Exiting bumpy patch, road sector to have smooth ride in 2014

From environment and regulatory bottlenecks stalling projects worth over Rs 1 lakh crore (Rs 1 trillion) to witnessing a corporate tug-of-war over a new category of vehicle, the highways sector had a bumpy ride this year.

While the ambitious 20 km a day road building programme of the United Progressive Alliance government remained a distant dream in the final year of the 5-year deadline, 2013 also saw change of guard with C P Joshi vacating the Road Minister's charge, making way for Oscar Fernandes who is optimistic that the sector will boom next year.

The year began with major infrastructure players like GVK, GMR exiting out of mega road contracts on account of problems such as delays in receiving the green nod, funding crunch and regulatory hurdles.

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While the Road Ministry initiated a plethora of measures to attract bidders for its projects and prevent developers from abandoning road contracts midway, an apex court order delinking environment clearance from forest clearance paved the way for execution of stuck projects with investments of Rs 27,000 crore (Rs 270 billion).

The National Highways Authority of India had sought Supreme Court intervention in the matter.

That apart, corporates had a near showdown when the government gave approval to 'Quadricycle', a new category of four-wheeled vehicle, to ply on roads. Many companies, including Tata Motors opposed the proposal, as they were not ready with their prototypes.

The proposal was revisited by the government and is yet to be finalised.

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As regards the Motor Vehicle Amendment Bill, the government could not get it passed during the year.

The Bill proposes hefty penalty for traffic rule violations including drunken driving.

Meanwhile, amid concerns over the reluctance of banks to give loans to infrastructure projects, Prime Minister Manmohan Singh asked the Highways Ministry to refer the matter to the Prime Minister's Economic Advisory Council.

Later in the year, the government approved a proposal for postponement of premium payments by highway developers in October and has referred the matter to a high-level panel, headed by Prime Minister’s Economic Advisory Council Chairman C Rangarajan, for fine-tuning it.

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Road Transport and Highways Minister Oscar Fernandes is confident that projects worth over Rs 1 lakh crore (Rs 1 trillion), which have been stuck for long, will start moving from next month as a concrete decision on the rescheduling of premium paid by developers is expected by the end of this month.

"I am hopeful that highway projects worth over Rs 1 lakh crore would be on stream next month onwards. The report of C Rangarajan Committee on premium rescheduling is likely to be accepted by month-end," Fernandes told PTI.

He said the move will pave the way for many upcoming infrastructure projects.

Asked to sum up the year 2013, Fernandes said: "It has been a challenging year. I took over in the month of July.

“Since then we have been travelling to most of the states in the country."

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Exuding confidence that there will be a spurt in activity in the sector in 2014, he said he has already taken a stock of the situation in almost every state right from calamity-hit Uttarakhand to far-flung North East and Jammu & Kashmir.

"The emphasis is to speed up work all over.

“Investment climate is not very favourable from the point of the view of the concessionaire as they are not able to bring any equity and because of which banks are reluctant to provide loans," he admitted, saying that a score of measures were underway to make available funds and remove green hurdles.

"Now we have prepared the ground properly and once everything is in place, we will move forward. Road sector will boom in 2014.

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“We have decided that since we have bid a number of times (for a large number of projects) and we have not received the good response, we have decided to shift to EPC," Fernandes said.

The projects for which the ministry is going to EPC mode, will be expedited, he said.

If the steps bear fruits, the highways sector, lifeline of India's growth infrastructure is set for a major leap during the next year.

After a dismal show in the last fiscal, 2012-13, the Road Transport and Highways Ministry had scaled down its projects award target by nearly half to 5,000 km in this financial year compared to a target of 9,500 km in 2012-13.

Last fiscal, the ministry was barely able to award 15 per cent of the targeted 9,500 km of highways on account of a number of factors including delay in clearances and equity crunch by developers.