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NHAI to Miss Target of Building 2,500 Km Roads in FY11-12: Report

  • NHAI’s execution rate has been positive on a y-o-y basis from the current 5.8 km per day as compared to 4.9 km/day, but it is still insufficient to meet the target.Policy paralysis, difficulty in getting environment clearance and achieving financial closures has taken toll on the execution of projects by the National Highway Authority of India (NHAI). A recent report suggests that NHAI is likely to miss its targets to build 2,500 km roads in FY11-12. It also indicates that building 20 km a day is a far-fetched dream.A report prepared by PINC Research says, “Total length (of roads) completed has only increased by 8.6% y-o-y (year-on-year) till December end, despite record awarding of projects last year. Till December 2011 the NHAI has completed 1,258 km of roads and is likely to miss its target of 2,500 km. However, we expect NHAI to complete around 2,110 km in FY11-12, an 18.2% y-o-y growth.”

  • According to the report, NHAI has a total target of 7,300 km road projects of which 4,285 have been awarded till FY11-12 while award to 3015 km of road projects are pending. “Considering the awarded projects, current bid stage and execution; we believe NHAI will miss both its target of awarding and completion. Till date (FY11-12), NHAI has awarded approximately 4,285 km of road projects worth Rs408.90 billion. We believe it is difficult for NHAI to award around 7,300 km this fiscal, as current bid stage of projects suggest possibility of awarding nearly 1,635 km by end of March. Though NHAI may stretch and award around 2000-2200 km, still it will fall short by nearly 800-1000km of awarding.”

  • NHAI’s execution rate has been positive on a y-o-y basis from the current 5.8 km per day as compared to 4.9 km/day, but it is still insufficient to meet the target. “We have factored in execution of about 2,110 km and awarding of nearly 6,285 km in FY11-12. To achieve 20 km/day of target requires nearly 22,000 km of work in progress, which currently stands at approximately 13,258km. Hence, we believe it would be an uphill task to achieve 20 km/day target,” the report says.

  • Recently the Cabinet Committee on Infrastructure approved three projects worth Rs35 billion spanning 332 km. The PINC report says that, “Though we have witnessed very competitive bidding throughout last year, we believe competition would ease going forward, as already developers are facing challenges regarding financial closures and our channel check suggests nearly 40 projects are on the block. Our stance gets further vindicated by looking at the recent bid of Kiratpur-Ner Chowk in Himachal Pradesh won by ILFS Transportation that witnessed only four bidders.”

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