NHAI wary about FY15, hopes to award 5,000 km of roads

May 04 2014, 23:30 IST
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The NHAI is also concerned banks may not be willing to fund too many projects The NHAI is also concerned banks may not be willing to fund too many projects
SummaryThe NHAI is also concerned banks may not be willing to fund too many projects

After a dismal FY14, in which approximately 1,400 km of expressways were awarded for construction, NHAI is a lot more optimistic about FY15 and hopes to get back to levels seen in FY12, reports fe Bureau in New Delhi.

NHAI’s commentary, however, is pessimistic and it says projects in the EPC mode are dependent upon it being able to acquire the necessary land.

As for the BOT model, that would depend on the response of developers — bidder interest has been falling over the last couple of years as project costs have shot up due to delays in clearances. The NHAI is also concerned banks may not be willing to fund too many projects.

While leading developers like GMR and GVK walked out of projects in FY13, few developers have taken up projects following their restructuring based on the Rangarajan Committee’s recommendations. This is because, apart from high interest costs, traffic volumes have been below projections.

According to a Crisil report, the financial viability of highway projects is severely strained and the project returns are now in the range of 8-14%, less than half the 22-26% arrived at based on NHAI’s traffic and cost estimates.

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