Hoping to award 5,000 km of roads, NHAI wary about FY15
NHAI is a lot more optimistic about FY15 after a dismal FY14, in which approximately 1,400 km of expressways were awarded for construction, and hopes to get back to levels seen in FY12, reports sources in New Delhi.
However, NHAI’s commentary is pessimistic and it says projects in the EPC mode are dependent upon it being able to acquire the necessary land.
As for the BOT model, that would depend on the response of developers — over the last couple of years bidder interest has been falling as project costs have shot up due to delays in clearances. The NHAI is also concerned that banks may not be willing to fund too many projects.
Based on the Rangarajan Committee’s recommendations few developers have taken up projects following their restructuring, while leading developers like GMR and GVK walked out of projects in FY13. This is because traffic volumes have been below projections, apart from high interest costs.
The financial viability of highway projects is severely strained and the project returns are now in the range of 8-14%, less than half the 22-26% arrived at based on NHAI’s traffic and cost estimates, according to a Crisil report.
Source: Financial Express
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