The government has decided to terminate three highway projects worth Rs 3,000 crore because of poor performance by contractors, bringing to the fore the fact that all is not well with our road projects despite government's efforts to de-risk infrastructure projects.
These three projects are part of 19 road and highway projects that are stuck for various reasons.
Government has decided to terminate three highway projects in Jharkhand, Haryana and Uttarakhand on account of poor show by the developers, chairman of the National Highways Authority of India (NHAI), Raghav Chandra, said at an event in New Delhi on Friday.
The three projects - Rargaon-Jamshedpur highway in Jharkhand, Rohtak-Jind highway in Haryana and the Haridwar-Dehradun highway in Uttarakhand, involve total investments of Rs3,000 crore, he said.
"We have decided to terminate three projects," said Raghav Chandra, chairman of National Highways Authority of India (NHAI) on the sidelines of the 24th annual general meeting of the American Chamber of Commerce in India.
The Rohtak-Jind project in Haryana is estimated to cost Rs410 crore and the Haridwar-Dehradun project in Uttarakhand will cost Rs1,021 crore while the Ranchi-Jamshedpur project in Jharkhand will involve an expenditure of Rs1,650-crore.
The Haryana project was awarded to Vijai Infrastructure on the build-operate-transfer (BOT) model. It began work in October 2013. NHAI suspects diversion of funds in this project.
The Uttarakhand project was awarded to a joint venture of the Era Group and Russian company OJSC-SIBMOST on the annuity model. Work began in November 2011. NHAI found the companies were unable to bring in the necessary funds in the stipulated period.
The Jharkhand project, on which work began in December 2012, was awarded to Madhucon Projects on the annuity model. NHAI suspects diversion of funds in this project as well.
These three projects are part of 19 road and highway projects that were stuck for various reasons. In January, minister for transport, highways and shipping Nitin Gadkari and finance minister Arun Jaitley met developers and bankers in a bid to revive stalled projects.
"We have given more time to a few other concessionaires. I don't want to name them yet. We will take a decision on their projects soon," Chandra said.
The government will soon hold another meeting to review the fate of the remaining 16 stuck highway projects.
Contractors have been removed and blacklisted by NHAI earlier too. The reasons ranged from missing the deadline for financial closure and construction delays.
In his address, the NHAI chairman said while American companies have worked with the government as a consultant on many road projects, none have shown any interest in bidding for such projects.
The NHAI chairman said while contractors are still attracted by public-private partnership projects, there is a tendency among these companies to miss the deadline for financial closure and construction.
While more projects could also meet the same fate, government is coming with more such businesses for private sector players. Chandra said the NHAI is scouting for a consultant for Rs12,000-crore project to develop a 235-km Outer Ring Road of Andhra Pradesh's new capital Amravati. It would be an eight-lane expressway.
He also said developing expressways was going to be a priority sector for the NHAI. Besides Amravati Outer Ring Road expressway, the NHAI was working on Lucknow-Kanpur, Delhi-Jaipur,Vadodara-Mumbai expressway projects as well.
"For Vadodara-Mumbai project, the detailed project report has been prepared and the auction is going to happen any time soon. For Bangalore-Chennai expressway, 50 per cent of the land acquisition is already over," Chandra said.