There is not enough capacity in the system to construct 7,000-8,000 km of highways every year, that too on public-private partnership (PPP) basis, National Highways Authority of India (NHAI) Chairman R.P. Singh said here today.
The Government should set a more realistic target on road construction of about 3,000-4,000 km a year, he said. In 2009, the UPA Government had set a target to build 20 km every day or award about 8,000 km a year.
The Chairman said implementing such a programme entirely on PPP basis would require about Rs 55,000-60,000 crore of debt from banks and Rs 30,000 crore as equity from the private sector a year. He pointed out that lending to the sector was considered unsecured and banks had limits on such lending.
TOLL RATES
Calling for a review of the toll policy, the Chairman questioned the Government’s current principle of collecting tolls – which go up in sync with the wholesale price index every year – on existing highways, instead of creating new route alignments and charging tolls on them.
“The Government has a responsibility to provide connectivity. How long can one collect ever increasing tolls on existing roads, with high rates of inflation?” he asked.
He pointed to the resistance building up on high toll charges, and there was even political support to such resistance in certain instances. As the elections approach, such opposition is likely to rise, Singh added.
PROJECTS TURN UNVIABLE
On GMR and GVK exiting from two large highway projects citing delays in environment clearance, Singh said these firms were exiting because the projects had now turned unviable.
“Basically, in our view, as to why they are walking out of these two projects is the change in economic scenario and escalation of cost and not delays in environment clearance,” Singh said.
He added that NHAI “sympathises” with the two major players but was not ready to accept the reasons for termination of contracts.
“Unfortunately, the escalation is becoming too high because in the last few years, the rates of aggregates (raw material) have gone up,” Singh said.
GMR Infrastructure terminated its contract Rs 5,700-crore for the Kishangarh-Udaipur-Ahmedabad Expressways with NHAI on grounds of “delays in environment clearance”.
GVK pulled out of the pact for Shivpuri-Dewas Expressway in Madhya Pradesh citing “change in law” after a Supreme Court order made Environment Ministry permission mandatory even for extraction of minerals in an area below five acres.
NHAI will ask GMR not to abandon the project and complete the contract as technically no condition was unfulfilled, Singh said.
In the case of GVK, “if you take the Supreme Court’s interpretation of the existing law as a change of law then literally every contract can be abandoned”, he added.