New Opportunities, Newer Challenges: Project launches and impact of Covid-19 at the state level

Project launches and impact of Covid-19 at the state level

The state road segment witnessed a number of big developments in the past year with the launch of several high-value expressway projects. State governments have been increasingly focused on speedy project execution. While work on a few projects picked up pace due to the absence of obstructions like traffic, many others that faced labour shortages were delayed. However, before the pandemic hit, the state governments had allocated considerable funds for road development in their respective budgets for 2020-21. These could now see cuts on account of the additional funds that the governments have had to shell out to ramp up healthcare infrastructure.

Uttar Pradesh

The Uttar Pradesh government has allocated 3.1 per cent of its total budgetary allocation in 2020-21 to the roads and bridges sector with a major thrust on the development of expressways. It has allocated Rs 20 billion for the Ganga Expressway project, Rs 3 billion for the Purvanchal Expressway project and funds worth Rs 2.1 billion have also been approved for the Bundelkhand Expressway project. Apart from expressways, the government has allocated funds worth Rs 8.3 billion for the Uttar Pradesh Core Road Network Development Program. Meanwhile, Rs 7.55 billion has been allocated for the Uttar Pradesh Major District Roads Improvement Project and Rs 1.7 billion has been allocated for the construction of flyovers, bypasses and intersections in the state.

Work on the six-lane Ganga Expressway project which was stalled on account of the pandemic has now resumed. Detailed project reports (DPRs) for 12 packages have been completed. The state government has also decided to tap Reserve Bank of India-licensed private banking entities for funding the 594 km project, which is estimated to cost about Rs 300 billion. Private sector lenders will be expected to offer credit on the same terms and conditions as the public sector banks. Further, the Uttar Pradesh Expressways Industrial Development Authority’s (UPEIDA) board has approved the proposal to raise Rs 29 billion from the Housing and Urban Development Corporation to cover the land acquisition costs associated with the project.

Meanwhile, close to about 60 per cent of the construction work has been completed on the 341 km Purvanchal Expressway project. The project is expected to cost about Rs 223 billion. About 18 per cent of the construction work has been completed under the 296 km Bundelkhand Expressway project. UPEIDA has so far acquired about 95 per cent of the land required for the project. The Rs 149 billion project also achieved financial closure and the authority has signed a loan agreement worth Rs 59 billion with a consortium of six banks led by the Bank of Baroda. Construction work on the 91.35 km four-lane Gorakhpur Link Expressway is yet to start. Till now, about 77 per cent of the land has been acquired.

Delhi

The Delhi government allocated Rs 16.5 billion for the construction of roads and bridges in its 2020-21 budget. There were substantial developments on new, proposed as well as old under-construction projects. For the 1.2 km tunnel under PragatiMaidan, 85 per cent construction has been completed with the public works department currently undertaking construction of roads in the tunnel. Tunnel construction was delayed by three months due to Covid-19 but it is expected to be completed by the end of the year. The tunnel will connect India Gate with Ring Road through PuranaQila Road and Mathura Road.

Besides, pre-construction work on the proposed Ashram-Delhi–Noida Direct (DND) flyway six-lane flyover project, expected to cost Rs 1.28 billion, has started. The work, which was set to begin earlier this year, was stalled due to the pandemic. Currently, soil testing and other geotechnical surveys are being conducted on the proposed stretch with design work to begin as soon as the soil test results come in.

Maharashtra

The Maharashtra government in its 2020-21 budget announced two new schemes: the urban road development scheme and the rural road development scheme, with an outlay of Rs 10 billion and Rs 15 billion respectively.

The state government has also announced the implementation of many new road projects. The Maharashtra State Road Development Corporation’s (MSRDC) Chirle-Patradevi Expressway project is currently at the feasibility study stage.

The MSRDC has also taken over the 126 km Virar-Alibaug multimodal corridor from the Mumbai Metropolitan Region Development Authority (MMRDA). The project will be constructed in two phases, with Phase I entailing the construction of a 98.5 km highway between Navghar and Balavali and Phase II involving the construction of a 29.9 km highway between Balavali and Alibaug. The MSRDC will complete land acquisition and invite bids by June 2021 for construction to start post-monsoon in September 2021. Further, the MMRDA will take over the Thane-Borivali twin tunnel project from the MSRDC.

Apart from new projects, there were significant developments in ongoing big-ticket projects as well. The eight-lane Mumbai-Nagpur Expressway is expected to be completed in May 2022 against the earlier target of December 2021. Construction work on the 701 km expressway was severely impacted by the Covid-19-induced lockdown. The number of workers at the sites dropped to 10,000 in June 2020 from a peak of 18,000, but by October 2020 the worker strength had increased to 20,000.

About 27 per cent of the work has been completed under the Mumbai Trans Harbour Link (MTHL) project. The delivery of the first orthotropic steel deck (OSD), which will enable faster construction work and reduce deck-related on-site activities, has been received. OSDs are being used in the project for spans of up to 180 metres without any cable stays/suspensions. Of the total length of the MTHL bridge of 21.8 km, the length of the OSD superstructure is around 4.1 km. The total steel quantity to be used for the OSD superstructure in the project will be about 85,000 tonnes. The launching of the OSD superstructure is expected to start in April 2021. The MMRDA, the nodal agency for the project, has also spent Rs 1.35 billion for environment impact reduction. The total project cost is estimated to be Rs 142 billion.

The 9.9 km Mumbai coastal road project is currently in the land reclamation phase. The Brihanmumbai Municipal Corporation (BMC) has filed two affidavits before the Supreme Court stating that they will require additional reclamation of 6 hectares and 15 hectares, respectively, for the project. This will take the total reclamation requirement from 90 hectares to 111 hectares. The BMC will use the additional reclaimed land for construction of a partially submerged inclined sea wall along the 9.98 km coastline. The construction of the sea wall has already begun. The sea wall is crucial for securing the road from wave impact, floods and erosion. The Supreme Court has indicated that it does not see a problem with the reclamation of 90 hectares but the BMC will have to take coastal regulation zone clearances in Maharashtra for reclaiming additional land over 90 hectares. So far, 52.35 hectares has been reclaimed and, as per the new plan, 58.65 hectares is yet to be reclaimed. The total project is estimated to cost Rs 127 billion.

Karnataka

The Karnataka government has allocated about Rs 82 billion for the roads and bridges department in its state budget for 2020-21. The government is also actively developing projects with multilateral assistance. For instance, under Phase III of the Karnataka State Highways Improvement Project, the state government is proposing to undertake upgradation works for about 418 km of state highways in three packages under the hybrid annuity model. The project involves a 75 per cent construction grant and a concession period of nine years – two years construction and seven years operations and maintenance. The Asian Development Bank will provide $346 million in loan assistance for the project, which is expected to be completed by June 2024.

The project scope for the eight-lane peripheral ring road (PRR) project in Bengaluru has been modified. The road will now form a complete circle along with the existing NICE Road. The Bangalore Development Authority will issue a preliminary notification to acquire an additional 471.99 acres of land to complete the revised project. The PRR project will now be nearly 67.5 km with the 2 km addition and will have slight deviations in the route to prevent any impact on Petronet LNG’s pipeline and apartments in Seegehalli. The revised cost of the project will be Rs 176.48 billion, an increase of nearly Rs 30 billion. The additional amount will not have to be paid in cash as at least half of it will be given in the form of transfer of developmental rights (TDRs). The state government is yet to finalise the amount of pending compensation for the 2,281.99 acres (including the extra 471.99 acres) that has to be acquired for the project.

Kerala

In its 2020-21 budget, the Kerala government has allocated 3.6 per cent of its total expenditure for roads and bridges. A major project in the state is the Kerala State Transport Project II which has three components. The first component, which will include upgradation of about 363 km of state highways, is further divided into two subcomponents – the first involves pre-construction activities like resettlement and shifting of utilities, environment management and supervision, and quality control services, while the second sub-component involves the upgradation of 82 km of state highways on a public-private partnership (modified annuity) basis. The second and third components involve road safety management and institutional strengthening respectively. The project will pass through eight districts covering 87 villages and is expected to be completed by April 2021 at a total cost of $445 million. The overall implementation of the project has been rated moderately satisfactory. As of January 2020, about 270 km of state highways had been upgraded under the project. Of the loan commitment of $216 million, $121.21 million has been disbursed by the World Bank, as of January 2020. Under 2020-21 state budget, Rs 4 billion has been allocated for the project.

The Kerala government also launched the Anakkampoyil-Kalladi-Meppadi tunnel project to connect Kozhikode with Wayanad. It will now begin conducting surveys and finalising the alignment ahead of the completion of the DPR. The survey work is expected to take three months and construction work on the project is expected to begin by March 2021, with a deadline of 34 months for completion. The state government has given administrative sanction for Rs 6.58 billion in the first phase through the Kerala Infrastructure Investment Fund Board. Konkan Railway Corporation Limited, which will act as a special purpose vehicle for the project, has been roped in for construction.

Telangana

The Telangana government has allocated 3.1 per cent of its total budget expenditure in 2020-21 for roads and bridges. It has plans to construct 511 bridges in the state, at a cost of Rs 25 billion. Of these, about 400 bridges have already been constructed at a cost of Rs 17 billion. The government’s focus on developing intra-city movement and decongesting traffic has led to the development of road projects like the Strategic Road Development Project (SRDP) in Hyderabad.

So far, 18 works – nine flyovers, four underpasses, three road overbridges and two bridges – have been completed under the SRDP. Further, works worth Rs 60 billion are at various stages of implementation. The Greater Hyderabad Municipal Corporation used the traffic-free period during the lockdown to complete different structures in the project. For instance, work on the Punjagutta steel bridge commenced. Many critical works pertaining to different projects were also completed during the lockdown.

What lies ahead

State governments are increasingly focusing on ways to decongest urban centres in the country. Further, they are also aiming to create new connecting infrastructure between the various economic hubs within the states to accelerate growth. Covid-19 has dampened the prospects of improving the fiscal strength of states. While states such as Uttar Pradesh continue to be bullish on their expressway development agenda, the launch of investment-heavy projects by other states is likely to witness a setback owing to mounting fiscal pressures. Funding of projects may become a serious challenge in the near to medium term. This should motivate states to look at innovative means of arranging funds.