Progress on roads

Things are looking up in roads and highways, facing a huge investment backlog. By last year, the pace of construction of road projects under the National Highway Authority of India (NHAI) had crawled to barely 4 km per day.

The figure has since more than doubled, with streamlining of policy implementation and speedy norms for bidder selection. But the target of constructing 20 km per day seems some way off.

More important, there are welcome moves underway to iron out glitches and shortcomings in the investment process. For instance, Industrial Development Finance Corporation has launched a platform to frame a common set of financing documents for NHAI projects.

The lack of standardised guidelines does add to the difficulties faced by road developers, banks and financial institutions in achieving financial closure within the timelines of concession agreements. Reportedly, the award of contracts for building over 23,000 km of highways during 2010-11 has been okayed. Also notable is the objective to award five mega road projects, involving an investment of over Rs 25,000 crore, this fiscal. It’s part of NHAI’s plan to build nine big-ticket highways, each requiring Rs 5,000 crore or more and covering nearly 500 km.

The idea is to add 35,000 km of highways in five years to the existing network of 71,000 km, under the aegis of the highways development programme, which would require an estimated outlay of about $60 billion, with $40 billion expected to be invested by the private sector.

The way ahead is to have built-in provision to independently vet and audit road quality and standards. Also needed are clear-cut rules for revision of road tolls and concessionaire returns. While it makes sense to take into account traffic conditions for investor comfort, the policy process needs to purposefully discourage perverse tweaking of the norms.

In parallel, we need to roll-out expressways, which would be greenfield investments; thus far we have mostly four- and six-laned highways. Further, we need to be nationally focused to shore up state highways and district roads too.