Citizens' Issues
Roadblocks to Road Building
Urgent need to revamp NHAI, to clear up the huge mess in road projects
 
The MakeInIndia mega show is all set to hit Mumbai over the weekend as this column goes to print. Prime minister (PM) Narendra Modi will, probably, showcase five ministries that are widely perceived to be doing well in their respective domains. These are: the ministries of external affairs, railways, power and petroleum and the ministry of road transport and highways (MORTH). Each has had to clean up the mess of the past decade before it could start showing results; there is a lot more to be done.
 
This column will focus on MORTH which got the biggest impetus under another Bharatiya Janata Party (BJP) led government under prime minister Atal Bihari Vajpayee (1999-2004). The growth continued over the next few years with highways expanding across India and new expressways linking key centres. 
 
But the slide that began in the second term of the United Progressive Alliance (UPA) has now assumed dangerous proportions with no sign of a real turnaround. The Narendra Modi government, which will complete two years in May 2016, can no longer blame the previous regime for its own failure to kick-start stalled projects and empower institutions under ministers, like Nitin Gadkari, who are capable of delivering results.
 
The situation is evident from a report in the Indian Express that NHAI (National Highways Authority of India) will surrender the Rs5,000-crore limit of tax-free bonds this fiscal (out of its quota of Rs24,000 crore).  Sources say the actual amount surrendered may be significantly higher and even twice as much. The organisation is not confident of spending the money for several reasons. 
 
When it comes to road building, the problems are multi-fold and have been clearly identified by the ministry itself.  NHAI was structured by the Vajpayee government as a powerful body charged with building the 6,000km golden quadrilateral project in phase-1 and 7,000km north-south/east-west project in phase-2. In the past decade, it gradually became dysfunctional because of a steady dilution of its authority and decision-making powers, leading to dubious practices, lack of accountability and the induction of poorly qualified people. This led to disputes, delays, cost escalation and worse. Here are some of the broad issues that have cropped up, as a result. 
 
  1. Long delays in earlier projects; aggressive bidding by construction companies; diversion of funds; and a complete halt in fresh funding especially from public sector banks (PSBs) whose portfolio of bad loans has assumed dangerous proportions. 
  2. Shockingly, we learn that when private companies bid for projects, the concession agreements signed with them contain a number of dubious clauses that allow the very scope of the project to be changed on a ‘mutually acceptable’ basis. This immediately impacts project cost and the time for completion and renders the bidding process fairly meaningless. In fact, delays work to the advantage of companies that win such bids. Further, NHAI also has the practice of providing ‘provisional’ completion certificates, whatever that means. 
  3. If this weren’t bad enough, the project costing itself is flawed. Long delays in obtaining various clearances (environmental clearance being the most notorious of the lot) make the project cost as calculated two or three years earlier and inadequate, even before implementation begins. Sources tell us that NHAI and banks assume cost of funds to be 8%-10% when, in fact, the actual cost of funds is over 12%. Many bids also do not follow international practices of providing a margin for increase in cost due to delays, increase in prices or other contingencies. Since there is no independent verification of costs, companies can make unrealistic bids, confident of being able to tinker with contracts on a ‘mutually agreeable’ basis. This opens the doors to corruption or disputes and litigation. Several projects are stuck after 70% of the work is complete because infrastructure companies are unable to raise funds for completion. 
  4. Way back in December 2014, a top audit firm pointed out that NHAI was one of the biggest litigants in Indian courts. One learns that there are nearly 200 cases pending in the Supreme Court, over 2,000 cases pending in various high courts and nearly 3,000 cases in other courts. Strangely, most concession agreements have an arbitration clause which is clearly not working at all because the number of arbitrations is less than 1,000. This sad state of affairs is another example of the massive waste of taxpayers’ money by public sector companies and government bodies in expensive and debilitating litigation. These court cases not only destroy trust, but are the cause of mounting bad loans of banks as well. 
  5. Incomplete projects means patchy roads; but NHAI has been quick to levy a toll on the public and transporters, confident that users rarely get together to protest. Queries filed by activists under the Right to Information Act have revealed shocking corruption and fudging of numbers by toll contractors. This happens because toll contractors are not compelled to start electronic tolling, or use simple technology-based tools to calculate traffic data. It is NHAI that ought to be concerned about the massive revenue leakage. Instead, desperate transport unions, burdened by long delays and high costs due to multiple tolls across the country, have been trying hard to get the ministry to find a solution. At the same time, local politicians, in various states, are exploiting the situation to incite violence at toll-booths from time to time, without pushing for any change in usurious toll collection. 
  6. Sanjay Shirodkar, a Pune activist who has been investigating the toll issues, says that although vehicular traffic growing at 10% per annum is the reason for four-lane highways being converted into six-lane ones, the bids for toll contracts, often, show zero growth in the number of vehicles paying toll. Isn’t it strange that neither NHAI nor the transport ministry is interested in getting to the bottom of this, even though funds for new projects are scarce? The answer is obvious.
There are many other issues with regard to cost of projects, including the ability to raise long-term funds and how to raise viability-gap funding and which projects require support in the form of various grants.
 
A smart government, which acts with authority, can easily force quick resolution of a large number of these disputes so that many stalled projects can be revived and a solution found for those that are stuck for want of funds. At present, the market sentiment is so low and funds for road projects so scarce that there is a very poor response to build-own-and-transfer (BOT) projects. 
 
If the prime minister truly believes in his own MakeInIndia slogan, he needs to push for a revamp of NHAI urgently, empower it adequately and ask it to change the bidding process to ensure that the most competent and realistic bidders win infrastructure contracts rather than the ‘lowest bidder’ who can manipulate the system. But this will happen if the competent ministers are allowed to take decisions, rather than being forced to operate in the shadows of an omnipotent prime minister’s office.
 

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COMMENTS

Sonica Agarwal

9 months ago

My experience is that positive change of scope happens more often than negative change of scope. Positive change of scope means addition by NHAI of certain items. Items that get added often include junctions, culverts, minor bridges, etc. These often arise due to local requests, safety considerations and at times because it was missed by the estimators earlier. Beyond a certain % of cost, this expense for extra work is reimbursable by NHAI. The developer incurs the expense and waits for months and years to get this reimbursement and not to forget these reimbursements are estimated lower by NHAI vis-a-vis cost incurred. On the other hand, negative change of scope is very useful where large part of land is not available due to environment or other issues. However, 80% of cost saved due to this negative change of scope needs to be paid to NHAI.

As for provisional certificate (PCC), it is a very important provision in the agreement. 100% completion of a road is near impossible due to land issues. So, if only a small % of land acquisition is pending and project is complete in all other respects, PCC is issued. In the absence of such a provision, even when 90% project is complete, the developer will be unable to make any revenue for years beyond due date. It may be noted that the toll collection in such cases is partial, i.e. linked to the road length completed.

nilesh prabhu

10 months ago

modi should do to railway what vajpayee did to road.

Modi has the mandate, Vajpayee did not.

shadi katyal

10 months ago

Your article has brought the memories of one of the patriot who lost his life when M. Dubey has brought corruption to the PM and sacrificed his life.
Gadkari being RSS is an old hand when it comes to corruption as shown by his work in Bombay.
Why are there so many casea and even SC is sleeping.We donot hear such cases in Europe and USA why in India.Presume being old PWD hand Gadk for payback and Gadkari might have left a door open. Is there any accountability and transperancy in such road contracts???
Gadkari keeps claiming how amny kilometers are being completed per day but what is true.
So when will the nation see Achey Din in roadways?

REPLY

Sucheta Dalal

In Reply to shadi katyal 10 months ago

Again... confused facts. Gadkari had nothing to do with the highway projects then! And R C SINHA was nowhere in the picture.

PPM

10 months ago

Mother of all the corruption in NHAI BOOT projects was brought in by Mr.Nitin Gadgari (when he was the PWD Minister in Maharastra)by awarding the Mumbai-Pune Highway to IRB Infra, with maximum options and loopholes to manipulate.

He is a powerful central minister now, responsible for the highways and what you expect from him?

REPLY

Sucheta Dalal

In Reply to PPM 10 months ago

You are extremely badly informed. The projects in Maharashtra were done at stunningly low rates when Gadkari was the minister and R C Sinha was MSRDC vice chairman.

It is a pity that we run down good work of fantastic persons like Mr R C Sinha, because we dont know facts.
The mumbai-pune expressway was completed at half the cost of private bidders + the panvel bypass which was not in the private bidding deal. And in time. The rot started in the NCP-Congress led regime

Siachen: Talk of withdrawing from Siachen cannot be agenda-driven
Thirty-two years after Indian troops secured key passes on the north-south running Saltoro Range to deny Pakistan access to the Siachen Glacier, it continues to dominate the headlines.
 
Tragedy, no stranger to the glaciated region bordering Sinkiang and the Northern Areas under the control of Pakistan, resulted in a 10-man infantry section from 19 Madras, inclusive of a medic from the Army Medical Corps, being buried alive when an ice wall collapsed near Sonam Post at 20,600 ft.
 
In what had to be a major feat of human endurance, braving the extreme cold and lack of oxygen, rescue teams dug through the 35 feet of ice debris and five days latermiraculously pulled out a survivor, Lance Naik Hanamanthappa Koppad. Despite the collective prayers of the entire nation and the efforts of army doctors, this brave soldier too joined his other nine comrades three days after being rescued and evacuated.
 
Even as the rescue drama unfolded before the nation, a leading newspaper in the country published an article written by an associate professor from the Jawaharlal Nehru University suggesting that Indian troops deinduct from Siachen and the glacier be declared a peace park.
 
The article, echoing sentiments expressed in the past, claimed that maintaining troops at Siachen cost the government Rs.5 crore (nearly $735,000) daily and that hundreds of lives had already been lost in holding territory that was of no major consequence.
 
"I'm all for an open debate on matters that concern our national security. However, these debates need to be informed discussions that look at the entire picture and are not just agenda driven," said General V.L. Singh, the minister of state for external affairs who is also a former Indian Army chief. "The last time the 'withdrawal from Siachen' issue was raised, it was in 2012 at the behest of the PMO. Once these behind-the-scenes machinations were exposed on social media, the UPA had quietly dropped the idea."
 
A 12-member Track-II committee had been cobbled together in 2011 with the blessings of then prime minister Manmohan Singh. A former air chief, along with handpicked armoured corps officers (all of them never having served in the region) represented India while on the Pakistan side was a group headed by a former army chief. The two delegations then met in various parts of the globe under the aegis of an Ottawa-based think tank.
 
"The Americans have always had an interest in the region," says Lieutenant General Rakesh Loomba, a former head of Military Intelligence. "Even the maps that initially showed the Saltaro range and the Siachen Glacier as being Pakistani territory were issued by the US Air Force."
 
The blatant cartographic aggression had resulted in Colonel Narendra 'Bull' Kumar leading an Indian Army expedition into the area in 1982 that confirmed the presence of mountaineering groups sent in by Pakistan. Subsequently, Indian troops had secured the key passes on the Saltoro, getting into position just a few hours before Pakistani troops also arrived.
 
Lieutenant General Prakash Katoch (retd), a Special Forces veteran who commanded the Siachen Brigade during the 1999 Kargil conflict, said: "All this talk of withdrawing from Siachen is pure bunkum! First, Pakistan has zero presence on Siachen, notwithstanding whatever their army keeps telling their own people. Their positions are to the west of the Saltoro Ridge. For years, they have tried to dislodge Indian troops from there, but they have never succeeded. We've paid in human lives to secure the border there - it is now the de facto Line of Control with Pakistan while towards the north, we have China that controls the Shaksgam Valley. Why should we pull out? That would amount to shooting ourselves in the foot and a betrayal of all those who have died securing the area."
 
While most Indian Army officers dismiss all talk of de-induction from the glacier, Sanjaya Baru, in his book "The Accidental Prime Minister", touches on the subject, saying a former Indian Army chief, General J.J. Singh, had privately told Manmohan Singh that a withdrawal was doable.
 
"All this is fanciful talk," says Gen. V. K. Singh. "The basic question that needs to be asked from those who wish to withdraw - be it (Ajai) Shuklaji and his friends in Trac II or Professor Happymon Jacob from JNU - after de-inducting where do you want your new line of defence to be set up? Do they have any idea what that will entail? Also, what about the rest of the LOC - have these people any idea of the conditions prevailing there? To just mouth off with no idea about the larger picture is extremely dangerous."
 
"It would mean fortifying the entire Ladakh range that runs from west to east, preparing defences along the Shyok river. The quantum of troops required would be almost 15 times what we have in Siachen now, plus it would make Leh a frontline town," says General Katoch who continues to write extensively on the subject.
 
"If we want to honour the fallen who have sacrificed their lives in Siachen, we need to nip this talk in the bud. We must remember that the gates to India have always been opened from within," Gen. Katoch adds.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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D.H. Waghela is new chief justice of Bombay High Court
Mumbai : Chief Justice Dhirendra H. Waghela of the Orissa High Court was on Monday sworn-in as the new chief justice of the Bombay High Court, an official said.
 
Maharashtra Governor C.V. Rao administered the oath of office to Chief Justice Waghela at Raj Bhavan here in the presence of Chief Minister Devendra Fadnavis, ministers, judges, legal and civil officials and other invitees.
 
Chief Justice Waghela, 61, succeeds Chief Justice Mohit Shah, who retired on September 8 last year. Justice (Mrs) Vijaya K. Tahilramani was officiating as Acting Chief Justice since then.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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COMMENTS

D S Ranga Rao

10 months ago

Nearly 6 months time/delay to fill up the vacancy of a Chief Justice of a High Court, that too an important and big state like Maharashtra, is too much to bear with. When we can expect the judiciary and government rise to the occasion?

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