Progress in the road sector has been marked by heightened level of activity both in terms of award as well as execution of projects. In the past, the government successfully created an ecosystem attempting to debottleneck the sector. In the future, mega programmes such as Bharatmala and Setu Bharatam, and the development of economic corridors will be the biggest investment drivers. The National Highways Authority of India (NHAI) has set ambitious targets for the next few years, offering a plethora of opportunities to all stakeholders. At a recent India Infrastructure conference on “Road Development in India”, R.K. Pandey, member, projects, NHAI, shared his views on the progress so far with regard to project award and completion under the Bharatmala programme, future plans and targets and upcoming opportunities. Excerpts…
The road sector’s contribution to GDP is about 5.5 per cent. India has the second largest road network in the world of about 5.9 million km and over 65 per cent of the freight traffic is being carried on national highways.
As we reached the fag end of the National Highways Development Programme (NHDP), we envisaged the formulation of the Bharatmala programme. The primary aim of the programme is the development and improvement of the national highway network through a corridor-based approach. While we followed a corridor-based approach for highway development under Phases I and II of the NHDP, under Phases III-VII, corridors were subdivided into projects and as a result the implementation was spread across a 15-year period.
When the Bharatmala programme was planned, it was decided that it would be implemented in phases and would cover a total length of around 65,000 km. Phase I of the programme, covering a length of 24,800 km, was expected to be completed by 2022. The programme has been divided into six components – economic corridors; inter-corridor and feeder routes; national corridor efficiency improvement; border and international connectivity roads; coastal and port connectivity roads; and expressways. Besides, the whole programme also involves the completion of balance works of the NHDP.
The most important category under the programme is economic corridors, which connect points of economic importance, that is, points that are either the origin or destination of freight movement. With the aim of improving the efficiency of national corridors, besides ensuring a consistent user experience, NHAI has conducted a deficiency analysis, where a benchmark is set for facilities on the entire corridor. Another component of Bharatmala focuses on corridors which facilitate the development of backward and tourist areas that are not well connected. Similarly, improvement of connectivity to many major and minor ports and development of expressways constitute other important components of Bharatmala.
In the history of road development we have always followed existing alignments and never thought of developing greenfield corridors. With the introduction of the new act for land acquisition, the cost of land has gone up from 5-10 per cent of the project cost to 50-60 per cent. In fact, in some areas, the cost of land acquisition is more than the cost of the project. For Bharatmala, we were able to plan in a more systematic manner since we had access to new and more efficient technologies and solutions for project planning. As a result, the next wave of corridors was identified in a scientific manner. Before the implementation of Bharatmala, data on freight movement was collected across 600 districts, along with traffic census data at 1,500 points. The shortest possible corridors were selected for 12,000 routes carrying 90 per cent of the freight and drone mapping was used to identify choke points on the existing national highways.
In order to identify greenfield corridors, we conducted a life cycle cost analysis wherein we considered the cost of land acquisition, utility shifting, removal of structures, vehicle operation and road construction. These corridors usually pass through areas that are not well connected. While greenfield corridors will entail the acquisition of double the amount of land as compared to existing alignments, the cost of land under the former will be much lower. We have identified eight greenfield corridors that are at different stages of development.
With regard to programme implementation, NHAI will be involved in the implementation of about 90 per cent of the projects under Bharatmala while the balance will be implemented by National Highways and Infrastructure Development Corporation Limited and state public works departments. Phase I of the programme entails the award of 24,800 km under Bharatmala and 4,000 km of balance works under the NHDP. Of this, 8,502 km of roads (6,097 km under Bharatmala and 2,405 km under NHDP) have been awarded. Besides, roughly 1,500 km of road projects have been appraised and approved. In total, 9,635 km of roads have either been awarded already or have been approved and are expected to be awarded soon. The balance lengths are at advanced stages of project preparation. As NHAI has consciously adopted a approach to award a project only after acquiring at least 80-90 per cent of the land required for the project, there was a drastic reduction in the lengths awarded last year. Thus, NHAI’s focus has shifted from fast-tracking project awards to fast-tracking project implementation. At this pace, Phase I of the programme is expected to be completed by 2023-24, instead of the initial completion target of 2022.
When the programme was initially approved, the total cost was estimated to be Rs 5.35 trillion. However, there has been a substantial increase in costs with the major share attributable to land acquisition. The cost of the already-approved projects spanning about 10,000 km is over Rs 2.5 trillion. When we conceptualised Bharatmala the cost of land was not that high.
However, the fact to be appreciated is that although the road sector faces a lot of challenges, NHAI has always been able to address them. For example, the authority started with item rate contracts and then switched to the build-operate-transfer (BOT) model. However, in 2011-12, engineering, procurement and construction (EPC) contracts saw a revival as the BOT model could not be sustained. The hybrid annuity model (HAM) was introduced after it was realised that the EPC model cannot be sustained due to the lack of sufficient resources. Again, seeking to raise more funds, the authority shifted to the operate-maintain-transfer (OMT) model and more recently introduced the toll-operate-transfer (TOT) model.
Disputes are another important aspect which concern the industry. To ensure efficient dispute settlement, NHAI has launched a number of schemes, including payment of 75 per cent of the arbitration award on the basis of bank guarantees. Besides, we have constituted two independent committees to resolve disputes speedily. With this move, the authority has been able to settle a number of disputes and has received an encouraging response. Besides, NHAI has gained immense experience and received industry feedback and is ready to take all the required measures to streamline dispute resolution.
Technology use is another challenge. Under EPC, HAM and BOT, the project design is the responsibility of the concessionaire/contractor. However, NHAI has been receiving complaints from contractors regarding the freedom to choose the project design. The authority claims that although it does not directly supervise the work, it still allows contractors to use their own technology for project execution, ir-respective of the provisions in the detailed project report, subject to satisfactory performance on the part of the contractors. Besides, a high-powered committee has been constituted to deal with contractor complaints regarding the freedom to use a particular technology.
Another issue facing the industry is with respect to the modifications in the contract documents. NHAI prefers standardised documents so that the terms and conditions do not vary from contract to contract. However, it has been receptive to suggestions regarding contract modifications. It has already made modifications to the EPC contract and the latest version was released in June 2019. Similarly, the HAM and BOT contract documents have also been modified.
Road safety has also become a prime area of concern. Improvements in roads are accompanied by an increase in vehicle speeds, thus contributing to the increased fatality rate of road accidents. Currently, NHAI is concentrating on road safety issues, in terms of enforcement as well as project preparation. However, addressing safety issues also results in an escalation in project cost. For example, while in the initial stages of the NHDP four-lane roads were considered good enough, the authority eventually realised that although the roads were good enough from the perspective of operating costs, they were not good enough as far as road safety is concerned. Thus, addressing such road safety issues will inevitably lead to project cost escalations.
Overall, given the way that we have performed in the past, we will certainly be able to implement the Bharatmala programme. Regarding the completion of key construction activities, the only delay attributable to NHAI is land acquisition. The authority realises that the focus should not be on speedy award, but rather on fast-tracking project completion. The government has taken a firm decision to not award any project till we have 90 per cent of the land in possession. For many projects that have already been appraised and approved, we are waiting for land acquisition so that they can be awarded. In 2018, only 2,000 km of projects were awarded, against the planned 7,000 km. The works that were planned last year are in advanced stages this year and NHAI expects to continue to maintain a pace of awarding 6,000-7,000 km per year.
“The government has taken a firm decision to not award any project till we have 90 per cent of the land in possession.”
“The primary aim of the Bharatmala programme is development and improvement of the national highway network in the country through a corridor-based approach.”