Foreign firms bypass national highway projects

Even as the national highway development programme (NHDP) aims to meet its 2015 deadline, foreign interest in the ongoing upgrade projects is on the wane.

After the surge in participation by foreign contractors (around 40 per cent) in phase I of NHDP, also known as Golden Quadrilateral (GQ), the second and third phases have seen participation of only 20 per cent and 16 per cent, respectively.

The time consuming procedure for acquisition of land, especially under the new model concession agreement (MCA) being employed for phase III, is a primary reason for the phenomenon.

The new MCA specifies that land has to be acquired before the upgrade of highways starts. This clause has been a sore point with foreign participants.

However, infrastructure experts say foreign players are showing diminished interest in NHDP due to their inability to deal with local law and order issues.

Another significant reason is that as Indian companies become capable of handling large projects, the domestic competition has intensified, edging out foreign contractors.

One indication of the eagerness of Indian companies is the fact that many of them are even ready to pay the National Highway Authority of India (NHAI) money upfront to grab projects.

Of the 134 projects in various stages of progress in north-south-east-west (NSEW, also phase II of NHDP), only 29 are being implemented through foreign assistance or solely by foreign companies.

Of these, 14 are being handled by foreign companies, while the rest are joint ventures with Indian companies. Of the 18 projects awarded in the third phase till November 30, 2006, only three are being handled by foreign contractors, of which only one is a solo project.

However, the scenario is quite different for Golden Quadrilateral (GQ) projects being implemented. Of the 35 such projects, 15 are being implemented by foreign contractors independently or in collaboration with Indian contractors.

At the time of its inception, NHDP was poised to change the face of the country's highway network and this had evoked great enthusiasm from foreign players.