New Delhi: India’s highways regulator has sent notices to Hyderabad-based developers Madhucon Projects Ltd and Progressive Constructions Ltd, classifying them as non-performers for delaying work on some World Bank-funded highway stretches that are part of the Lucknow–Muzaffarpur road project.
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This means the two companies won’t be eligible for any future highway contracts unless they speed up work on the “current crop of projects”, said a top official at the National Highways Authority of India, or NHAI. The notices were sent to the developers in the first week of December, said the official who didn’t want to be identified.
The 513-km Lucknow-Muzaffarpur National Highway Project, for which the World Bank sanctioned $620 million (Rs3,038 crore) of loans in 2004, consists of 12 road packages covering Uttar Pradesh and Bihar. Of these, five are behind schedule, prompting the World Bank and NHAI to review the reasons for the delay. Neither of them disclosed their findings.
“Another large construction company was also considered for punitive action. But action has not been taken against it on account of better performances in several other projects,” said the NHAI official, who declined to name that company.
Several highway projects are running behind schedule because of alleged mismanagement by the highways regulator. An economic slowdown and a credit crisis have contributed to the delay.
“The economic slowdown has changed the rules of the game. Neither punitive actions nor incentives may be enough to get projects going. The highways regulator first needs to understand the situation on the ground,” said a specialist in advisory services with an infrastructure financier, who didn’t want to identify himself or the company he works for.
According to Rachid Benmessaoud, operations adviser, World Bank’s India office, the Bank last year expressed serious concern to the government about the poor implementation of five packages under the Lucknow-Muzaffarpur National Highway Project.
“However, decisions by NHAI to list any of its contractors as ‘non-performers’ are based on its own internal review process,” he said.
Slow work: A file photo of a construction site in New Delhi. Construction delays at five World Bank-funded highway stretches have put them behind schedule, prompting inquiries by the bank and NHAI. Qilai Shen / Bloomberg
“NHAI has been awarding projects without clearing land acquisition or ensuring law and order in the areas where the highways are proposed to be constructed. Although I have been informed about this (NHAI action), the details are known only to my son (Bhaskar Rao, the managing director of the company),” said Kavuru Sambasiva Rao, the founder of Progressive Constructions, who is also a member of Parliament, or MP, from Eluru in Andhra Pradesh.
The MP also said NHAI had held discussions with the firm on how it could complete projects earlier. In 2008, NHAI had axed a contract in the Sunakhla-Ganjam project in Orissa it had awarded to Progressive Constructions. The then NHAI chairman, N. Gokulram, said the regulator had terminated the contract. The balance work for the project was re-awarded in October.
Bhaskar Rao could not be reached for comment.
A Delhi-based executive at Madhucon, who did not want to be identified, said, “Talks are going on with NHAI and the matter should soon be resolved.”