After having awarded a total of 3000 km road projects in FY15, National Highways Authority of India now aims to award 9000 km road projects in FY16, says member- Finance Satish Chandra.
In an interview to CNBC-TV18, Chandra says the road authority also deferred premium payments for 13 projects to the tune of Rs 7000 crore in FY15.
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Furthermore, Chandra adds the FY16 expenditure is likely to be about Rs 75000 crore.
Below is the verbatim transcript of Satish Chandra’s interview with Latha Venkatesh and Sonia Shenoy on CNBC TV18.Latha: Since this is the last day of the year, how many kilometres of roads have been bid out and is there any last nine or ten projects that under bid at this point in time?
A: This year we have awarded 3,000 kilometers, total 27 projects as compared to last year 1,435 kilometres.
Latha: Anything still underway or we are done for the year?
A: No, we are done for the year. All bids are become finalised.
Sonia: So, 3,000 kilometres by the end of FY15. Any initial targets of what FY16 could look like, how many road projects could be awarded in the next fiscal?
A: Our target for next year is about 9,000 kilometres and about 50 percent of it will be either in build, operate and transfer (BOT) or hybrid annuity mode and the remaining 50 percent in engineering, procurement and construction (EPC) mode.
Latha: Have you all increased the viability gap funding for any of the projects that you last bid out?
A: Viability is like, this year we awarded three BOT projects and all these projects are on Viability Gap funding (VGF) from 17-40 percent. So, we are not getting premium in most of the projects and most of the projects are awarded on grant.
Latha: Which were these three BOT projects?
A: They were in different states, I do not remember the names.
Sonia: Out of these 3,000 kilometres of projects that you have awarded by the end of FY15, currently how many projects are under the bid evaluations stage?
A: All projects have been finalized and LOAs have been issued. And in fact out of 27 projects in 8 projects the works has also started. So, our performance this year has been very good as compared to last year.
Latha: In terms of money that you all spent for this year’s and previous year’s projects, how much was the investments from National Highways Authority of India (NHAI) this year? How does it compare with the previous year?
A: Our expenditure for current year is about Rs 22,000 crore. Last year it was about Rs 21,000 crore so, it is more or less same. But next year our expenditure is expected to be about Rs 75,000 crore. That is about Rs 55,000 crore more.
Latha: And how would you raise that money?
A: We have got extra allocation of Rs 15,000 crore from our budget and Rs 40,000 crore will come from borrowings. That is the net increase in the expenditure would be about Rs 55,000 crore as compared to last year.
Latha: When you say borrowings, would some of it be or all of it be through tax-free bonds?
A: We have requested ministry of finance for allocation of Rs 20,000 crore for tax-free bonds and remaining Rs 20,000 crore we are exploring various options like EPF or pension funds, commercial borrowings, etc.
Sonia: Can you give us the names of any of the projects which are currently getting cleared or are up for awarding?
A: If you want I can readout the list.
Latha: Yes, that will helpful. Especially the first branch of projects that will go.
A: You want this years list?
Latha: Yes, the last lot that has been awarded.
A: We have awarded 27 projects in the current year.
Latha: If you can give us the last set.
A: Last set, one is Aurangabad-Yedeshi, it was on BOT grant. Kaithal-Rajasthan Border in Haryana, Bikaner-Phalodi, these three projects were on BOT grant. Then 24 projects were on EPC mode and some of the important projects are Jaisalmer-Barmer in Rajasthan, Chhapra-Muzaffar in Bihar, Thanjavur-Pudukkottai in Tamil Nadu, Patna Gaya Dhobi, Phalodi-Jaisalmer, Chandikhol in Odisha. Then Bijapur-Gulbarga-Humnabad in Karnataka, like this.
Latha: You all had allowed companies to defer their premium payments. Is that lot over or are still some left where you want to negotiate and allow them to defer their premium payments?
A: This policy came into being in the current financial year 2014-2015. And this year for 13 projects we have deferred the premium and the deferred premium amount is about Rs 7,000 crore. And I think more or less the work is over; now we do not get more than one or two projects every month or so.
Sonia: For a lot of these projects, last year the big problem was the environmental and the forest clearances that did not come through very easily. This year has that situation eased up a bit. Are you seeing faster clearances come through?
A: There is a lot of improvement, like for example in 2010-2011, 2011-2012, we are awarded about 12,000 kilometres without adequate preparation in terms of land acquisition and forest clearance. And about 4,500 kilometres of this length had to be terminated last year and after about two years or so we could not arrange for land acquisition and forest clearance. Now the current government has simplified the procedure, both for the environmental and forest clearance. Projects up to length of 100 kilometres do not require environmental clearance, road projects. And similarly, for forest clearance, powers have been delegated by minister of environmental forest (MOEF) to their regional offices in the state capitals and after forest clearance stage one, we are allowed to cut trees. So, forest clearance we will saving about 6-7 months. Earlier it used to be in two stages, now it will be only in one stage and powers have been delegated to Regional Offices (RO).
Latha: So, now in the first ranch of the new year’s awards, are you prepared with forest clearances and land acquisitions?
A: Now NHAI, ministry, ministry of finance, all these three bodies have decided that no projects be awarded unless you have 90 percent land in your hand and forest and environmental clearance are also available. For now, all the projects are awarded with full preparation. That is the reason like in 2012-2013, we awarded 11 projects and work on all these 11 projects has started. 2013-2014 we awarded 15 projects and work has started in all the 15 projects. And the current year out of 27 projects awarded, work has already started on 8 projects. So, unlike previous years, now we are awarding projects after full preparation and then there would be no slippage of it.
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Latha: That is why I am asking for the 9,000 kilometres that you are planning for the next year which starts actually tomorrow. Are you already prepared with land acquisition? Simply because land acquisition today is way more difficult than what it was in 2012-2013 or 2013-2014.
A: Now, for all these 9,000 kilometre length, we require about 27,000 hectres more and this land will have to be acquired in the current year. Now let us see how this land acquisition ordinance and bill has turned out to be. And once things are clear we will go ahead.
Latha: So, for these 9,000 kilometres you all have not started any groundwork in terms of land acquisition?
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A: We started last year, year before, but even now 27,000 kilometre length more is to be acquired. During last two months or so like January, February, there has not been much acquisition because of these uncertainties. And land acquisition officers in various states, they are waiting for things to stabilize. There is a demand from the public that compensation be awarded as per new act. Whereas, as per the ordinance and the existing act, for ongoing land acquisition cases we are expected to give compensation as per old act. So, the matter has been referred to ministry and let us see how it turns.
Latha: What is your sense? When will it be resolved?
A: It will be resolved in another two weeks. The case has gone to ministry of rural development and ministry of law and we expect that in another two weeks time we will get immediate clarifications.
Sonia: For the recent BOT projects for which tenders have been finalized, can you share some names of which are the companies which have actually qualified for these projects?
A: Companies I might not be having but… I guess I have. Companies are like Sadbhav, GR Infra, Rajasthan, Dilip Buildcon, Gayatri ILFS, Transstroy, Corsan, Larsen and Toubro (L&T), Madhucon, IRB and Ircon, these are the prominent companies.
Sonia: You were telling us about the expenditure that you have of Rs 75,000 crore of which Rs 55,000 crore would be through borrowings and budgetary support. For the remaining Rs 20,000 crore, how soon would it be before you close these funds whether it is through the EPF or it is through the Pension route?
A: The proposal is under consideration Ministry of Road Transport and Highways (MORTH) and we have held two rounds of discussion with the EPF. And maybe by May end, we will finalise our course of action.
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