The alphabetD and F may be separated by just one letter , but while acquiring land for highways, the difference might just cost the developer time, energy and quite a lot of money.
For, while handing over land for highway development, the National Highways Authority of India’s (NHAI) responsibility ends with the issuance of a 3D notification under the NHAI Land Acquisition Act.
But developers can enter and start work only after 3F is notified by the State Government concerned.
3D is the declaration of land acquisition and, in case the owners are unwilling to part with their land, they can take the matter to the local authorities, preventing the firms from starting their work.
This explains why industry chamber FICCI’s infrastructure committee wants 100 per cent land acquisition before a road project starts. That NHAI has awarded the highest-ever project road length in fiscal 2012 makes it all the more natural for developers to demand availability of the entire land.
At present, 80 per cent land has to be acquired and made available to the developer by the time the concession agreement is signed. The agreement is usually signed within nine months of opening a bid.
Cost overrun
Delay in land availability adds to the project cost. Developers also face delays in collecting the toll if the project is not completed on time. One year of delay in construction could impact the internal rate of return by 100 basis points (one percentage point ).
In case land is not made available, NHAI has to pay some penalty. However, developers usually avoid taking the NHAI head-on as they depend on it for their business and dispute resolution.
“We have asked NHAI to make requisite changes in the contract document to ensure that 100 per cent land is made available,” said Mr Hemant Kanoria, Chairman and Managing Director, SREI Infrastructure, who also heads the infrastructure committee of the Federation of Indian Chambers of Commerce and Industry .
But Mr Kanoria played safe while commenting on the present state of land acquisition.
SREI Infra is implementing several highway projects, including one in the difficult terrain of Arunachal Pradesh.
Another problem faced by developers while acquiring land is outdated revenue maps and records.
Many a time, the title deeds are missing or have not been transferred across generations.
In the current fiscal, NHAI has a target to acquire over 12,000 hectares, against 9,800 hectares in FY12. This is against 8,577 hectares acquired in 2010-11; 6,244 hectares in 2009-10; and 3,120 hectares in 2008-09.
Before 2009-10, NHAI was acquiring about 3,000-4,000 hectares each year.
Recently, IRB Infrastructure backed out from developing a project in Goa, one-and-a-half year after signing the concession agreement, citing non-provision of land by the NHAI.