With increased investment in infrastructure development, the country has transformed into one of the fastest growing markets for tunnel construction. A number of sectors such as railways, roads, hydropower, water supply and metro rail offer ample opportunities to contractors. The tunnelling market is dominated by the presence of a few big players who hold 80 per cent of the market share. Most of the contractors are present in multiple sectors. However, some contractors serve only a few specific segments. Top contractors across sectors include Hindustan Construction Company (HCC), Larsen & Toubro (L&T), Jaiprakash Associates Limited and IRCON International Limited. The joint venture (JV) model is the most preferred method for project implementation.
Contractors in different sectors
The tunnel development market is marked by the presence of primarily domestic contractors with very few foreign players. However, in the past few years, some foreign players such as Strabag and Transtonnelstroy have entered the tunnelling segment in the roads, metro rail, water and sewerage sectors by forming JVs with large domestic players. Some of the projects developed by the foreign players are subsea sewage tunnels in Mumbai and underground alignments for the Delhi metro by Austria-based Strabag. Its Indian subsidiary in collaboration with Afcons Infrastructure is also involved in the execution of the Rohtang highway tunnel.
Afcons has also partnered with Transtonnelstroy of Russia for the development of the Kolkata East-West Metro project comprising a 3.89 km stretch, including a 520 metre underwater section and three underground sections.
The railway sector has a fragmented market structure with the presence of big players in JV with other players as well as a number of small players. The sector is dominated by the L&T-Afcons Infrastructure JV, which completed the construction of 92 tunnels with a total length of 83.6 km under the Konkan Railway project. Other contractors in the railway sector include HCC, ITD Cementation India Limited, IRCON International, Continental Construction Corporation Limited, and Abir Infrastructure Private Limited.
The metro rail sector too has a similar structure with the L&T-SUCG Infrastructure JV being the dominant player. Some of the important projects undertaken by L&T (either individually or in JV) are the Delhi metro Phase III project (Janakpuri West-Botanical Garden), and the Hyderabad, Chennai, Kochi and Lucknow metro systems. Other important players in the sector are HCC, ITD Cementation, J. Kumar Infraprojects and Soma Enterprise. Foreign players in metro development include Continental Holdings Corporation (China) and OJSC Mosmetrostoy (Russia).
Tunnelling in the roads and highway sector too is dominated by only a few contractors. In the past, IL&FS Transportation Networks Limited (ITNL) developed a large number of road tunnels including the 9 km Chenani-Nashri project on the Jammu-Srinagar highway. The tunnel is the longest in country and also Asia’s longest bi-directional highway tunnel. However, debt-ridden ITNL will now return its under-construction road projects to the National Highways Authority of India for fresh bidding. These projects include the Z-Morh tunnel also known as the Srinagar, Sonmarg Tunnelway and the Zojila tunnel project in Jammu & Kashmir. L&T is another big player in this sector and has recently been awarded the construction of two tunnels with a total length of 6.9 km under the Mumbai Coastal Road project. In terms of length of road tunnels, the Border Roads Organisation (BRO) leads the market with two tunnel projects spanning over 25.4 km. The BRO has been actively undertaking the development of strategic roads in the northern and north-eastern regions such as the Shinkula pass tunnel and Baralacha tunnel projects. HCC and Navayuga Engineering Company Limited are the other players present in the sector.
In the hydropower, irrigation, and water and sewerage sectors, HCC dominates the tunnel construction market. In the hydropower sector, the company has completed more than 335 km of tunnelling projects of which over 183 km is in the Himalayan region. Some of the major projects undertaken include the Uri II hydroelectric project in Jammu & Kashmir and the Chamera III hydroelectric project (Stage III) in Himachal Pradesh. The firm has developed seven water supply tunnels of 49.59 km, two irrigation tunnels of 103.39 km and one sewerage tunnel of 2.6 km. Some of the water supply tunnels constructed by the company are the Maroshi-Ruparel tunnel, and the Bhandup Complex-Charkop tunnel in Mumbai. Other firms that are active in the water and sewerage sector include Patel Engineering, Gammon India Limited, Soma Enterprise and Jaiprakash Associates.
Key challenges faced by contractors
The tunnelling experience so far has been mixed. While some projects have been successful other projects have encountered a number of challenges in implementation which has led to time and cost overruns. Though project execution has improved over the years, it is far slower than desirable. Apart from geological complexities, the contractors face a number of other challenges such as contractual issues, land acquisition, slow dispute resolution mechanism, etc.
Construction contracts often have unclear terms and conditions, ambiguous roles and responsibilities of contractors and project developers, and a skewed risk sharing mechanism. Any change in the contract due to changes in designs, quantities or specifications leads to disputes. The slow litigation and arbitration process results in projects getting stalled and hefty cost overruns for the developer. Many projects, especially in the hydropower sector, such as the Parbati Stage II project in Himachal Pradesh, have been delayed due to contractual issues. In the metro rail sector too, projects such as the Chennai metro, Phase I (AGDMS-Saidapet), and Mumbai metro, Line 3 have faced implementation delays.
It is therefore, important to design contracts that are not only well planned, but also balanced. There should be an equitable risk allocation and the contractor should be treated as a partner in the execution of the project. It is necessary to complete the project studies, soil investigations, etc. and mobilise all the re-
sources before starting construction. In case of any unforeseen circumstances, timely decisions help in faster implementation of the project and prevent timeline extensions.
Land acquisition too poses a big challenge for tunnel construction as contractors cannot begin construction work in areas where land has not been acquired on time. Some projects which have faced implementation delays are the Kochi metro project, the Katra-Banihal railway project, the Koteshwar hydropower project in Uttarakhand and the Rangit II hydro project in Sikkim.
Frequent agitations by local populations have also led to disruptions in the construction of tunnel projects. The Vishnugad, Pipakot, Subansiri and Teesta projects have been delayed due to protests by local people who feel that their rights have not been protected. Law and order problems in the state of Jammu & Kashmir have also disrupted projects.
There is also a huge gap in the availability of skilled workers for manning high-tech equipment such as tunnel boring machines. Over 80 per cent of the workforce is unskilled and migratory in nature. There is therefore a need for trained manpower with the requisite skills. Other issues faced by tunnel contractors include safety of workers, lack of dumping sites, especially in cities, and the adverse impact on the environment due to tunnelling activities.
It is critical to address these challenges to ensure proper and timely implementation of projects in the tunnelling segment. The frequent extensions of project timelines lead to high cost overruns for contractors. This not only affects their financial health, but also leads to delays in the implementation of important projects and the accrual of benefits to the people.
The tunnel construction market in India is dominated by a few players. The current project pipeline offers huge opportunities to these players especially in the hydropower, metro and road sectors. However, to fully reap the benefits of these opportunities contractors must make a concerted effort to mitigate the risks. Innovative technologies and new materials need to be used for project implementation. Contractors also need to collaborate with local people to address issues related to land acquisition, resettlement and rehabilitation. It is necessary that both owners and contractors shift from the “entity mindset” to a “project mindset” that enables cooperation between the parties and leads to faster achievement of targets.