Ever since the enforcement of the new Land Acquisition Act, the cost of land has become a major component of the total project cost. Hence, there is a need for re-thinking on the issue of reducing the extent of land acquisition. "But we are not going to compromise with our standards. Rather than thinking of 30-40 years, we can think of the next 20-25 years," RK Pandey, Member Projects, National Highways Authority of India (NHAI), tells INFRASTRUCTURE TODAY.
The first half of FY 2020 saw a decline in the awarding of projects. Since this is likely to affect capacity addition, how do you plan to meet the shortfall?
No, we don't see any shortfall as we have awarded 1,600 km of road projects so far. Even if we proceed at the current pace, the total award would be over 3,000 km by the end of the financial year. We intend to award 4,500 km and we are in the process of appraisal, approval and land acquisition.
Despite all the speculation about the health of NHAI and concerns over funding constraints by road developers, the agency remains confident about meeting its road-building targets. What is the reason behind this optimism?
Where is the question of thinking otherwise? Last year we had awarded 2,300 km and this year we are, under any circumstances, going to award more than 3,000 km. Therefore, we are going to do better than last year.
Private developers remain apprehensive about the BOT model and have sought more clarity on the issue. How would you allay their concerns?
The only way to do that is through consultation. For example, when we wanted to revive BOT projects, we invited all stakeholders. We heard them out and tried to dispel their apprehensions. We are modifying the model concession agreement to that extent.
In August, the Prime Minister's Office (PMO) had asked NHAI to focus on monetising the road and highway assets that the agency had created since 2014. Your comment! We are already monetising our assets. ToT money is one of the major sources of income in the implementation of road projects.
How do you seek to enhance e-toll collection through RFID in conjunction with state governments?
Today, both states and NHAI are developing BOT projects. If we have a tag that is only applicable on highways developed by NHAI, the road user might face issues while using a state highway and will end up using multiple tags. However, if there is one tag for all kinds of roads than it will help to enhance e-toll revenues.
Since land acquisition remains a challenge, there is plenty of talk about NHAI rationalising its requirements for future projects. How do you intend to achieve this?
NHAI is the executing agency of the Ministry of Road Transport & Highways. The programme is formulated by the ministry that assigns us certain stretches. Now, the ministry has given us 22,000 km. I will have to take care of my finances, market capacity and capacity of the concessionaire before giving the award. Our maximum award could be in the range of 6,000-7,000 km. So, out of the overall target we have to select a few. And that selection is done based on return on the project or our preparedness. It's a normal exercise that we undertake all the time. The point is that when our standards were formulated, the cost of land acquisition was very nominal. Ever since the passage of the new Land Acquisition Act, the cost of land has become a major component of the total project cost. Therefore, we will have to certainly think of reducing the extent of land acquisition. But we are not going to compromise with our standards. Rather than thinking of 30-40 years, we can think of the next 20-25 years. To that extent, we have already formulated our guidelines and are currently in the process of implementing them.
There is a proposal to get land acquisition affected parties to invest in NHAI bonds. Tell us something about that?
Regarding land bonds, there are many options that NHAI is exploring to ensure that we fulfill whatever tasks are assigned to us. To fulfill all those objectives, we will have to explore all kinds of possibilities. Land bonds are at the stage of conceptualisation. We are simultaneously working on several other options.
blurb "Regarding land bonds, there are many options that NHAI is exploring to ensure that we fulfill whatever tasks are assigned to us. To fulfill all those objectives, we will have to explore all kinds of possibilities."