Road Transport and Highways Minister C.P. Joshi is set to complete two years in his present portfolio and it has been quite a roller coaster ride. From the first half of his tenor, when bidders were falling over one another to win a highway project, in the last nine months investors have pretty much changed their view on risk in highways sector.
In the last few months, there are no bidders for new projects, banks are demanding entire land acquisition before providing advances, people are protesting about paying tolls, and developers looking to exit are unable to find right premium for their projects. The Government is also forced to look at funding highway building by following the engineering procurement contract (EPC) mode, instead of the PPP mode where fund raising was private developers’ job. In this context, Joshi shares his views on various issues.
What is the level of award for highways this year? Isn’t it much lower?
We have awarded close to 887 km highways till December. We are aware that the project awards this year are not as good as last year. But then, when awarded projects get stuck because of external issues, such as environment clearance, forest nod and banks tightening their lending, then the Road Transport and Highways Ministry can only try and raise it at appropriate forum. Also, the economic slowdown has set in.
What will be the target of the Highways Ministry for the current fiscal now?
We expect to close the year by awarding 6,000 km of highways. We are trying to award about 4,000 km of highways on an EPC basis. In EPC projects, we expect to see good response, as the companies would not have to raise finance or take traffic risk. We will definitely be building 3,000 km of roads, which is the maximum in stretch built in a year.
Do you need to raise funds for this round of awards?
We do not need to raise funds. We raised Rs 10,000 crore through NHAI’s (National Highways Authority of India) tax-free bond issue last year.
When will NHAI raise the tax-free bonds in the current fiscal?
We will take a call soon on the issue.
Last year you also saw a lot of resistance from people, who are unwilling to pay ever-increasing tolls for shoddy roads, or long waiting times. Any plans to tackle such issues?
The toll charge level is as per toll policies decided by inter-Ministerial and Cabinet committees at different points of time. Moreover, developers have entered into long term contracts based on the toll levels.
Any changes in those toll policies can be done only after a Cabinet nod and if developers agree.
The 1997 toll rules mandated annual revision of charges in line with the inflation. But on many public-funded projects, there were no revisions for close to four-five years.
Now, when those roads are being developed, the new policy comes into effect and the toll charges naturally go up significantly.
One option for us is to stagger the rate hike so that there are no shocks for the users and the toll increases are not over 25 per cent at a time. But, as discussed, all this requires Cabinet nod.
What is being done to reduce waiting time at toll plazas?
One of the things is to implement radio-frequency identification (RFID) tag-based usage on a larger section of toll roads. All the information can be on cloud.
When toll plazas get clogged due to manual intervention, such waiting time could be reduced by automatic, electronic toll payment. We are already doing pilot projects in four stretches. The target is to implement this across all toll roads in the next two years. But to implement this, banks have to come on board and all developers also have to come on board.
Then, there are concerns about all those toll roads where the toll is rounded off to nearest one rupee, as per the 1997 rules. There are over 45 such toll plazas, where the collection is done on the basis of rounding off to the nearest rupee, resulting in toll charges of say, Rs 21 or Rs 22. This involves providing change in coins and we are considering an option of asking those toll road developers to migrate to 2008 toll rules. But for this, again the developers, who are already on a long term contract, have to agree and a Cabinet nod is required.
The 2008 toll rules mandate rounding off to the nearest Rs 5. But, don’t you think many developers will resist migrating to the new rules if they are losing out in the process?
The possibility is there. So, we have to reach an agreement.
The delay on part of Environment and Forest Ministry might impact your Ministry’s performance. Any plans to streamline the process?
We have raised the issue with the Environment Ministry. Now forests are also of various types — many developers end up requiring forest clearances for road side plantations.
Recently, GMR is looking to quit from the largest highway project citing some pending clearances. What is your view?
NHAI is aware of the issue. The authority is looking into it.