 "The ministry intends to set up a highway regulator this financial year: Oscar Fernandes")
Oscar Fernandes took over as Union minister for road transport and highways at a time when the Centre is struggling to attract investments in the sector. After taking over during the reshuffle last month, Fernandes has his hands full. In an interview with Sanjay Jog, he explains a slew of initiatives being taken to give a much-needed push. Edited excerpts:
What are your plans to put the road sector on the fast track?
Formation of the roads and highways regulators, meeting the target of awarding projects of 9,638 km during 2013-14 and relaxation of norms for environment clearance are the issues under active consideration. Besides, the ministry is keen that the stretches requiring additional right of way (ROW) of 40 metres and length up to 100 km do not require environmental clearances. These issues are likely to be resolved shortly.
The ministry’s efforts to resolve some other key issues have paid off. The Reserve Bank of India has issued guidelines that bank loans to concessionaires will be treated as secured loans. Stretches aggregating up to 4,000 km length will be taken up on EPC (engineering, procurement, construction) mode this year. National Project Monitors are being engaged for quality checks during implementation. Environmental and forest clearances are de-linked and obtaining the no-objection certificate from gram sabhas has been exempted. The Indian Highways Management Company Ltd has been formed for implementation of nation-wide electronic toll collection. The ministry has been delegated the financial power to sanction projects up to Rs 500 crore.
What is the completion target for this financial year and during the remaining period of the 12th Plan?
Completion per km construction during 2011-12 was 13.73 km a day. It rose to 16.01 km/day during 2012-13. The target for 2013-14 is 17.34 km/day.
Progress on projects awarded is muted, especially due to the absence of necessary ROW, clearance and lack of financial closure. How are these issues being addressed?
According to the modified model concession agreement (MCA), it is to be ensured that 80 per cent of the total land is vested with the National Highways Authority of India (NHAI) at the time of appointed date. The ministry has taken a slew of initiatives to expedite land acquisition. The issue has been taken up with state governments for expediting the land acquisition matters. Regular meetings have been held at higher levels for speeding up the acquisition of land. High-powered committees under chief secretaries of state governments have been formed. Infrastructure and manpower resources to the Competent Authority for Land Acquisition in the respective states and Project Implementation Units of NHAI will be strengthened. In some of the states, special land acquisition units will be formed.
How will de-linking of environment and forest clearances come handy for speedy implementation?
Environment clearance is required for the entire stretch of the project highway, whereas forest clearance is needed for a particular stretch of the project highway where forest land is involved. Thus, forest clearance affects a small portion of the total project highway. De-linking of environment and forest clearances ensures speedy implementation of the project, as work can immediately start for the stretches that don’t require forest clearance. For the remaining stretches that need forest clearance, work may commence at a later time after obtaining the clearance.
Given the dismal performance of projects implemented under the build-operate-transfer (BOT) mode, what is the logic behind awarding projects on EPC and OMT (operate, maintain and transfer) basis?
One reason for the failure of the BOT mode during the past two years has been the absence of adequate market equity. Implementing EPC through budgetary support will boost the market equity, which will enable the market to rise again for making a favourable condition for taking projects on the BOT mode.
What efforts are being made to attract further investments, apart from the creation of infrastructure debt funds?
At present, the ministry’s focus is mainly on EPC projects to revive the industry. Besides, the ministry is making effort to remove all hurdles to pre-construction activities.
When will an independent regulator for the road sector be set up?
The ministry intends to set up a highway regulator within this financial year. Inter-ministerial consultation was held in March, which was followed by round table discussions with various stakeholders in association with the Confederation of Indian Industry in April. The task force has submitted its report in June. Bids for selection of consultants are under the ministry's examination.
What are your plans to put the road sector on the fast track?
Formation of the roads and highways regulators, meeting the target of awarding projects of 9,638 km during 2013-14 and relaxation of norms for environment clearance are the issues under active consideration. Besides, the ministry is keen that the stretches requiring additional right of way (ROW) of 40 metres and length up to 100 km do not require environmental clearances. These issues are likely to be resolved shortly.
The ministry’s efforts to resolve some other key issues have paid off. The Reserve Bank of India has issued guidelines that bank loans to concessionaires will be treated as secured loans. Stretches aggregating up to 4,000 km length will be taken up on EPC (engineering, procurement, construction) mode this year. National Project Monitors are being engaged for quality checks during implementation. Environmental and forest clearances are de-linked and obtaining the no-objection certificate from gram sabhas has been exempted. The Indian Highways Management Company Ltd has been formed for implementation of nation-wide electronic toll collection. The ministry has been delegated the financial power to sanction projects up to Rs 500 crore.
What is the completion target for this financial year and during the remaining period of the 12th Plan?
Completion per km construction during 2011-12 was 13.73 km a day. It rose to 16.01 km/day during 2012-13. The target for 2013-14 is 17.34 km/day.
Progress on projects awarded is muted, especially due to the absence of necessary ROW, clearance and lack of financial closure. How are these issues being addressed?
According to the modified model concession agreement (MCA), it is to be ensured that 80 per cent of the total land is vested with the National Highways Authority of India (NHAI) at the time of appointed date. The ministry has taken a slew of initiatives to expedite land acquisition. The issue has been taken up with state governments for expediting the land acquisition matters. Regular meetings have been held at higher levels for speeding up the acquisition of land. High-powered committees under chief secretaries of state governments have been formed. Infrastructure and manpower resources to the Competent Authority for Land Acquisition in the respective states and Project Implementation Units of NHAI will be strengthened. In some of the states, special land acquisition units will be formed.
How will de-linking of environment and forest clearances come handy for speedy implementation?
Environment clearance is required for the entire stretch of the project highway, whereas forest clearance is needed for a particular stretch of the project highway where forest land is involved. Thus, forest clearance affects a small portion of the total project highway. De-linking of environment and forest clearances ensures speedy implementation of the project, as work can immediately start for the stretches that don’t require forest clearance. For the remaining stretches that need forest clearance, work may commence at a later time after obtaining the clearance.
Given the dismal performance of projects implemented under the build-operate-transfer (BOT) mode, what is the logic behind awarding projects on EPC and OMT (operate, maintain and transfer) basis?
One reason for the failure of the BOT mode during the past two years has been the absence of adequate market equity. Implementing EPC through budgetary support will boost the market equity, which will enable the market to rise again for making a favourable condition for taking projects on the BOT mode.
What efforts are being made to attract further investments, apart from the creation of infrastructure debt funds?
At present, the ministry’s focus is mainly on EPC projects to revive the industry. Besides, the ministry is making effort to remove all hurdles to pre-construction activities.
When will an independent regulator for the road sector be set up?
The ministry intends to set up a highway regulator within this financial year. Inter-ministerial consultation was held in March, which was followed by round table discussions with various stakeholders in association with the Confederation of Indian Industry in April. The task force has submitted its report in June. Bids for selection of consultants are under the ministry's examination.