Companies involved in road development feel March 2010 target unlikely to be met
November 26, 2009
While the ministry for road transport and highways is optimistic about meeting its road development targets for March 2010, major operators in the road sector feel that the targets are not achievable.
Speaking at the release of a study report last week, Brahm Dutt, secretary, ministry for road transport and highways, said the ministry will meet its targets for March 2010. “Land acquisition for the projects is not an issue. Almost 50% of the land is already available,” he said. The road transport ministry headed by Kamal Nath, had set a target of 20 kms per day —7,000 km of road development per year—including this year.
“I think the target for March 2010 is impossible (to meet),” said Praveen Sood, CFO, Hindustan Construction Company (HCC). Officials from major companies in the road construction sector list problems like land acquisition and late bidding as the main reason for delay in the projects.
“They (officials from the ministry) will require to first start the bidding process for the project, and then complete the financial closure. Then work on the project is likely to start. It is a complete cycle. Even the projects that have been awarded over the past three months will not see financial closure till March 2010. There is no question of reaching those targets (set by the government) by March 2010,” explained Mr Sood.
“What is important is not the announcement of how projects have been given out, but the progress of those projects later on. The government should concentrate on removing impediments much faster. We have lost the past one year on deciding how many parties should qualify and then we lost one year in sorting out the conflict of interest issue,” said Pervez Umrigar, managing director, Gammon Infrastructure Projects Ltd.
He added that the main hurdle coming in the way of achieving these targets would be that of land acquisition. “(Just) 50% of land acquisition does not help. The problem always lies in the last 10%. It arises in the last leg. The target should be 100% land acquisition. If the land is acquired fully, certainly I will say the target is achievable. However, I would not know whether these land acquisitions will happen or not by 2010,” said Mr Umrigar.
However, companies report some positive changes already taking place in terms of land acquisition. “We can see an improvement regarding land acquisition. We have got two projects and the land for these projects has been coming in much faster than earlier. In the land acquisition area, we see a good response from the government,” said Mr Sood. Mr Umrigar agrees that there are a few projects where land acquisition has been progressing smoothly.
However, meeting the targets would be another story. “The targets are not achievable by March 2010. It is very likely we will meet targets in 2011,” concluded Mr Sood.