Road Ministry unlikely to award targeted 9,500 km projects by March

NEW DELHI: In view of economic slowdown and delays in environment clearances, Road Transport and Highways Ministry, already under attack for failing to deliver projects in time, is unlikely to meet the target of awarding contracts for developing 9,500 km of roads by March end.

"The performance of the ministry has suddenly come to a very poor low this fiscal and it would not be able to award 9,500 km of projects by the end of 2012-13," a Road Transport Ministry official told PTI.

The contracts for only 1,100 km could be given by the government in the first three quarters of the fiscal.

The official attributed the delays to a number of reasons including hardships in securing green clearances, problems in land acquisition and a slowdown in the economy.

"General economic scenario is quite poor and investment climate has also taken a hit. Besides, despite best efforts, it is not always possible to acquire land while there are delays in obtaining forest and environment clearances," the official said.

The ministry as well as the National Highways Authority of India (NHAI) are already facing problems because of major infrastructure firms pulling out of projects.

While GVK Power and Infrastructure announced termination of its contract with NHAI yesterday for building a major highway - Shivpuri-Dewas Expressway in Madhya Pradesh - last week, another firm GMR Infrastructure had cancelled its contract with the authority for building the Kishangarh- Udaipur-Ahmedabad highway.

Sources said NHAI apprehends that many more companies may withdraw from road projects following the exit of big players.

Meanwhile, NHAI, last week, moved the Supreme Court seeking modification of its guidelines mandating forest clearance prior to environmental clearance, saying that the related procedures have delayed and stalled 22 important projects worth over Rs 20,000 crore.

It is feared that long delays in receiving such clearances are forcing companies to abandon these projects as they are mainly debt-funded.

The official said the bidders were reluctant to bid for NHAI projects due to reluctance of banks to finance infrastructure projects.

"Bankers have reached their sectoral exposure ceilings in case of road projects as per RBI norms. Many of them have tied up their purse strings and not lending easily to the road projects anymore," the official said.

Amid concerns over the reluctance by banks to give loans to infrastructure projects, Prime Minister Manmohan Singh last week asked the Highways Ministry to address the matter to the PMEAC so that the issue can be resolved.