The low-profile Dr Chandraprakash Joshi , the Union Minister for Road Transport and Highways, who has been holding the portfolio for last 11 months, is the anti-thesis of his flamboyant predecessor Mr Kamal Nath. In the first few months of 2011, the former psychology professor from Rajasthan approached the sector with a level of cautiousness that had stakeholders perceive him as indecisive. But Mr Joshi likes to do his homework and is steadily asserting himself on many issues, if not all. In the context of highway project awards likely to touch a new high this fiscal, Dr Joshi spoke to Business Line.
Excerpts from the interview:
We will definitely be able to award 7,300 km of highway development projects through NHAI this fiscal. We are also confident of awarding over 7,000 km of projects in each of the next two fiscals. The preparation for awarding that many projects is on track.
Don't you think land acquisition will be an issue while implementing these projects?
In the current environment, land acquisition is proving to be a difficult issue. Many landowners are unwilling to part with their land, anticipating higher prices. On the other hand, that expectation is also natural on the part of landowners.
NHAI has undertaken efforts to acquire more land this year. On this issue, we are dependent on support from the State Governments.
In this backdrop, don't you think implementing the highways development programme — which requires land — will be a challenge?
This is why we will now be focusing on developing two-lane highway stretches, which do not require much of land acquisition.
What were the key steps that helped you increase the project awards?
The main objective was to take steps to bring in greater transparency. The number of bidders is higher. The annual prequalification methodology and adoption of e-tendering have been important steps. We are getting good responses to the bids, and also more premium than we initially anticipated.
Many projects where we had thought we would have to dole out subsidy to road developers are attracting premium.
Based on this year's bidding, NHAI will be earning over Rs 2,100 crore as premium earnings from the concessionaires. The amount will go up by an average of five per cent every year for a 20-year period. Combined with annual toll revenue of about Rs 2,500 crore, NHAI should be getting an average annual income of Rs 5,000 crore for next 20 years.
There have been concerns about aggressive bidding. There is talk about companies taking loans of larger amounts than the project cost…
All players who bid financially for a project are evaluated as per the technical qualification. After that, those who submit the best bid naturally win the projects.
If banks think projects are not profitable, they are free not to lend to concessionaires…This issue is between the concessionaire and lending institutions.
Have you decided on the timing of the NHAI's Rs 10,000-crore, tax-free bond issue?
We will take a final decision on this issue very soon. There is no point raising funds and not being able to utilise them. So, even if we do not raise the funds before December end, we will definitely come out with the issue before the March 2012.
What is the status of bidding out highway stretches for toll collection on OMT basis?
NHAI has 109 toll plazas under public-funded project mode. Of these, 16 toll plazas have been bid out on an operate-maintain and transfer (OMT) basis, and toll collection for another 26 will be bid out on OMT basis soon. About 65 are continuing on the annual auction basis.