Recent Developments: Government focuses on holistic sector growth

Government focuses on holistic sector growth

After a series of hits and misses, activity in the road sector has finally started to pick up. The majority of projects that had been stuck have broken ground. This is the outcome of an array of initiatives taken by the Ministry of Road Transport and Highways (MoRTH) to deal with the vexed issues facing the sector.  Bridging the digital divide and launching systems to ensure sound asset maintenance have been among the key focus areas. Innovative means of funding have also been explored to ease the liquidity crunch in the sector.

Indian Infrastructure takes a look at the major developments in the past year…

  • In a much-awaited move, in July 2017, the Public Investment Board (PIB) accorded approval to the ambitious Rs 10 trillion Bharatmala project, which involves the development of around 51,000 km of road length comprising economic corridors, coastal roads and expressways, to be implemented in phases. In the first phase, around 29,000 km has been planned for development at an estimated cost of Rs 5.5 trillion. The project will now be put before the cabinet for clearance. The Bharatmala project aims to replace the National Highways Development Programme (NHDP). Most of the project will be implemented on an engineering, procurement and construction (EPC) basis while giving the National Highways Authority of India (NHAI) full autonomy, irrespective of the project cost. However, in some cases, projects will be implemented on a public-private partnership basis, after attaining clearance from the MoRTH. Meanwhile, a detailed project report prepared by global consultancy firm AT Kearney has identified 44 economic corridors for development including Mumbai-Cochin-Kanyakumari, Bengaluru-Mangaluru, Hyderabad-Panaji and Sambalpur-Ranchi. These economic corridors will help open up India’s hinterland to development.
  • In March 2017, the Cabinet Committee on Economic Affairs approved the implementation of 403 km of road projects under the North East Road Network Connectivity Project (Phase I) in the states of Meghalaya and Mizoram. Of the approved length, 52 km will be in Meghalaya and 351 km in Mizoram. The project, which will be implemented on an EPC basis, has been approved at a revised estimated cost of Rs 67.21 billion (including the cost of land acquisition, resettlement and rehabilitation and other pre-construction activities) and will be funded by the government. Meanwhile, civil works and maintenance works are expected to be completed by 2021 and 2025 respectively. Two-laning of the roads will be undertaken with loan assistance from the Japan International Cooperation Agency.
  • In June 2017, the MoRTH launched INAM-Pro+, an upgraded version of INAM-Pro, the web portal designed by National Highways and Infrastructure Development Corporation Limited (NHIDCL) as a common platform to bring cement buyers and sellers together.  More than 700 construction companies have been using INAM-Pro for the past two years and have a committed supply of 27 million tonnes of cement at a price controlled by predefined ceiling values. The portal has made it convenient for prospective buyers to procure cement at reasonable rates and in a transparent manner. Thus, it has been upgraded to INAM-Pro+ to include construction materials, equipment/machinery and services (such as purchase/hire/lease of both new and used products and services in the construction sector).
  • In May 2017, the ministry received an overwhelming response to the issue of NHAI’s masala bonds on the London Stock Exchange. The initial benchmark of Rs 15 billion was upsized to Rs 30 billion at a price yielding 7.3 per cent annually due to the highly positive response from the investor market. The transaction marked the largest ever five-year issuance and the largest inaugural transaction in the masala bond market. Further, the issue attracted a wide spectrum of investors with Asia contributing 60 per cent of the subscription; the balance 40 per cent came from Europe. Further, 61 per cent of the amount came from fund managers and insurance firms, 18 per cent from government banks and 21 per cent from private banks.
  • In October 2016, the MoRTH launched the Indian Bridge Management System (IBMS). The IBMS is being developed to create an inventory of all bridges in the country and rate their structural condition to ensure timely repair and rehabilitation work. The system is the largest platform in the world owned by a single entity, with a database of over 150,000 bridge structures. As of July 21, 2017, inventory and condition survey has been conducted for 162,000 structures. Of these, 147 were found to be in poor condition.
  • In January 2017, the State Bank of India (SBI) partnered with a Bhopal-based skill development organisation, AISECT, for the roll-out of the electronic toll collection (ETC) programme across the country. AISECT will also be responsible for the nationwide sale and recharge of SBI’s prepaid account FASTag through AISECT-SBI banking kiosks, which will be used for toll collection across national highways. At present, there are 360 toll plazas on national highways where the ETC facility is available.