To award 7k-km by public funded model, 3k by PPP: Road secy

The road space has come under the radar of troubled infrastructure space, along with power. Vijay Chhibber, secretary - ministry of road transport & highways, says last year was extremely difficult. He says, this year the emphasis will be on public funded projects, moving away from last year’s over emphasized build–operate–transfer, or BOT, projects.

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Chhibber says there is a plan to award about 7,000 kilometers by way of public funded projects and maybe around 3,000 kilometers by way of public private partnership (PPP) projects. There would be a possible lag in PPP projects because markets still don’t seem to have stabilized, he adds. The target of 3,000 km for PPP projects is ambitious but wants to hold on to the target till December-end because there is no guessing for when the markets may turn around, he says.
Indian concessionaires are not having a kind of liquidity that was assumed when the PPP architecture was drawn out, but it is still too early to scale back the projects, says Chhibber. 
Up to July, 933 kilometers of projects have already been awarded. Though this is less than the target, there are hopes of catching up by October-November, he adds. Up to October, around 3500 km will be awarded, he says. Below is the verbatim transcript of Vijay Chhibber’s interview on CNBC-TV18 Q: How many projects or how many road kilometers has National Highways Authority of India (NHAI) been able to bid out at all, one hasn’t heard of too many and there are about 3-4 months into the financial year?
A: Last year has been very-very difficult so there is a carry forward of that lag. Taking a cue from what happened last year that is the over emphasis on build–operate–transfer (BOT) projects. For the current financial year we have changed that and we are now emphasizing a little more on public funded projects.
We have plans for about 7,000 kilometers to be awarded by way of public funded projects and maybe around 3,000 kilometers to be awarded by way of public private partnership (PPP) projects. There would be a possible lag in the PPP projects because the markets still don’t seem to have stabilized. As you mentioned rightly that NHAI has series of about 20 projects bid out which we did not get any response but I think with the focus shifting to the public funded projects there would be enough available for the industry during the current financial year. Q: How many of engineering, procurement and construction (EPC) have you already given out?
A: Up to July, 933 kilometers of projects have been awarded and while this is less than the target we hope that we will be able to catch up by the time we reach into October-November. It should also be noted that the EPC projects that we are emphasizing in this fiscal require 90 percent of the land to be acquired before the projects are bid out as against 60 percent land for the PPP projects. To that extent there is some delay in getting the pre-bid issues sorted out but once these are sorted out in the second half of the year there would be large number of projects being brought into the market. Q: This 933 kilometers that were awarded were with 90 percent land acquired?
A: All EPC projects now would be with 90 percent otherwise we will not even take it to the appraisal stage. All projects that are now being awarded are those where all the pre-bid issues have been sorted out. Q: Do you think this FY14 target that you have laid out is quite aggressive and you may need to scale it down considering the fact the awarding or rather there are no takers at this point in time for most of the projects that are already bid out?
A: As I mentioned the target of 3,000 km for PPP projects is an ambitious target. We will still like to hold on to that target at least up to December because it is anybody’s guess when the markets will see a turnaround. It is also a fact that Indian concessionaires do not have the kind of liquidity that was assumed when the PPP architecture was drawn up. I think it is still too early to scale back the projects. In any case the EPC portfolio is substantial and the industry will be something going forward. In fact, if we do even 80 percent of this target we would be achieving a record performance in the current fiscal. Q: Can you give us some idea of what is definitely going to be bid out in the next quarter where one has clear visibility where perhaps if not 90 percent, 80 percent land acquired or permissions got – some number that the industry can cling to for the next few months?
A: Up to October certainly something like 3,500 kilometers would get awarded and this is a target we feel that is still sustainable.
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