The road sector has shown significant progress during the past year. The government has been taking initiatives to ensure adequate fund availability for highway development and attract more private investment. Besides, the focus on quality construction and road safety has increased recently.
Indian Infrastructure tracks the major developments in the past year…
- The Ministry of Finance released the National Monetisation Pipeline for infrastructure sectors in August 2021. The government plans to monetise 26,700 km road assets over FY22-FY25, with a monetisation value of Rs 1.6 trillion.
- The National Highways Authority of India (NHAI) has received approval from the Securities and Exchange Board of India to launch its maiden infrastructure investment trust (InvIT) to raise Rs 51 billion. The authority has decided to reserve the InvIT’s initial public offering for institutional investors. The InvIT is expected to be launched by the third quarter of financial year 2022.
- The toll-operate-transfer (TOT) segment witnessed a number of developments. Adani Enterprises Limited and DP Jain and Company Infrastructure Private Limited emerged as the highest bidders for highway stretches in Gujarat under TOT Bundle V. Adani Enterprises won the letter of award for Bundle 5-A1, which spans 53.6 km, with a financial bid of Rs 10.11 billion. Meanwhile, DP Jain emerged as the highest bidder for Bundle 5-A2, which spans 105.9 km, with a financial bid of Rs 12.51 billion. The authority’s decision to declare the initial estimated concession value for a TOT bundle only after declaring the selected bidders has worked in its favour. The authority received bids worth Rs 22.62 billion, against a reserve price of Rs 16.21 billion. Meanwhile, NHAI withdrew TOT Bundle IV, after multiple postponements. The authority has also received an upfront consideration of Rs 50.11 billion from Cube Highways and Infrastructure for TOT Bundle III, which comprises nine highway stretches spanning 566 km.
Model concession agreements
- On August 24, 2020, the government released a revised model concession agreement (MCA) for the BOT (toll) model to address the key challenges encountered by stakeholders and encourage wider adoption of the model. As per the revised MCA, the revenue potential of a project would be reassessed every five years during the concession period, instead of every 10 years. Besides, a BOT toll project will now only be awarded after NHAI has taken possession of 90 per cent of the requisite land.
- In order to address the challenges faced by highway developers amid the pandemic, the government made certain modifications to the MCA for hybrid annuity model projects. As per the latest amendments, the annuity payment will be made on the reducing balance of completion cost at an interest rate equal to the average of the one-year marginal cost of the funds-based lending rate of the top five scheduled commercial banks, plus 1.25 per cent. The government has also introduced smaller and more frequent upfront construction payment to project developers to ensure a comfortable liquidity position for them.
- The MoRTH has also revised the eligibility criteria for road projects built in the engineering, procurement and construction (EPC) mode to ensure wider participation from domestic companies. The ministry has relaxed the financial and technical criteria, including the annual average turnover required to qualify for EPC projects.
Focus on quality highways
- NHAI has decided to deploy the Network Survey Vehicle (NSV) to enhance the quality of the national highways. Carrying out a road condition survey using NSV on national highways has been made mandatory at the time of certifying the completion of the project, and every six months thereafter.
- The authority has also mandated the use of drones for monthly video recording of national highway projects during all stages of development, construction, operation and maintenance.
- In its recent circular, MoRTH has declared that officers and engineers of regional offices of MoRTH, NHAI and NHIDCL will face major or minor penalties in case of more than three instances of proven negligence of norms for supervision or failure of structure during construction or operation.
- NHAI is also taking steps to ensure adherence to standards for the construction and maintenance of projects. The authority has issued a penal action with a provision for a heavy fine of up to Rs 100 million and debarment for up to three years of the defaulting firm or personnel. Besides, NHAI has decided to depute independent teams from its headquarters to carry out frequent quality checks of work on projects secured by private players by quoting “abnormally low” bids.
- In December 2020, MoRTH signed an MoU with the Federal Ministry of Climate Action, Environment, Energy, Mobility, Innovation and Technology of the Republic of Austria on technology cooperation for road infrastructure development. The MoU aims at bilateral cooperation in the fields of road construction, management, road safety and intelligent transport systems.
- NHAI has introduced an initiative to associate with reputed technical institutes like IITs, NITs and AICTE-approved engineering colleges for mutual cooperation for the dissemination of expertise on civil/highway engineering for national highway projects. The authority has signed initial pacts with at least 200 technical institutes to encourage them to voluntarily adopt highway stretches for research.
Rating mechanism for national highways
- In March 2021, MoRTH released ratings for 18,668 km of completed four/six-lane national highway stretches covering 343 toll plazas. Each toll plaza was judged by NHAI based on three major criteria – efficiency, safety and user services. In the first-ever ranking of national highway stretches carried out by NHAI, the Ahmedabad-Vadodara section of NH-48 stood out as the best national highway in the country, followed by the Goa/Karnataka border-Kundapur corridor in Karnataka.
- In mid-February 2021, MoRTH made FASTag mandatory for all lanes in fee plazas on national highways. With this, the overall penetration of FASTag has crossed 96 per cent.
- Meanwhile, the ministry has finalised a GPS-based toll collection technology to ensure the seamless movement of vehicles across the country. Under the new technology, the toll amount will be deducted directly from the bank account based on the movement of vehicles. With this, the country is expected to become “toll booth-free” in the next two years.
- In order to ensure minimal waiting time at toll plazas on national highways, NHAI has issued guidelines to ensure service time of not more than 10 seconds per vehicle. As per the guidelines, if there is a queue of more than 100 metres, vehicles will be allowed to pass without paying the toll.
Key project awards and completions
- Several big-ticket expressway projects have been awarded in the past one year. Since August 2020, four packages have been awarded under the Delhi-Vadodara Expressway and five under the Vadodara-Mumbai Expressway. Packages were also awarded under other key expressways such as the Raipur-Visakhapatnam Expressway, Delhi-Amritsar-Katra Expressway, Bengaluru-Chennai Expressway, Delhi-Saharanpur Expressway and Ahmedabad-Dholera Expressway. A few BOT projects were awarded to players like IRB Infrastructure Developers Limited and Adani Enterprises. Meanwhile, the 82 km Delhi-Meerut Expressway was fully opened to traffic on April 1, 2021.
- Some key tunnel projects were also launched. In October 2020, the central government inaugurated the 9.02 km Atal Tunnel at Rohtang. It is the world’s longest highway tunnel and connects Manali to the Lahaul-Spiti valley. The 8.5 km Quazigund-Banihal tunnel has also been opened to traffic for trial. Besides, Megha Engineering and Infrastructure secured the contract to execute the Rs 45 billion Zojila tunnel project in Jammu & Kashmir.
- On March 9, 2021, the central government inaugurated the 1.9 km India-Bangladesh Friendship Bridge (Maitri Setu) over the Feni river at Sabroom in south Tripura. Besides, L&T Limited won the contract to construct a new four-lane bridge (parallel to the existing Vikramshila Setu) across river Ganga in Bihar.
- The Ministry of Finance has given its approval for setting up the National Road Safety Board to advise the government on the formulation of policies related to road safety. MoRTH has set a target of reducing deaths caused by road accidents by 50 per cent by 2024.
- In January 2021, NHAI signed an MoU with the Institute for Road Traffic Education and Institute for Development and Communication in Chandigarh to promote road safety and collaborate in the areas of traffic management. It has also been decided that all new national highways being developed under NHAI will have an advanced traffic management system.
- NHAI is planning to develop a grid of wayside amenities in PPP mode along national highways and expressways at 600 locations over the next five years. Recently, MoRTH came out with a policy on the development of wayside amenities along national highways and expressways on land belonging to NHAI or a private party on the alignment of a project. The new policy mandates a grant of NHAI land to a private party for the development of wayside amenities on lease of up to 30 years.
Other major developments
- NHAI has recently approved a land acquisition policy based on value capture finance (VCF). The norms seek to devise a mechanism to implement VCF, jointly with the states, to partly finance the cost of highway construction in order to make them viable.
- NHAI is planning to set up several electric vehicle (EV) charging stations on national highways to augment the EV infrastructure in India.
- In March 2021, NHAI constituted a subsidiary for logistics movement across the country, transferring the existing nine contracts to the arm. Further, the authority has renamed Cochin Port Road Private Limited as National Highways Logistics Management Company, and it will now oversee multimodal logistics parks and port connectivity projects.