NHAI Struggles To Secure Land For 42 Road Projects Worth Rs 40,000 Crore

In a setback to the government's infrastructure development plans, more than 42 road projects worth over Rs 40,000 crore are stuck due to the National Highways Authority of India's inability to secure land for the projects. Despite receiving Letters of Award nearly a year ago, the projects are still awaiting the appointed date to officially start work, putting a strain on the developers' profitability.The delay is likely to have a material impact on the execution of the projects in fiscal 2025, according to people tracking the sector. The developers are facing significant challenges in meeting their project timelines, which could lead to cost overruns and penalties. “The national highway's construction pace is expected to decline around 10% during FY25 as compared to FY24, owing to escalating execution challenges, rising competitive landscape as well as significant delay in receipt of Appointed Dates post award of project,” said Setu Gajjar, assistant director, CareEdge Ratings.“The delay is largely on account of challenges in land acquisition, particularly for greenfield projects,” Gajjar added..NHAI Arm To Issue First Ever Green Bonds Worth Rs 1,000 Crore This Month .As per the concession agreement the authority promises to provide around 80% of the land to the concessionaire in around six-seven months from the date of award of the project. However, right-of-way, forest clearance, and compensation related issues regularly crop-up leading to delay in appointed date.If the delay is over one year, then both the developer and the authority can mutually agree to either extend the timeline of the project or agree to terminate the project.The other criterion for appointed date is financial closure for the project by the developers. However, of the current 42 delayed projects, only four have pending appointed dates, due to financial closure related issues, according to people familiar with the matter.Some of the HAM projects that have not received appointed date after one year of LoA include:4/6-lane Varanasi-Kolkata Greenfield Expressway.Belgaum-Hungund-Raichur Section of National Highway 748A (part of Hyderabad-Panaji Economic Corridor) [Few packages in this stretch have recently received the appointed date but after 1.5 years of receiving the LOA]Bangalore-Vijayawada Expressway.Mysore to Kushalnagara section of NH-275. Six-Lane Access Controlled Ludhiana-Bathinda Greenfield highway.Four-Lane Access Controlled Greenfield Highway section on NH-163G (Khammam– Vijayawada).Four-Lane Access Controlled Greenfield Highway section on NH163G (Warangal-Khammam).Four-Lane Access Controlled Greenfield Highway Section (Mancherial – Warangal).Umagaon-Saharsa Corridor..INOXGFL Group To Invest Rs 26,500 Crore Across Companies Over Next Three Years.On paper, the order book of the main sponsors that have these projects look healthy, but they are non-executable and in effect put the top line under pressure. “Owing to slackened project awards, the order book position, which used to be in the range of 2.5 to 3 times has shrunk to around 2 times, and, pending receipt of appointed dates would further pull down the executable order book,” Gajjar said.The road sector is already grappling with execution-related challenges, which are likely to be exacerbated by the delay in issuing Appointed Dates for projects. The sector has already been impacted by the slowdown in tendering and awarding of projects under the Bharatmala initiative, which was halted last year due to cost overruns requiring cabinet approval. The tendering process has been slow in fiscal 2025, further adding to the sector's woes.Over the last four to five years around 50-55% of the projects were awarded under the HAM category, but, experts believe the focus will now shift towards BOT Toll, after NHAI introduced it earlier this year to reduce its debt.Under the HAM project, NHAI pays up to 40% of the construction cost as a grant to the concessionaire and the remaining 60% over the tenure of the project. The toll rights rest with the authority. That is a huge financial liability on NHAI.Under BOT Toll the authority has to pay only 40% upfront, while the remainder is borne by the toll operator. In the earlier BOT projects the concessionaires did not get any grant. However, in BOT Toll concessionaires have to bring in double equity over what NHAI pays initially..NHAI Arm Lines Up First Green Bond Issue Worth Rs 1,000 Crore Next Week

NHAI Struggles To Secure Land For 42 Road Projects Worth Rs 40,000 Crore

Despite receiving Letters of Award nearly a year ago, HAM projects are still awaiting the appointed date to officially start work, NDTV Profit exclusively reports.

NDTV Profit

NDTV Profit

Follow Us

DOWNLOAD THE APP

NHAI Struggles To Secure Land For 42 Road Projects Worth Rs 40,000 Crore

Despite receiving Letters of Award nearly a year ago, HAM projects are still awaiting the appointed date to officially start work, NDTV Profit exclusively reports.

Choose a plan

Follow Us

DOWNLOAD THE APP