Highway developers have asked the National Highways Authority of India (NHAI) to invite financial bids for projects only after all requisite clearances, for land acquisition, environment, forest and wildlife, are in place.
The demand comes at a time when disputes between highway developers and the Authority are turning murkier.
The developers, most of whom are constricted for funds from lenders, who want all requisite approvals in place before extending loans, have stated that the obligation of getting clearances should be a pre-condition for NHAI.
“The pre-condition of making available 100 per cent right of way together with environmental/forest/wildlife clearances by lending agencies should be applicable to the Authority. The projects should not be called for bid before achieving the same,” the National Highways Builders Federation (NHBF), a lobby body for highway developers, said in a letter sent to NHAI, the Highway Ministry and Finance Ministry on January 9.
NHBF has about 80 highway developers as members, such as Larsen and Toubro; GMR, Shapoorji Pallonji and Srei Infra.
In mid-2012, banks started demanding entire land before transferring money to the projects. For over 20 projects, even the requisite 80 per cent land is not available.
In this context, the developers have requested that time-bound environmental, forest or wildlife clearances on priority be allowed for highway projects.
The other demands include allowing quarrying for areas below five hectares, particularly for highway projects.
Before issuing the letter of award, land acquisition should be completed, NHAI should approve and deposit the amounts for shifting the utilities, cutting of trees; get the reserved or private forest clearance (if any); ensure Environment Ministry clearance including soil quarries, and complete agreement with the Railways, if required.
NEGATIVE OUTLOOK
Meanwhile, India Ratings has revised its outlook on Indian construction companies to Negative for 2013 from Stable in FY12. “This is due to continuing challenges in order execution which have resulted in stretched working capital. Liquidity as well as financial leverage has been adversely affected in many construction companies which have ventured into build-operate-transfer (BOT) projects due to the challenges in raising equity to fund these projects,” it said.
The agency said delays were seen in the commencement of execution of new projects due to pending forest, environment and various other clearances.
“Tying up equity and debt funding for BOT projects has also become difficult. Construction companies are finding it increasingly difficult to raise equity and are funding equity requirements of BOT projects by borrowing at the parent level, adversely impacting the parents’ credit profiles. This is likely to continue in the medium term,” it added.