The Indian road sector is abuzz with activity. Government initiatives aimed at resolving pre-construction issues have started bearing fruit. At India Infrastructure’s recent ‘Road Development in India’ conference, Amit Kumar Ghosh, Joint Secretary, Ministry of Road Transport and Highways (MoRTH), shared his views on reforms in the road sector, and the launch of the Bharatmala programme. Excerpts…
Specific reforms for faster project execution
The targets for developing national highways are increasing every year and faster implementation remains the key challenge. To this end, a number of reforms and technological upgradation initiatives have been introduced to streamline the process from planning to execution. For instance, during the planning phase, surveys based on origin and destination are undertaken. The science of detailed project report (DPR) preparation is also being refined to include automatic traffic surveys and exhaustive studies. To deal with the issue of land acquisition, the Bhoomi Rashi portal has been launched, releasing compensation to land owners by linking it with the Public Financial Management System and digital mapping of the work in progress. Moreover, the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act has been adopted for compensation, requiring acquisition of at least 80 per cent of the total site area prior to the appointed date. For enhanced project monitoring, a project monitoring information system has been developed in-house.
We have tried to change the paradigm with Bharatmala. Under the programme, there has been a movement from point-to-point connectivity to a corridor approach, from lane expansion to new alignments, from the shortest route to connecting economically important nodes, from expensive land acquisition to access-controlled highways, from urban choke points to dedicated ring roads, from unorganised small-scale storage to large-scale logistics, and from last-mile hiccups to smooth end-to-end connectivity. With a total of 66,100 km to be developed, Phase I has 24,800 km to be completed by 2022. But the 10,000 km awarded in the ongoing National Highways Development Programme has not been abandoned and is also being undertaken, pushing the actual target to 34,800 km of national highways in the next five years. Since October 2017, work for more than 4,400 km has been awarded. The DPRs for the remaining length are also under way.
New models and asset recycling
While the engineering, procurement and construction model has been the preferred mode, the hybrid annuity model (HAM) has been devised to fast-track project implementation. HAM has found support from concessionaries, contractors as well as lenders. To move towards the asset recycling concept, the MoRTH has come up with the toll-operate-transfer model. The first bundle of the programme has been successfully bid out, comprising nine projects (six in Andhra Pradesh and three in Gujarat), covering 680.6 km. While the initial estimated concession value of the bundle first was Rs 62.58 billion, the consortium of Macquarie Asia Infrastructure Fund, Investments India Pte Limited and Ashoka Buildcon Limited bid for it for a period of 30 years for Rs 96.82 billion, reflecting a positive sentiment towards asset recycling in the market. Bids for the second bundle are likely to be closed by November 2018.
In the past, the NHAI has experimented and floated masala bonds in London, which received a good response. The creation of four infrastructure investment funds has already been approved by NHAI. Recently, the Ministry of Finance has approved NHAI’s proposal and has been given the go-ahead for floating Bharatmala bonds. While we welcome foreign investors and funds, the country, its citizens and various funds within the country can invest in Bharatmala bonds.