Govt may have to slash Nath’s 20-km-a-day target

Expressbuzz, June 24, 2010
New Delhi The government may have to curtail Kamal Nath’s 20-km-a-day target for building and awarding national highways in the country because of resource constraints and a tepid progress in award in 2009-2010. In fact, the Rs 8,12,661 crore financing plan prepared by the road transport and highways ministry and the National Highways Authority of India (NHAI) in November 2009 has been referred to the B K Chaturvedi committee for revision under directions of the empowered group of ministers (EGoM) on roads.
“There are various reasons that have forced the government to go on a backfoot on the original financing plan. Firstly, the NHAI was not able to award the targeted 12,000 km highway projects for 2009-2010 and managed to award just about 3,700 km projects. This has created a backlog. Meanwhile, construction cost has gone up by 10 per cent, affecting the financing plan. The other major reason is that cess collections have also been down by 3-4 per cent in 2009-10,” a senior government official associated with the process said. Year 2009-2010 went in sorting out a number of policy constraints for the sector including changes to the model concession agreement after which awarding picked up.
Planning Commission deputy chairman Montek Singh Ahluwalia has also raised doubts over the feasibility of the financing plan that targets 20-km-a-day highway construction. In his views the NHAI “does not borrow on its strength and has a limited capacity available under government guarantee, which also has to meet the requirements of other critical sectors.” In the EGoM meeting held in May, he said that the resource availability for the National Highways Development Programme would depend on the needs of other sectors, which will emerge after the finalisation of the XIIth five-year plan.
In fact due to the resource constraint the original plan has been revised by the EGoM to building 60 per cent roads on build-operate-transfer model, 25 per cent on annuity and 15 per cent on engineering-procurement-construction basis.
Over the next twenty five years the estimated borrowings of NHAI are about Rs 1,90,000 crore as per the original financing plan, which will now change. But this is based on the presumption that 56 per cent of the roads will be constructed on build-operate-transfer model, 35 per cent on annuity and balance, and 9 per cent on engineering-procurement-construction basis.