Expectations galore for the road sector in the year 2014
M inister of Road Transport and Highways Oscar Fernandes in a tete-a-tete with PTI Economic Service shares his work done in 2013 and outlook for the new year. “Road sector will boom in 2014. There will be a spurt in activities. We will take up projects which could not be taken due to the downturn. Lakhs of crores of projects will be on stream with rescheduling without revenue loss to the government,” Fernandes told PTI, exuberating confidence. In the year 2013, the sector witnessed major issues. From environment and regulatory bottlenecks to a tugof-war between corporates over a new category of vehicle or getting a regulator by its side, the highway sector’s journey 2013 was of many ups and downs. The year which started in anticipation of getting an independent Road Regulator, after the Finance Minister P Chidambaram announced in the budget, is yet to see the light of the day. But for some projects, which were stuck due to lack of environmental clearances, there was light at the end of the tunnel when the Cabinet Committee on Infrastructure showed green flag to the languishing highway projects. During the year major infrastructure players like GVK, GMR exited out of mega road contracts on account of problems such as delays in receiving the green nod, funding crunch and regulatory hurdles. While the Road Ministry initiated a plethora of measures to attract bidders for its projects and prevent developers
from abandoning road contracts midway, an apex court order delinking environment clearance from forest clearance paved the way for execution of stuck projects with investments of Rs 27,000 crore. Corporates had a near showdown when the government gave its approval allowing ‘Quadricycle’ a new category of four-wheeled vehicle to ply on roads. Many companies opposing the proposal, as they were not ready with their prototypes, had their way as the proposal was revisited by the government and is yet to be finalised. Meanwhile, amid concerns over the reluctance of banks to give loans to infrastructure projects, Prime Minister Manmohan Singh asked the Highways Ministry to refer the matter to the Prime Minister’s Economic Advisory Council. Later in the year, the government approved a proposal for postponement of premium payments by highway developers in October and has referred the matter to a high-level panel, headed by PMEAC Chairman C Rangarajan, for fine-tuning it. The ministry also witnessed change of guard with the incumbent Road Minister C P Joshi vacating the post and making way for Congress Party loyalist and Labour Minister in UPA-I government, Oscar Fernandes. When asked to sum up the year 2013, Fernandes told PTI, “It has been a challenging year. I took over in the month of July. Since then we have been travelling to most of the states in the country.” Another uphill task for the ministry was reconstructing roads in the hilly state of Uttarakhand which was devastated by the flash floods in June 2013. Giving a boost to the Investment climate is not very favourable from the point of the view of the concessionaire as they are not able to bring any equity and because of which banks are reluctant to work. One of the reasons for not getting bank funding is not being able to take up construction work in places where 80 to 90 per cent land is not made available. Some projects have gone into rough weather. Some concessionaries taking over have not been able to speed up the projects because they have not been able to get the possession of land. What the ministry has decided now is preparing the ground properly and once everything is in place, it will move forward. “Since we have bid a number of times and we have not received a good response, we have decided to shift to EPC. Projects for which we are going to EPC, we will be able to speed up. We have been able to do 17 km a day, the work going on is different and awarding is different,” says Mr. Fernandes. Exuding confidence that there will be a spurt in activity in the sector in 2014, he said he has already taken stock of the situation in almost every state right from calamity-hit Uttarakhand to far-flung North East and Jammu & Kashmir. “The emphasis is to speed up work all over. Investment climate is not very favourable from the point of view of the concessionaire as they are not able to bring any equity and because of which banks are reluctant to provide loans,” he admitted, saying that a score of measures were underway to make funds available and remove green hurdles. If the steps bear fruits, the highways sector, which is the lifeline of India’s growth, the infrastructure sector is set for a major leap during the next year.