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Last Updated : Feb 16, 2016 03:43 PM IST | Source: CNBC-TV18

Expect 10% increase in Budgetary allocation to roads: NHAI

NHAI spent Rs 33,000 crore on road projects this year so far, an increase of 60 percent year-on-year, its Chairman Raghav Chandra tells CNBC-TV18.


The National Highways Authority of India is confident of awarding 5000 kilometers of road projects in FY16, its Chairman Raghav Chandra tells CNBC-TV18.

He expects the government to increase budgetary allocation to roads by 10 percent the coming year, and says the process of project approvals has improved.

NHAI spent Rs 33,000 crore on road projects this year so far, an increase of 60 percent year-on-year.

NHAI plans to issue another Rs 5000 crore worth of bonds in FY16, Chandra says.

He says NHAI has acquired around 9000 hectares so far in FY16, adding that the land acquisition cost has gone up.

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

Latha: Can you give us an update, we started FY16 with an expectation at least a political statement that the ministry will award 10,000 kilometres of roads, how much has been awarded year-to-date (YTD)?

A: Overall, we have awarded projects from the ministry side of more than 6,000 kilometres. NHAI itself has awarded more than 3,300 kilometres of road projects and there is lots of more work to be done and lots happening and lots will happen in the year to come.

Latha: We have got your numbers on projects awarded, what is the execution run rate? There a fairly tall target of 30 kilometres per day was mentioned by the minister. Are we anyway close to getting it and how would the constructed kilometres per day compare for FY16 vis-a-vis FY15?

A: I think there is going to be a definitive improvement over the previous year and this is increasingly possible because the number of projects that we have on the anvil is much larger. So the number of kilometres that you award or deliver in terms of completion is dependent on the number of projects that you have on the drawing board.

So more detailed project reports (DPRs) are getting ready, state governments are preparing DPRs, various bodies associated with the ministries are preparing DPRs, NHAI itself is preparing DPRs that is worth about 6,000-7,000 kilometres. So dependent on the number of projects that we have ready, we will have that much more projects to award and to complete.

Unless the basic stock of road projects is ready, we cannot do much but the good part is that there are more projects on the anvil, more project reports getting prepared, the process of preparing project reports is improving, they are using more modern technologies and we are generally pushing for a larger base of projects to be ready for the next year.

Sonia: Just to clarify, you did mention that the awarding of road projects has risen to more than 6,000 kilometres, I am assuming, in the April to December period. But can you tell me how many more projects have been approved and will get rolled out before the end of the fiscal?

A: I can speak for the part, which the National Highways Authority is directly handling and we are very confident that we should be able to do 5,000 kilometres of awards this fiscal and to be able to complete about 2,000 kilometres clearly of the national highway road projects. These are more complex projects and there is a lot of value added structures, bridges, flyovers, over-bridges, so these are complex projects but we are definitely moving as per our target.

Sonia: The government budgetary support to national highways was about Rs 85,000 crore in the earlier Budget, what is the expectation this time around?

A: I would expect that we should at least have a 10 percent addition over the last year. Even though sometimes there are revisions, I do feel that the highway sector is one sector, which is not going to have to face any major reductions and we should be able to have a positive trend of an increasing budgetary outlay.

Latha: How much have you so far spent from the NHAI's kitty itself year-to-date and how would that compare to your FY15 expenses?

A: Yes, we have spent overall this year so for about Rs 33,000 crore and I expect this to rise further and if you combine it with the private sector spending, overall this sector as far as the National Highways Authority is concerned, this would work out to about Rs 55,000 to Rs 60,000 crore worth of expenditure on national highway projects.

Latha: How much would that compare with last year, just to get an idea of growth?

A: I think it is about 60 percent more than the expenditure that was undertaken overall last year. So that is a significant jump in terms of expenditures on highway development and all the activities connected with that, land acquisitions, civil construction, project report preparation, consultancy fees and various other issues connected with that.

Latha: The previous interview to a newspaper you had mentioned that some of the money, you collected over Rs 13,000 crore through your bonds, the government may want to keep or want to ask from you. Should one conclude that finance is not the bigger problem that once again land acquisition and execution are the problems? You have enough money provided the construction is at a ready-to-go stage?

A: Yes, you are right to a great extent because though we had already raised Rs 13,000 crore worth of bonds, we intent doing another Rs 5,000 crore in the coming days.

We are going in for a private placement today itself for about Rs 1,828 crore through qualified institutional buyers (QIBs), high networth individuals (HNIs) and corporates and we will be on the 24th opening ourselves to another public issue of Rs 3,300 crore.

Yes, it is not always possible to get your projections absolutely right and there are other competing sectors, so we have allowed Rs 5,000 crore out of the Rs 24,000 crore that were allocated to us of tax free bonds to be allocated to other more priority sectors like National Bank for Agriculture and Rural Development (NABARD) or some other such related agricultural sectors.

Sonia: I also wanted to ask you about some of the legal disputes that NHAI has been with many of the infrastructure companies and that seems to be one of the hurdles to meet your target of laying roads. Do you expect in this Budget any kind of framework that would be laid down by the finance minister to reduce this burden of litigation?

A: Already, there is a new arbitration act, which has been brought in that reduces the time taken for settling such disputes, which streamlines the process of arbitration handling. All these are extremely positive measures.

Within NHAI itself, we have resolved many more disputes amicably through the process, which is embedded within the model concession agreement.

We have been more positive to accept arbitration orders of the arbitration tribunal. The number of cases that we are going in for litigation, have been reduced. So, overall there is an atmosphere, it is a mindset change where we are trying to resolve disputes amicably. The new arbitration act has also brought in more positive environment for this.

Latha: Is land acquisition getting any better at all? If yes, in which states?

A: I think by and large, we will have done about 9,000 hectares this fiscal and things are moving. Only some legacy issues are there where you acquire land for some part of the road under the earlier provisions and now some people have been paid without new provisions, they are also litigating. So the number of litigations and cases have gone up, but we are going through processes to resolve them as quickly as possible.

So land acquisition, costs have gone up but we are trying to handle it to the best of our ability.

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First Published on Feb 16, 2016 10:46 am
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