur and Mumbai to Kolkata via Nagpur to treat it as a highway grid including golden quadrilateral which is already four lanned to ease the traffic movement for the farmers to reach their produces to fetch them better prices

  8. Minister Nitin Gadkari is an astute businessman. He might wish to apply the same standards of viability appraisal to NHAI as are standard for the Purti Group. 2. I have consistently posted that humongous sums of money have been given for road and rail projects, including funds borrowed from captive sources like LIC. Many of these projects are not financially viable. One is very happy to observe that remedial action is being initiated.

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