The road sector has witnessed a new high ever since the government initiated a slew of reforms. New government programmes have been launched and work under the existing programmes has been expedited. In order to quantify the opportunities, India Infrastructure Research tracked a total of 493 road projects in the national highways (only under bidding and upcoming projects) and state highways segments. These projects entail a total investment of over Rs 12 trillion (cost estimates include several big-ticket expressway projects). In terms of investment, 9 per cent of the projects have been completed, 17 per cent are currently under implementation and 74 per cent are on the drawing board. With regard to the mode of implementation, in terms of number, about 57 per cent of these projects are under the engineering, procurement and construction (EPC) mode, 38 per cent are under the public-private partnership (PPP) mode and the mode of implementation for the remaining is either not available or yet to be decided. The pipeline highlights a wide range of opportunities, which will be put on the block for developers/contractors in the next one-two years if found to be feasible.
Completed projects
According to India Infrastructure Research, a total of 64 state road projects spanning a length of 5,900 km have been completed after 2011. These projects, worth Rs 1 trillion, were completed in Tamil Nadu, Andhra Pradesh, Maharashtra, Uttar Pradesh, Rajasthan and Bihar. Most of these projects have been completed on a PPP basis. Among the projects entailing high investments are the Agra-Lucknow Expressway (Rs 132 billion) in Uttar Pradesh, the Mukarba Chowk-Wazirabad Chowk Elevated Corridor Project (Rs 8 billion) in Delhi, the Sion-Panvel Expressway (Rs 17 billion) and the Mumbai Eastern Freeway (Rs 13 billion) in Maharashtra, the Hyderabad-Karimnagar-Ramagundam four-laning project in Andhra Pradesh (Rs 22 billion) and Phase I of the Chennai outer ring road in Tamil Nadu (Rs 13 billion).
Under-construction projects
There are 118 key ongoing state road projects with a combined length of over 6,700 km. These are expected to mobilise an investment of over Rs 2.03 trillion. The majority of these projects are likely to be completed between 2018 and 2020.
These include 56 projects worth over Rs 824 billion which are being implemented on a PPP basis while the remaining are being implemented on an EPC basis. Some of the ongoing big-ticket state road projects are the six-laning of Section VII of the Ranchi ring road project, the bridge across the Godavari river on the Eluru Gundugolanu Kovvur road in Andhra Pradesh, the Signature Bridge project in Delhi and the Bakhtiyarpur-Tajpur bridge over the Ganga river in Bihar.
On the drawing board
India Infrastructure Research estimates that the road sector currently has about 311 projects on the drawing board. These are projects which are at the feasibility/detailed project report stage or are under bidding.
These projects are expected to entail an investment of close to Rs 8.78 trillion (only those projects for which cost estimates are available have been considered). Segment-wise, 65 projects are planned to be implemented in the national highways segment. These include several expressway projects which have been put on the drawing board by the Ministry of Road Transport and Highways (MoRTH) such as the Vadodara-Mumbai and the Bengaluru-Chennai corridors. Of the pipeline of national highway projects tracked by India Infrastructure Research, there are 20 projects covering a length of over 1,600 km worth Rs 388 billion which will be implemented on a PPP basis. Eight of these are planned to be awarded on a hybrid annuity model (HAM) and the remaining on a build-operate-transfer basis.
The state road sector too offers a lucrative pipeline of projects. In the past one to two years, several states have created a huge shelf of road projects which offer investment as well as construction opportunities. As per India Infrastructure Research, there are 246 key state road projects which are in the pipeline. These involve an investment of over Rs 7.7 trillion. Some of the top upcoming projects are the Mumbai-Nagpur Expressway, the Mumbai-Trans Harbour Link (MTHL), the Pune Ring Road, the Versova-Bandra Sea Link, the Mumbai Coastal Road project, and the Yamunanagar-Bawana Expressway project. Among these, the MTHL, the Pune Ring Road and the Bengaluru Peripheral Ring Road are among projects that have been on the drawing board for a long time.
The way forward
The road sector has undoubtedly witnessed a complete turnaround in activity since 2014. On the financing front, the government is changing the way it channelises funds, with the emergence of new funding avenues. Long-term sources of financing are now being tapped. The launch of the toll-operate-transfer (TOT) model to monetise the existing asset base is one such step. Initially, nine projects have been put on the block. The MoRTH has clearly stated its intent to adopt a robust mix of implementation models for sound functioning of the sector in the future. The ministry has successfully tested the waters with HAM and floated projects on a TOT basis. These initiatives highlight a shift in strategy from overdependence on only one mode of implementation.
On the policy front, while all the key stakeholder demands have more or less been met by the government, effective implementation of the new models and timely resolution of issues will prevent the sector from slowing down once again.
However, the government believes that there is a need for all stakeholders in the sector to introspect and identify the gaps. In addition to the pipeline of projects in the national and state highways segments, the central government has launched programmes such as Bharatmala and Setu Bharatam which highlight huge opportunities for stakeholders ranging from consultants to contractors, and equipment, material and technology providers going forward.
