Corporate India has woken up to the potential of highway projects once again.
After a temporary lull, the urgency to pump-prime the economy through higher spending, simplified procedures and anticipated higher returns from larger scale of operations have caught the fancy of big corporations.
Giants like Reliance Infrastruture, the GMR Group and Larsen and Toubro (L&T) are now looking at the National Highway Development Programme (NHDP) keenly.
The National Highways Authority of India (NHAI) will initiate bidding next month for as many as 60 NHDP projects, totalling 6,500-km and costing Rs 70,000 crore entailing four and six laning of highways.
NHAI has decided to award longer stretches over 100 km to bidders to sustain investor interest.
“L&T has always been a bidder for highway projects. We would like to bid for bigger projects (longer stretches) where the expected rate of returns are good,” said a company executive who did not want to be identified.
Anil Dhirubhai Ambani Group’s (ADAG) Reliance Infrastructure has already won bids for projects worth Rs 3,800 crore for 135 km of new highways covering Haryana, Delhi & UP on a Build-Operate- and Transfer (BOT) basis and four-laning of the 66 km of the existing Gurgaon-Faridabad road.
As to why there has been a sudden spurt in highway projects after a long lull, Pravesh Minocha, director with consulting firm Feedback Ventures said the current conditions are favourable with softening of interest rates, an impetus to the economy and the easing of NHAI norms.
“The government has also increased project costs by as much as 20 per cent and the bidding procedure has become less cumbersome,” he pointed out.
GMR Group, which is also one of the interested bidders for the NHDP phase III and V projects, said it would be in the fray for these projects.
“We are evaluating all the projects and will bid for viable and value creating projects,” said SK Kulkarni, associate vice-president, GMR.
The group had earlier executed NHAI projects in Andhara Pradesh and Karnataka.