NHAI chief RP Singh blames government apathy for floundering projects

NEW DELHI: The National Highways Authority of India has slammed the Centre for failing to take quick decisions to revive the country’s flailing highway development programme and blamed ‘infrastructure experts’ in the finance ministry and Planning Commission for ‘massacring’ the authority’s attempts at kick-starting projects.

In a scathing missive to road transport and highways ministry, NHAI chief RP Singh has said the authority and the ministry have been “literally marginalised with the Planning Commission and the department of economic Affairs calling the shots.”

“Such a situation does not prevail in any other ministry. This needs to be quickly rectified in case we want quick progress in the road sector,” Singh’s letter sent on Monday stressed, highlighting that the sector’s problems were not “unsurmountable” and could have been easily fixed “if only decisions had come fast on policy issues.”

Flagging the NHAI board’s “limited authority” despite having four secretaries as its members, Singh said the ‘rigid’ model concession agreement (MCA) cannot be changed by the ministry or NHAI without inter-ministerial consensus and this has scuttled any hope for evolution in the Public Private Partnership ( PPP) model for the highway sector.

The trigger for this NHAI letter seems to be the about-turn by some members of an expert group constituted by the Cabinet to decide the modalities for deferring premium payments committed by road developers. “The committee deliberated these matters in their sittings during November 2013 and a broad consensus was arrived at on the references made based on which the chairman ( PMEAC head C Rangarajan) circulated a draft report. We now learn that some Members of the Expert Group have suggested amendments totally at variance with the consensus arrived at during the meetings,” stated the letter.

In a bid to revive investment in the sector, NHAI had sought two specific dispensations from the government – easing of the exit policy to enable divestment of equity to private private equity funds to bring liquidity into the system, and rescheduling of premium to kick-start several stalled road projects.

NHAI has stated that both these issues have been ‘abnormally delayed’ and their exit policy proposal was ‘massacred by infrastructure experts of the DEA and the Planning Commission’ and the final approved version was an unworkable policy which found no takers.
It has also voiced its concern that the premium rescheduling proposal is moving in the same way and every effort is being made to ‘subvert’ the rescheduling that had got Cabinet nod on October 8 . “It is pertinent to note that after the Cabinet decision was taken on 8-10-2013, the Planning Commission issued an OM on 25-10-2013, literally criticising the NHAI and the Cabinet decision,” the letter pointed out. Given that several projects awarded since 2011-12 continue to languish and an acceptable premium rescheduling scheme is still out of sight, NHAI has argued that it is more practical to drop the policy and so ahead with an amicable termination of these projects and re-award them as early as possible.

NHAI has also blamed the finance ministry for the financing troubles in the sector where banks and lenders have virtually stopped lending to developers highway projects.

The department of financial services had previously instructed financial institutions that unless 100% land was in possession and all environment clearances were in place, no lending for road projects should be done.

“While one wing of the MoF (ministry of finance) i.e, DEA had put their stamp of approval on the concession agreement which specifies a requirement of 80% land in possession for taking up of any project, the other wing, i.e, department of financial services put out this contradictory policy of insisting on 100% land,” the letter stated, adding that having to take it up with the Centre to ensure all wings were on the same page ‘lost us valuable time’ and marginally viable projects became non-viable.