ROADS AND HIGHWAYS

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SUMMARY
  • India with 47 km of road length has one of the largest road networks in the world.
  • 1, 15,435 km of National Highways as on 30.06.2017.
  • National Highways awarded in 2016-17- 15,948 kms.
  • National Highways constructed in 2016-17- 8,231 kms.
  • Around 6502.74 kms. of National Highways are targeted to be awarded in 2017-18.
  • 83,677 kms of highway sector projects proposed to be implemented with an overall cost of USD 106 billion over the period 2017-18 to 2021-22.
  • The type of PPP project implementation models used in the highways sector are Build Operate Transfer (BOT) Toll, BOT (Annuity) and Special Purpose Vehicles (SPV).
  • Budgetary allocation for 2018-19 stands at USD 10.92 billion to Ministry of Road Transport & Highways.
  • The implementation agencies of MoRTH includes the following:
    • National Highways Authority of India (NHAI)
    • State/UTs PWD (Public Works Department)
    • lNational Highway and Infrastructure Development Corporation Limited (NHIDCL)
    • Border Roads Organization (BRO)
REASONS TO INVEST
  • The transport sector contributes 6% of the country's GDP with road transport having around 70% share. More than 65% of freight and 80% of the passenger traffic in the country is handled by roads.
  • Highway traffic in the country is on a growth trajectory. Overall annual freight traffic in the country is estimated to reach around 13,000 billion tonne km (btkm) by 2030 .Whereas, overall annual passenger traffic is estimated to reach around 168,000 billion passenger km (bpkm) by 2030. For both of the above, road transport is likely to cater to around 50% of traffic.
  • The Government of India has launched major initiatives to upgrade and strengthen highways and expressways in the country including enabling policy measures.
  • In addition to highway development, focus is also on efficient operations & network management for improving logistics efficiency. This shall give rise to new investment opportunities.
  • Incentives by the Government sector to attract Private Investment and Foreign Direct Investment in the sector are :
    • Bearing of cost by the Government for:
      • Project Feasibility Study
      • Land for the right of way and way side amenities
      • Shifting of utilities
      • Environment clearance, cutting of trees, etc.
    • 100% FDI in the road sector
    • Subsidy up to 40 % of the project cost to make project viable.
    • 100% tax exemption in any consecutive 10 years out of 20 years after commissioning of the project.
    • Duty free import of high capacity and modern road construction equipment.
    • Ease of External commercial borrowing norms.
    • Indexing of toll rate to Wholesale Price Index. .
  • During 2017-18, around 6,502.74 kms. of National Highways are targeted to be awarded.
  • During 2017-18 to 2021-22, 83,677 kms of highway sector projects are proposed to be implemented with an overall cost of USD 106 billion. This includes:
    • Bharatmala Pariyojana Projects-34,800 km of National Highways (NHs) at an approved outlay of USD 82 billion.
    • 48,877 kms of projects under other ongoing schemes like NH(O), Special Accelerated Road Development Programme in North East (SARDP-NE), Externally Aided Projects (EAP) and Roads Projects in left Wing Extremism Affected Areas (LWE) at an estimated cost of USD 24 billion.
  • Road & Highway Projects completed during 2017:
    • Chenani- Nashri Tunnel :
      The 9km long, twin-tube, all weather tunnel constructed between Udhampur and Ramban in Jammu & Kashmir is India’s longest highway tunnel. Additionally, Asia’s longest bi-directional highway tunnel is built at an elevation of 1200 meters at a cost of USD 0.57 billion.
    • Dhola-Sadiya Bridge:
      The 9.15 km long bridge over river Brahmaputra in Assam is India’s longest bridge.
    • Extra-Dossed Bridge across River Narmada at Bharuch:
      The 1.4 km cable stayed bridge has eased the transportation movement on Vadodara- Surat section of NH-8.
    • Bridge over River Chambal at Kota:
      The 6 lane cable stayed bridge built at a cost of USD 42 million has marked the completion of East- West Corridor.
  • Ongoing Roads & Highways Projects :
    • Bharatmala Pariyojana Phase-1:
      An umbrella program for the highway sector to improve National Corridor Efficiency of 34,800 kms to be implemented over a period of 2017-18 to 2021-22 at a cost of USD 82 billion. Additionally, to fast track process, 10% of funds will be ear-marked under the Grand Challenge Mechanism for the state Government. It is also proposed that 1911 kms of International Connectivity Roads and 3319 kms. of Border Roads will be developed under the project. And, first phase would entail development of 2000 kms of International Connectivity and Border Roads at an estimated cost of USD 3.84 billion.

      Components under Bharatmala Phase-1 are:

      • Components :Economic corridors development

        Length-Km :9,000

        Outlay-USD (billion) :18.46

      • Components :Inter-corridor & feeder roads

        Length-Km :6,000

        Outlay-USD (billion) :12.30

      • Components :National Corridors Efficiency

        Length-Km :5,000

        Outlay-USD (billion) :15.38

      • Components :Border & International connectivity roads

        Length-Km :2,000

        Outlay-USD (billion) :3.84

      • Components :Coastal & port connectivity roads

        Length-Km :2,000

        Outlay-USD (billion) :3.07

      • Components :Expressways

        Length-Km :800

        Outlay-USD (billion) :6.15

        Sub-Total

        Length-Km:24,800

        Outlay-USD (billion):59.23

        Balance road works under NHDP

        Outlay-USD (billion):23.07

        Total

        Outlay-USD (billion):82.30

    • Chardham Mahamarg Vikas Pariyojana:
      At an estimated cost of USD 1.84 billion, it envisages development of 889 km of roads to be completed by March’2020.
    • Eastern Peripheral Expressway- Western Peripheral Expressway:
      Developed by the joint initiative of National Highway Authority of India (NHAI) and Haryana Government, the expressways each 135 km long create an outer ring road of 270 kms for Delhi.
    • Delhi- Meerut Expressway:
      The first leg of Delhi- Meerut Expressway (Nizamudin Bridge to UP Border), a 8.7 km stretch and 14 lanes highway was completed in a record time of about 15 months as against the scheduled 30 months. The project involves construction of 74 km long Delhi-Dasna-Meerut Expressway and 22 km long Dasna- Hapur section of NH-24.
    • Vadodra- Mumbai Expressway:
      The 473 km long expressway linking Ahmedabad-Vadodara Expressway to Mumbai-Pune Expressway will connect Ahemdabad to Pune at a length of about 650 km.
    • Bangalore- Chennai Expressway:
      The 262 km Expressway is a Greenfield alignment.
    • Byet Dwarka-Okha Bridge:
      The signature four lane bridge spans a length of 2.32 km, entailing an estimated cost of USD 0.10 billion, the project is scheduled to be completed in 30 months’ time.
  • Setu Bharatam Scheme envisages construction of 208 ROBs/ RUBs (Road over Bridge/ Road under Bridge) at an estimated cost of USD 3.2 billion.
  • 34 MOU’s amounting USD 30.76 billion signed at India Integrated Transport and Logistic Summit.
  • Upgradation of Issuer Ratings of National Highways Authority of India to Baa2 from Baa3 and revision of outlook to stable from positive.
  • Issue of NHAI’s Masala Bonds at London Stock Exchange.
  • Increasing International Partnerships:
    • MoU between India and Nepal for construction of bridge over river Mechi at an estimated cost of USD 24 million.
    • MoU between India and UAE for promotion of increased investment in infrastructure development and logistics efficiency.
    • Motor Vehicle Agreement (MVA) between India and Afghanistan for enhancing regional connectivity and trade through road transport.
    • Co-operation Framework Agreement between IAHE, India and IFEER, Morocco for bilateral cooperation in the field of training in Engines and Road Maintenance of Moroccan Engineers.
    • MoU between MoRTH and TFL (Transport for London) to revamp public transport infrastructure in the country.
  • Development of mobile-apps such as E- Challan and E- Parivahan for comprehensive enforcement solutions.
  • Several Measures taken to revive stalled projects.
  • Under its Green Initiatives, NHAI planted over 2.5 lakh trees and has also set up a Green Highway Division.
  • National Highways Development Project (NHDP):
    The Government launched NHDP to upgrade and strengthen National Highways through various phases of the project. The phase-wide details of NHDP as on 31.05.2017 are as follows:

    (#Total 20,000 Km. was approved under NHDP Phase IV. Out of which 13,203 Km. as assigned to NHAI remaining Km. with MORTH.).

  • Special Accelerated Road Development Programme for North-Eastern region (SARDP-NE): The two-phased scheme has been allocated USD 0.81 billion for the FY 2017-18 . Two phases are:
    • Phase 'A' of SARDP-NE covers 4099 kms of North Eastern Region. It includes a special Arunachal Pradesh Package of Roads and Highways covering 2319 kms, and is presently under implementation.
    • Phase 'B' of SARDP-NE, covers 3,723 km (1,285 km NHs and 2,438 km of State roads) of road. Phase 'B' SARDP-NE shall be taken up after completion of Phase 'A'.
  • Improvement of road connectivity in Left Wing Extremism (LWE) affected areas : As per the Road Requirement Plan, 5422kms. of road length had to be constructed for aligning 34 districts identified under the project. The total length awarded and constructed under the project are 5419 kms and 4486 kms. respectively. The total expenditure incurred since inception up-to 31st March, 2017 stood at USD 0.95 billion. Thus, an allocation of USD 0.10 billion has been made during the current FY 2017-18.
STATISTICS
  • The length of National Highways has grown from 91,287 kms on 31.03.2014 to 1, 15,435 km as on 30.06.2017.
  • National Highways, although constituting 2% of total road network, carry 40% of the total Road traffic.
  • During 2002-16, 369 Road & Highway projects undertaken under PPP mode.
  • National Highways Awarded in 2016-17 -15948 kms. , as against 10098 kms in 2015-16 and 7972 kms in 2014-15.
  • National Highways Constructed in 2016-17-8231 kms. , as against 6061 kms in 2015-16 and 4410 kms. in 2014-15.
  • Efficiency Parameters during 2017-18 are :
    • Average Construction of road in km/day-22.55 kms.
    • Average Award of Works in Km/day-43.70 kms.
    • % of Toll Plazas covered with Electronic Toll Collection System-98.3%.
  • Achievements for the period April-March (2017-18) are :
    • 8,088 kms. of road length awarded.
    • 7,589 kms. of construction completed.
    • 2,156 kms. of highways tolled.
  • 85% Indians are solely dependent on public transport. 70 million passengers use State Road Transport Undertaking buses on a daily basis.
FDI POLICY
  • 100% Foreign Direct Investment (FDI) is allowed under the automatic route in the road and highways sector, subject to applicable laws and regulation.
SECTOR POLICY
  • Development and maintenance of road infrastructure is a key Government priority, the sector has received strong budgetary support over the years.
  • Standardised processes for PPP and public funded projects and a clear policy framework relating to bidding and tolling have been developed over the years.
  • Major policy initiatives undertaken by MoRTH are:
    • Provision of funds to the State Government for development of state roads as per the Central Road Fund Act 2000, amended by Finance Act from time to time.
    • Introduction of Electronic Toll Collection System, FASTag by MoRTH. The success of the initiative can be witnessed by increase in user fee collection from USD 27 million in January’ 2017 to USD 43 million in November’ 2017. The penetration during the same period increased from 11.2% to 18.5%.
    • Implementation of Value Engineering Programme in 2017 to promote use of new technologies, materials and equipment in highway projects executed either under PPP or public funding mode.
    • Automation of Regional Transport Offices under Transportation Mission Mode Project. It envisages creation of a consolidated transport database. The two flagship applications under the project are VAHAN (Vehicle Registration, Taxation, Permit, Fitness and associated services) and SARATHI (Driving License, Learner License, Driving Schools and related activities).
  • Authorities to appraise and approve projects:
    • EPC Projects-NHAI
    • BOT Toll Projects of NHAI, where no grant is required to be given to concessionaires- NHAI, irrespective of cost.
    • NHAI projects under Hybrid (Annuity) and BOT (Annuity) modes with cost (TPC excluding land cost) upto USD 0.30 billion – Ministry and Honorable Minister of MoRTH.
  • To fast track approval process, enhanced powers to NHAI, specifically for EPC (Engineering, Procurement and Construction) and PPP (Build-Operate-Transfer) projects where no Viability Gap Funding is involved.
  • Project Monitoring Information System introduced by NHAI for tracking the status of all projects, preparation of reports and online upload of important project documents like DPRs and contract documents, etc.
FINANCIAL SUPPORT

KEY POINTS IN THE UNION BUDGET 2018-19

  • The Union Budget of 2018-19 allocated USD 10.92 billion to Ministry of Road Transport & Highways. It includes USD 1.77 billion of revenue expenditure and USD 9.14 billion of capital expenditure.
  • Conversion of Road Cess to Road & Infrastructure Cess. Under this, cess on petrol and high-speed diesel has been increased by INR 2 per litre. While, the excise and custom duty have been cut by the same amount.
INVESTMENT OPPORTUNITIES

Current investment opportunities in the sector include the following:

  • Project Highways- Construction & O&M
  • New Expressway projects under Bharatmala Pariyojana Project Phase-1 :
    • Delhi-Jaipur Expressway (Greenfield-196 kms)
    • Delhi-Amritsar-Katra Expressway (600 kms)
    • Vadodra-Mumbia Expressway ( 650 kms)
    • Hyderabad- Vijayawada- Amravathi (HVA) Expressway (300 kms)
    • Nagpur-Hyderabad-Bangalore (NBH) Expressway (1,100 kms)
    • Kanpur Lucknow (KL) Expressway (75 kms)
    • Ring road/ Expressway at Amravath (186 kms)
  • Asset recycling ToT (Toll-operate-Transfer) model – proposed
  • Restoration/ Replacement of 147 bridges under the Indian Bridge Management System.
  • Replacement of 208 level crossings by ROBs/ RUBs( Road over Bridge/ Road Under Bridge) under Setu Bharatam Scheme.
  • Bidding for the first bundle of 9 NHs under the Toll-Operate- Transfer Scheme.
  • Innovative technologies, material, equipment etc.
  • Tunnel projects- many are at bid stage
  • Projects related to efficient operations & network management for improving logistics including development of Transport Nagars and Logistic Hubs, enabling seamless inter-state traffic movement, improved public transportation etc.
  • Intelligent Transport Systems (ITS)
  • Other opportunities- Road Safety, Driver Training Institutes etc.
FOREIGN INVESTORS
  • Apollo(UK) - JLI(UK) - DSC(lndian) - LOR(UK) Consortium (UK)
  • CIDBI Malaysia (Malaysia)
  • Consortium of Gomuda (Malaysia) & WCT Engineering Malaysia (Malaysia)
  • DSC - Apollo consortium (UK)
  • Emirates Trading Agency LLC - KMC Construction Ltd. (Dubai)
  • ERA-SIBMOST (Russia)
  • ESSEL Infra & CR-18 Consortium (China)
  • Galfar Engineering and Contracting SAOG (Oman)
  • Gamuda Malaysia - WCT Malaysia (Malaysia)
  • GMR-Tuni-Ankapalli Express Ltd. (Malaysia)
  • Hindustan Construction Company Ltd. -Laing-Sadbhav Consortium (UK)
  • IDFC-PLUS ExpesswayBerhad Consortium (Malaysia)
  • IJM - SapoorjiPallonji (JV) (Trichy toliwayPvt. Ltd.) (Malaysia)
  • IJM Corporation Berhad - IDFC Ltd. (Malaysia)
  • IRB Infrastructure Developers Ltd.- Deutsche Bank AG (Singapore)
  • IsoluxCorsanConcesionnes Sa - CorsanCorviam Constructions SA - Soma Enterprise Ltd (Spain)
  • JMTPL(I) Corporation Project (Malaysia)
  • KMC Construction Ltd.- CR18G Consortium (China)
  • MVR - MRK - JTEC (JV) [MVR infrastructure &Tollway Pvt Ltd.] (China)
  • NavinyaBuildcon-Atlantia Spa(JV) (Italy)
  • Ramkey Infra and JPTEG (China)
  • RIL-AAA- JTEG Consortium (China)
  • SREI - PNC - GAL FAR Consortium (Dubai)
  • SREI-Simplex-Galfar Consortium (Shree Jagannath Expressway pvt.ltd.) (Dubai)
  • Supreme Infrastructure India Ltd.-Mahavir Road & Infrastructure Pvt. Ltd.-China State Construction Engg. Honqkcnq Ltd. (China)
  • SVBTG Consortium of Pacific Alliance Inc -PBIDC - STRADEC Inc- CES & L&T (USA - Phillipines)
  • Tambaram-Tindivanam Express way Pvt. Ltd. (Consortium of GMR Consortium & UE Malaysia) (Malaysia)
  • Tantia-Jiangsu (JV) (China)
  • Transstroy (I) Ltd. - Corporation Transstroy OJSC Consortium (Russia)
SOURCES
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