Under the Bharatmala project, the government plans to build 83,677km of national highways, which includes widening present national highways and building economic corridors and expressways at a total cost of Rs5.35 trillion. Photo: Aniruddha Chowdhury/Mint
Under the Bharatmala project, the government plans to build 83,677km of national highways, which includes widening present national highways and building economic corridors and expressways at a total cost of Rs5.35 trillion. Photo: Aniruddha Chowdhury/Mint

NHAI may compensate some projects affected by Bharatmala

NHAI is working on a policy to compensate brownfield projects that have either reached traffic maturity or are likely to be impacted by the Rs5 trillion roads project

New Delhi: The National Highways Authority of India (NHAI), to ensure smooth implementation of the ambitious Bharatmala project, is working on a policy to compensate brownfield projects that have either reached traffic maturity or are likely to be impacted by the over Rs5-trillion roads project.

Under the proposed “policy for capacity augmentation under PPP (public-private partnership)", project concessionaires will be given options of selling the assets back to NHAI, undertaking revamp of the brownfield projects or terminating the toll contract.

The policy is being envisaged as many national highways in the country either have or are about to reach their traffic maturity. Besides, several greenfield projects will be built that could lead to diversion of traffic from the present highway projects, which would be contrary to the contracts between the NHAI and the project concessionaires.

Under the Bharatmala project, the government plans to build 83,677km of national highways, which includes widening present national highways and building economic corridors and expressways at a total cost of Rs5.35 trillion.

“Under Bharatmala many roads would be required to be widened. But the existing contracts with the concessionaires don’t allow undertaking such expansion projects. Besides, the agreements between the present concessionaires and NHAI clearly states that no alternative route will be built that can divert traffic from the toll road. So the policy is being conceived to address these two concerns arising due to Bharatmala," a senior government official explained on condition of anonymity. He added that the decision will be taken purely on a case-to-case basis and the policy will be ready within six months.

During the last fiscal, NHAI awarded 150 road projects comprising 7,400km and worth 1.2 trillion, an all-time high since its inception in 1995.

Of the total projects awarded, 3,791km of roads worth Rs43,000 crore was awarded in the EPC (engineering, procurement and construction) mode; 3,396km of roads worth Rs76,500 crore under the hybrid annuity mode and 209km in the toll mode at a cost of Rs2,500 crore.

NHAI has also put out tenders for 232 projects since November 2017 under Bharatmala. The bids invited are for 11,200km of roads, costing around Rs1,96,000 crore.

“The policy will have three components—one where NHAI will buy back the project; second, where the concessionaire will be given a choice to widen the highway if the clause is in the agreement; and termination of the contract if no amicable solution is worked out," said another person aware of the development who also did not wish to be named.

He said the policy is being drawn up so that investments in the road sector are not impacted and threats of NPAs are also addressed in many cases.

As per rating agency Icra, 25 national highway toll road projects involving Rs19,435 crore of debt are at risk due to direct competition from the new economic corridors under Bharatmala.

The senior government official quoted above said, “The NHAI board has already discussed the policy once and deliberations are on in NHAI whether a Union cabinet nod is required or not."

The increasing pace of work by NHAI is due to new procedures being sanctioned and put in place since November 2017, following the cabinet’s nod to Bharatmala. Under the new protocol, the NHAI board has been given powers to sanction EPC projects. A high-powered Projects Appraisal Committee and a Cost Committee have been put in place in NHAI.

“The policy will be a good move. One, it will ensure that the concessionaires’ financial concerns are being adequately addressed. Second, it will give concessionaires a choice to quit the project and have capital to invest in the upcoming projects," said Jayant Mhaiskar, CMD of MEP Infrastructure Developers.

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