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National Highways Authority of India (NHAI) awarded several major projects in 2014-15, the majority of which were under the engineering, procurement and construction (EPC) mode.
The four laning of the 127 km Patna-Gaya-Dobhi section of NH-83 in Bihar was awarded to IL&FS Engineering & Construction. The company received a letter of award (LoA) from NHAI for a total value of Rs 1,232 crore for the project, which will be executed under JICA ODA Loan Assistance.
Larsen & Toubro bagged an order for development & upgradation of Bijapur-Gulbarga-Homnabad section of NH-218 (New NH-50). Bids for the project were invited in 2012 on DBFOT (Toll) basis. However, it failed to generate any response from bidders till FY14. Later, bids for the project were re-invited on EPC basis.
Spanish firm, Isolux Corsan, managed to bag two EPC contracts for executing Talchar-Dubari-Chandikole section of NH-200 in Odisha and Phalodi-Jaisalmer section of NH-15 in Rajasthan.
An Interesting as well as welcome development noted during the last fiscal was that along with regular players like L&T and IL&FS, new and regional players also managed to bag key highway projects. Dilip Buildcon bagged two projects under NHDP Phase-IV, on EPC basis; one in Tamil Nadu and the other in Jharkhand.
Udaipur-headquartered GR Infra bagged two EPC contracts for development of Jodhpur-Pokaran section of NH-114 and Jaisalmer-Barmer section of NH-15 in Rajasthan, on EPC basis, under NHDP Phase-IV.
NHAI also awarded three BOT projects in 2014-15. Two of the highway projects — four laning of Kaithal - Rajasthan Border Section of NH-152/65 in Haryana; and four laning of Yedeshi - Aurangabad section of NH-211 in Maharashtra, were bagged by IRB Infrastructure Developers. Ircon International was awarded the project of widening & strengthening of the existing Bikaner-Phalodi section to four-lane in Rajasthan, on BOT (Toll) basis.
State-wise, NHAI awarded five highway sections in Rajasthan, followed by four in Tamil Nadu and three in Bihar.
NHAI’s targets for 2015-16
In 2015-16, NHAI may award 58 projects (5,300 km). Out of this, 31 projects (2,800 km) will be under EPC mode, 10 projects (1,000 km) under BOT mode, and the remaining 17 projects (1,500 km) under hybrid mode. However, these targets are yet to be formally approved.
Still, 28 projects are expected to be awarded in the first quarter, having a total length of about 2,200 km. All of these projects will be implemented under EPC mode.
In the second week of April 2015, KNR Constructions bagged a Rs 937 crore road contract in Tamil Nadu, from NHAI.
To rekindle developers’ interest in the PPP mode, NHAI recently laid down the guidelines for a hybrid annuity model. The model is a mix of EPC and BOT formats, with the government and the private enterprise sharing the total project cost in the ratio of 40:60, respectively.
As per the guidelines, the government’s funding to the extent of 40 per cent of the project cost will come up in five equal instalments during the construction period, thus reducing the financial burden on concessionaire during the project implementation phase.
As compared to EPC projects, a shift to hybrid annuity model is expected to ease the cash flow pressure on NHAI.
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