Published On: Tue, Oct 25th, 2016

High-risk highway projects decline 13%: Crisil

NHAI collaborates with PFC for Green Highway Program

Crisil said 85 under-construction projects and 104 operational build, operate and transfer (BOT) road projects shows that there has been a 13% reduction in high-risk projects over the past fiscal.

The pace of road construction has also improved by 40% to 6 km per day in fiscal 2016 from an average 4.3 km per day in fiscal 2015, Crisil said.

“The material improvement in the pace of execution can be attributed to policy reforms by the NHAI and facilitations by the government, which are also reducing delays. Given this, we expect the average construction per day for NHAI projects to nearly double to more than 11 km by fiscal 2018,” said Ajay Srinivasan, director, Crisil Research.

The key policy reforms include easing of the clearances process, ensuring 80 per cent land acquisition before the award of project, premium rescheduling, allowing developers to fully exit operational road projects, and introduction of the hybrid annuity model.

Crisil stated its analysis of the 104 operational projects showed as much as an 18% reduction in both length (to 2,700 km) and outstanding debt (to Rs.19,650 crore) of high-risk operational BOT projects compared with 2015.

“Within the 85 under-construction BOT projects, there has been a 10% reduction; however, as much as 4,600 km of projects are still in the high-risk category because delays in land acquisition and approvals have increased costs by 20% or Rs.11,000 crore, and the financial health of sponsors remains weak,” the report said.

These stuck projects were largely awarded during 2009-2012 and the mitigation options for them include a one-time fund infusion through NHAI loans, and a change in sponsor.

 

 

 

 

 

 

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