Amidst all the noise of land acquisitions delaying highway projects, the National Highways Authority of India (NHAI) is inching closer to acquiring a record 10,000-12,000 hectares in the current fiscal. This is the largest ever land acquisition in a year by the highways regulator.
Yet, this may not be music to many developers because even the large figure does not automatically translate into proportional increase in contiguous land available for development.
Since road development requires contiguous land, not getting access to as little as a 100-metre stretch can halt work on a project. Non-availability of contiguous land can affect toll collection for many projects.
“We expect to have in possession 10,000-12,000 hectare land in the current fiscal,” said a source. 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 would acquire about 3,000-4,000 hectares each year. Land requirement is linked to the length of the highway under development. The length under development has seen 40-50 per cent growth each year in the last two fiscals. NHAI hopes to award 7,300 km of highways for development in the current fiscal, up 43 per cent from 5,083 km in 2010-11. Even the 5,083-km stretch was 51 per cent higher than the preceding year.
NHAI is required to hand over 80 per cent land by signing model concession agreements between the developer and NHAI. But developers tend to complain that this criterion is not met in most instances. “In a majority of projects awarded last year, 80 per cent land is not available to the developer,” says Mr M. Murali, Director-General, National Highways Builders' Federation.
Recently, IRB Infrastructure backed out from developing a project in Goa, one-and-half years after signing the concession agreement, citing non-provision of land by the NHAI. One year of delay in construction could impact the internal rate of return by 100 bps (one per cent).
The expense on account of land acquisition is also set to cross Rs 5,000 crore this fiscal, though officials are not clear about the exact estimate at the moment.
RISING COST
“Last year, NHAI had spent about Rs 5,000 crore for land acquisition. In the previous fiscals, an average of Rs 1,500-2,000 crore was spent,” the source said.
On average, for land acquisition, NHAI now pays Rs 1.25 crore for developing one km of highway against Rs 80 lakh a km one-two years ago.
Also, many landowners are now unwilling to part with their land anticipating higher prices. NHAI expects to meet the incremental cost in land acquisition partially through the proceeds of the Rs 10,000-crore bond issue.
Aware that land acquisition delays could hamper the extent of roads completed, the Highways Minister, Mr C.P. Joshi, recently admitted that land acquisition is proving to be a difficult issue.
Compared to highway awards, the road completion stretches are at a much lower level — 2,500 km (target for current fiscal), 1,780 km (2010-11), 2,693 km (2009-10) and 2,205 km (2008-09).
To get over this problem, NHAI plans to take up development of two-lane highways with paved shoulders in the next two fiscals, which will not require much land.