<div>Failure to obtain environment and forest clearances for road projects has resulted in more than 20 large and small projects being held up, with several of them facing the prospect of being terminated by the private firms involved. <br /> </div><div>The first to announce termination was the GMR Group, with the Rs 5,387-crore Udaipur-Kishangarh-Ahmedabad project, where the developer had committed to pay a premium of </div><div>Rs 636 crore every year to the National Highways Authority of India (NHAI). The second project that is likely to see termination is GVK’s Rs 2,815-crore Shivpuri-Dewas link in Madhya Pradesh, slated to bring NHAI a premium of Rs 182 crore a year. <br /> </div><div>However, are delayed clearances the only reason for hold-ups? NHAI officials say that in many cases, the companies had bid “irrationally” for projects in an attempt to win the contract. Several others had bid close to half the premium at which GMR won the project. “At the time, companies were willing to bid anything to win projects as that would help their share value in the market,” says an official, adding that they too were surprised by the kind of premium some projects were fetching.</div><table width="100" cellspacing="4" cellpadding="4" border="0" align="right"><tbody><tr><td><span style="color: rgb(255, 0, 0);"><strong>20 road projects are held up due to delays in getting clearances</strong></span></td></tr></tbody></table><div><br />With the economic downturn, many firms failed to achieve financial closure and, in most cases, their balance sheets were so severely leveraged that they could not put up even half the equity component required by banks to close the project. GMR officials, however, deny this, saying they had achieved financial closure for the project in 2012, and had put on the table the Rs 700 crore required as equity by the bankers. “Is it the NHAI’s contention that all the projects that are held up were bid for irrationally and all of them are using this excuse to back out of their commitments?<br /> <br />That can be true in one or two cases, not 20,” says a GMR official, on condition of anonymity.</div><div>While some developers have been trying to hawk their road assets to anyone willing to buy for the past 8-10 months, their inability to get the requisite clearances may give them the “excuse” needed to back out of the project.<br /> </div><div>NHAI argues that linking the environment and forest clearances is at the root of the problem and unless the two are delinked, delays will be rampant. “The two need to be separated. What happens now is that if there is a tiny stretch of forest on a 200-km stretch, the environment clearance doesn’t come till the forest department clears it. Since forest clearances take so much time, this delays the entire project,” says an NHAI official. NHAI has now taken the matter to the Supreme Court.<br /> </div><div>The construction company executives, however, blame the NHAI for the failure to acquire land in time and secure clearances. “The NHAI works as some kind of agglomeration of various PWDs (public works departments). Some parts of it work efficiently but most of it functions in the old-PWD style, which is highly inefficient,” says an executive. <br /> </div><div>But as the blame game and finger-pointing between the NHAI and private developers continues, the roads sector and the country’s road-building programmes will have to suffer. Sadly, the price will be paid by the aam aadmi.<br /><br /><span style="color: rgb(34, 34, 34); font-family: arial, sans-serif; font-size: 13px; line-height: normal;">(This story was published in Businessworld Issue Dated 21-01-2013)</span><br /><br /><br /> </div>
