Private players lapping up new highway projects
With India’s economic recovery gaining momentum, the government’s ambitious highway development programme, which had stalled for the better part of 2000, is witnessing a turn around.
Though, the National Highways Authority of India (NHAI) – the central agency which builds highways across – is still way behind meeting its own target of constructing 20 km of highways per day, the new road development projects that have been put on the block are getting a huge response from both domestic and international players.
Helping in the turnaround, industry experts say, is the growing confidence in the sector which is seen as giving good returns on investment coupled with policy changes bought about by the government in the model concession agreement which helped in attracting private players.
Here are the figures. According to NHAI, since March 2010 onwards, a majority of the 24 highway projects -- for which bids were invited -- have got between 18 to 50 pre-qualified bidders per project. This huge response is a contrast to earlier times when the NHAI was not finding enough takers for many of the same projects. “A majority of the projects are witnessing aggressive bidding since 2010. There is a tremendous amount of interest among private players. Compared to last few years, we are getting large number of bids for each project now,” said JN Singh, Member (Finance), NHAI.
NHAI officials said that by March 2011, all these 24 projects will be awarded.
Vinayak Chatterjee, chairman of infrastructure consulting firm Feedback Ventures said, “A cleaning up of the bidding policy and a good track record of financial closure of earlier projects has led to an increase in the confidence of both domestic and international players in the sector. Also, in the last few years there has been an increase in capacity in terms of manpower and hi-tech equipments in executing these projects.”
The confidence in the sector can also be seen from the fact that between June 2009 and December 2010, of the 58 highway projects (total length of 5,735 km) worth Rs 51,000 crore that NHAI awarded, it got a negative grant – the amount offered by the concessionaire to NHAI for the project as it found it profitable -- to the tune of Rs 7,882 crore.
NHAI officials said that among the domestic players Larsen and Toubro, HCC, IVRCL, IRB,GMR, GVK, Reliance and Tata and among international players firms like based Leighton are among some of the prominent bidders.