Highway sector shifts gear with 9 awards in January

The National Highways Authority of India (NHAI) may fail to achieve the ambitious target of awarding 125 projects worth Rs 100,000 crore by the end of this fiscal. However, if the development over the last two months is any indication, the highway construction sector seems poised for the next big leap.

NHAI has issued letters of award (LoA) for as many as nine projects in January itself, the maximum since recession choked funding in the highways sector beginning September 2008.
The companies that have emerged as top contenders for the nine projects in January include Larsen & Toubro and Reliance Infrastructure. IVRCL, IRB and Isolux Soma are others in the preferred contender list.

LoA is issued to the most preferred bidder for a project. Following issuance of LoA, NHAI begins the proceedings to hand over 80% of the land required for construction. Once the land is handed over to the bidder, the contract is inked between the government and the private participant.

Officials close to the development attribute the development to the road sector reforms initiated by the prime minister-appointed B K Chaturvedi committee.  “The corrective measures taken by the committee in the model concession agreement for highways has beefed up investor interest as well as confidence,” said an NHAI official, adding that “With the tendering procedure getting streamlined, we have seen instances of 20 to 30 companies lining up for particular projects.”

The nine projects which have got LoAs in January span 758 km and require an investment of around Rs 8,942.82 crore.

Compared to this, the authority awarded only three projects worth Rs 3,430 crore, covering 177 km, in January 2009. Last February, NHAI awarded four projects, while the authority managed two projects in May. Things started looking up only post July 2009, when the authority issued LoAs for three projects worth Rs 3,383 crore, but in September, no such award was made.