Moneycontrol
Jul 19, 2016 02:39 PM IST | Source: CNBC-TV18

Targetting road construction of more than 10000kms this yr: NHAI

NHAI has seen bidding complete for 50 projects, awarded 11 and has invited 15 bids this financial year, says NHAI Chairman Raghav Chandra, adding, NHAI has a construction target of more than 10,000 km of roads for FY17.


Thanks to the economic slowdown seen since 2011-2012, as many as 20 road projects have seen delays to the point the National Highways Authority (NHAI) has classified them in the 'languishing' category.

Along with State Bank of India, the NHAI has selected three projects for new fund infusion, said NHAI Chairman Raghav Chandra. "This is a step to revive construction works to make these projects operational," he said.

Speaking to CNBC-TV18, Chandra said the consortiums involved are Supreme Infra in Maharashtra-Goa project, Madhucon Projects Ltd in Bihar and SEW in West Bengal. Biggest among the three, is Supreme Infra's Panvel-Indapur project, which will to receive Rs 540 crore from the government.

NHAI has seen bidding complete for 50 projects, awarded 11 and has invited 15 additional bids this financial year, Chandra said, adding that it has a construction target of more than 10,000 km of roads for FY17.

He also commented on recent news that China Railway Construction Corporation (CRCC) had expressed an interest in taking part in EPC and PPP projects, saying that such a move would ease liquidity crunch in infrastructure projects and said NHAI was open to tweaking rules to allow CRCC to come in.

Below is the verbatim transcript of Raghav Chandra's interview to Latha Venkatesh and Sonia Shenoy on CNBC-TV18.

Sonia: We were speaking with the management of Supreme Infra yesterday and they indicated to us that there is some attempt that the government is making to revive some of the stuck projects, can you tell us exactly what is the infusion in terms of funds, what is the amount of stuck projects currently and what is being done by the NHAI in order to revive these projects?

A: We have about 20 projects, which are exceptionally delayed and as a result of which they have been termed as languishing projects, these are legacy projects dating back to the periods 2011 to 2012 and Panvel-Indapur is one of those projects for which the agreement was signed in January 2011, which is six and a half years ago and where only 40 percent physical completion of the work could be attained. So we have decided to revive this project to facilitate completion.

As a result of this decision, it will entail fund infusion from NHAI's side. First the bank in this case, the State Bank of India (SBI) has come forward to finance the project to a level because the Supreme Infra seems to have run out of funds to finance the project, to get it completed up to a level of 50 percent completion where upon we are committing to infuse as per our scheme for fund infusion to a level of Rs 540 crore. This will mean a great deal of effort on the part of the concessionaire, which is Supreme Infra, great responsibility on it to get the project completed now up to a level of 50 percent whereupon they will be facilitated with fund infusion from our side and we will ensure that they are requisite safeguard to ensure that the money that we gave is utilised only for construction, it is in no case diverted and that the project gets completed at the earliest. So that we will set in motion a standard operating procedure for that and we are hopeful that this will ensure that this is very critical project which connects Mumbai to Goa and which is also subject to a lot of accidents and fatalities every year -- I was told that last year the number of fatalities on this road was 120 by the District Collector of Raigad so we will ensure that adequate safety features are put in and this project comes onstream and gets completed.

Latha: How much is SBI putting in first?

A: The lender would be putting in another Rs 50-60 crore to help the project attain provisional completion.

Latha: Anything coming from the contractor at all, Supreme?

A: Yes, there would be fund infusion equity contribution from Supreme as well.

Latha: Any other project that you have taken up on a similar fashion?

A: There are two other projects that we have taken up in a similar fashion and one of them is Chhapra-Hajipur in Bihar, this too was a languishing project, dating back to January 2011 and in this case more than 50 percent work has been done. So it is an annuity project and because work could not be done because conditions precedent on both sides were not fulfilled, land had not been delivered in time because the costs had gone up. So to compensate the project, we are restoring annuities, which otherwise had evaporated and we will be infusing funds to the tune of about Rs 150 crore and we expect SBI again is the lender in this case to infuse in an equivalent amount and about Rs 25 crore to come from the concessionaire itself and this will be given to the project at bank rate plus 2 percent.

Latha: Concessionaire is Madhucon?

A: In this case Madhucon and these two have been terribly languishing projects, nothing was happening on the ground and there were complaints from the district administration from the state. Another project that we have tackled similarly is in West Bengal which is Krishnagar to Berhampore connecting West Bengal to the Northeast. This is another critical important project significantly dating back to 2011 and in this case we will be restoring some annuities as well and we expect the project to also be able to get fund infusion from our side of about Rs 400 crore and to once again get started and come back onstream. This again is a SBI project.

In this case the concessionaire is a company called SEW.

Sonia: You had also earlier indicated that you are going to take a stern stance with respect to projects that have been long overdue and in cases where expenses and disbursements have seen a big gap as well. Have you identified any such players and any ones that you can tell us about?

A: We have identified but it wouldn't be fair for me to reveal their names. So it is work in progress and it involves also balancing the interest of getting project completed in time and looking at the alternative of terminating the project and bidding it out afresh with all its legal complications so maybe little later from now in a month or so, we should be more clear about how we are proceeding forward in these cases.

Sonia: Can you tell us what is the target that you have in terms of awarding of projects by the end of FY17 and how many projects have you awarded so far?

A: In this financial year we have already bid out overall 50 projects out of which we have awarded 11. 30 projects we have received the technical bids and they are under an advanced stage of evaluation and I expect that in the next two weeks we should get half of them through and another 15 bids have been invited. So that is for a total of more than 3,000 kilometers for projects costing overall about Rs 45,000-48,000 crore.

Latha: How much do you think you will bid out in the full year?

A: We expect to bid out more than 10,000 kilometres worth of projects. We are aiming to bid out about 11,000-12,000 maybe more depending on the project availability and we expect to award a substantial part of that envelope.

Sonia: What about actual construction and the target was to construct about 30 kilometres per day but I understand that as on June, the number is still much below that?

A: It is a work in progress and as far as construction figures are concerned, perhaps little later in the year, we would be able to give you a more accurate picture of where we are moving in that.

Latha: You are planning to allow China's CRCC also to participate in construction? Wouldn't that make like even more difficult for the domestic concessionaires?

A: A large delegation of their officials had come and met us and they made a projection of the good work that they have done in China and elsewhere. So I will not be surprised if they participate in our projects but I don’t see them necessarily cannibalising our concessionaires or our contractors perhaps there maybe tie-ups, which will occur and if that happens then keeping in view the financial liquidity crunch, which our contractor sometimes pays, there might be an easing of that.

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