You are using an older browser version. Please use a supported version for the best MSN experience.

NHAI to miss 2016-17 road projects target on land acquisition woes

LiveMint logoLiveMint 30-03-2017 Shailaja Sharma

Mumbai: The National Highways Authority of India (NHAI) will miss its target of awarding 15,000km of road projects in the year ending 31 March by a huge margin, according to analysts and available data.

A year ago, the government set a target of awarding 25,000km of road projects in fiscal 2016-17. Of this, 15,000km was to be awarded by NHAI and the remaining 10,000km by the ministry of road transport and highways (MoRTH). It was seen as an ambitious goal from the very start, given that the Union government is already building roads at the fastest pace ever.

Between April 2016 and January 2017, however, NHAI has awarded 50 projects spanning about 2,914km under the build, operate, transfer (BOT), hybrid annuity model (HAM), and engineering, procurement, construction (EPC) models, according to data on NHAI’s website. Data for February and March has not yet been made available.

NHAI will likely achieve about 4,500-5,000km of road awards in the year ending 31 March against its earlier plan of 15,000km, according to Alok Deora, an analyst at IIFL Wealth and Asset Management. 

“While the awarding and construction target is ambitious—2.5 times of the previous year’s achievement— there have been significant issues in terms of acquiring land and other clearances,” Deora said. “However, there has been a significant pick-up in road awards in the month of March possibly due to expedition in achieving clearances. So, FY18 should be better than FY17.”

The authority’s original construction target for FY17 was 8,000km.

Awarding activity in the fiscal has suffered due to insufficient land acquisition during the year, Motilal Oswal Securities Ltd said in a 22 March report. 

“In FY17, the NHAI has awarded road projects for 3,000km (8.2km per day) and constructed 2,350km (6.5km per day). This is well below its initial target of awarding 15,000km and constructing 8,000km. However, our channel checks suggest that momentum should pick up significantly in FY18,” the Motilal Oswal report said.

Construction activity too is expected to increase from 6.5km per day to 10km per day in FY18, it said.

NHAI chairman Yudhvir Singh Malik did not respond to an email sent on Monday requesting comment.

India has the world’s second largest road network of about 4.8 million km, but major highways constitute a small percentage of that.

The roads awarding pace had slowed down 20% in the first nine months of FY17 due to the weak environment of the sector, India Ratings and Research, a Fitch group company, had said in a 21 February report. “The government’s thrust on cash-based contracts reflects the general opinion of the need for more liquidity in the hands of developers to execute the projects,” it said. 

NHAI and MoRTH had together awarded about 10,098km of national highway projects in FY16 against 7,980km in FY15. During April-February 2017, NHAI and MoRTH together have awarded 9,700km of projects, according to a 14 March report by IDFC Securities analysts Ashish Shah, Shirish Rane, and Jiten Rushi. 

More From LiveMint

image beaconimage beaconimage beacon