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.
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.
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.