Of the 27 high-density national highway corridor projects awarded two year back to road developers by the Centre, 24 sections have failed to take off due to different reasons, including delays in environmental clearances and land acquisition. The 24 sections of road projects worth a whopping Rs 34,000 crore and spans over 3,500 km. From these projects, the National Highways Authority of India (NHAI) had hoped to earn over Rs 1,00,000 crore through premium income, spread over a period of up to 30 years. Flagging the issue, NHAI Chairman RP Singh, in a recent letter to the road transport ministry, listed the affected projects and asked the government to expedite a bailout.
As in other infrastructure projects, the government can step into increase the viability of the project by bridging the funding gap, with the assistance taking the form of a capital grant. In 2011-12, NHAI awarded a record 51 projects covering 6,700 km, of which 27 were awarded to developers on premium. The problem with the projects bid on premium came to light during 2012-end, when the developers of the 555-km Kishangarh-Udaipur-Ahmedabad and 332-km Shivpuri-Dewas road projects sent termination notices, indicating their unwillingness to continue.
The companies cited the delay in getting regulatory approvals as the primary reason for the projects becoming unviable. Morevover, the cost of material required for building roads is estimated to have increased by 25 per cent since the time the projects were awarded.
Now, the government is discussing bailout proposals, including allowing the companies to offload the premium amount to be paid in the initial years to later years. The proposal has, however, failed to find acceptance in the law ministry, which feels that offloading of premium would require changes in the agreement.
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