BW Communities

Taking The Most Coveted Road

BW Online Bureau Nov 08, 2014

<?xml version="1.0" encoding="UTF-8"?><root available-locales="en_US," default-locale="en_US"><static-content language-id="en_US"><![CDATA[The race is on to win the biggest highway project ever auctioned by the National Highway Authority of India (NHAI). The 555 km of highway that is to be widened to six lanes is part of the Golden Quadrilateral. The authority has calculated the cost of the BOT (build-own-transfer) project at a substantial Rs 5,387 crore. Of this the grant limit — that is the proportion that will be met by NHAI — is 10 per cent. To recover this investment, the successful bidder will get 26 years — that is the concession period, assuming the construction takes three years. Many bidders, however, feel that that the actual project cost will be well in excess of Rs 6,500 crore. The project does involve a lot of a work. It starts from Kishangarh (on NH-79 A) and ends at Ahmedabad (on NH 8) after traversing through Nasirabad, Bhilwara, Chittaurgarh, Udaipur and Himatnagar in Rajasthan and Gujarat (see map). It will ultimately be part of the Delhi-Mumbai route and is expected to see heavy traffic. It will include construction of two major bridges, 27 flyovers and five rail overbridges. The project will have eight toll plazas and a 23-km, six-lane, bypass in Udaipur which alone would cost around Rs 500 crore. Not surprisingly, the Kishangarh-Ahmedabad project has attracted tremendous interest from bidders. The project is also being closely monitored by the new minister C.P. Joshi, since it involves an important corridor in his state of Rajasthan. The project has many firsts to its credit. One, it is longest stretch to be auctioned on a BOT basis. Second is the level of foreign interest in a road project in India. Due to the sheer size of the project and the expertise required, almost all the 11 bidders who are in the fray have tied up with foreign partners. Many of these are entering development of the road sector in India for the first time. In fact, many smaller bidders could not manage to bid for the project since the project requires a fair amount of technical expertise as well as financial muscle. Companies in the fray are to submit the bids by 29 July and the project will go to either whoever asks for the lowest grant or — as many bidders argue — it may go to whoever offers the highest revenue share to NHAI. The authority has been expecting the project to fetch  a high premium of close to Rs 300 crore. "The road is also part of the Delhi-Mumbai industrial corridor. So besides passenger traffic, it is also expected to see a fair amount of freight movement," says one of the bidders. Also, this project is more sought after since it is a "prime corridor, and one most bidders would like to have under their belt". Another bidder says of the three main stretches of the corridor, it is only the Ahmedabad-Mumbai stretch which will attract very heavy traffic. Delhi-Kishangarh will attract somewhat less traffic and the third corridor, Kishangarh-Ahmedabad, is expected to be quite slow. But despite their interest, the bidders have some reservations about when the project will finally be allocated. There has been a marked slowdown in decision making in the government, especially in the roads and highways sector, they point out. In fact, four other projects that were recently auctioned by the NHAI have been awaiting clearance from the Cabinet Committee for Economic Affairs for over a month. (This story was published in Businessworld Issue Dated 08-08-2011)