Trends

Stepping Up

Indian-National-HighwaysINJECTIONS of reform are a sign of growing urgency for development in the life of a nation. At the beginning of 2017, India’s road elephant, was ambling lazily on the growth highway relatively unmindful of its intended destination and targets, anticipating a shot of much needed GST.

Now midway into the year, with the Goods and Services Tax regime beginning to flow into its bloodstream – also coupled with the need to keep up pace with the Chinese economic dragon which overtook it long ago – the pachyderm has picked up pace, and seems to be breaking into a semblance of a run.
On the roads and highways accomplishment front, however, it is not yet the 42 km per day run promised originally.

To be fair however there has been progressive improvement. In a political scenario where comparison of work with the previous government has now become the norm, it is easy to see that the NDA has stolen a march over the UPA. Things have come a long way from three years ago, a period when road and highway construction projects could not gather pace with as many as 400 projects stonewalled due to problems related to land acquisition, environment and forest clearances, recalcitrant contractors and bank non-performing assets piling up.

According to data released by the Roads and Highways Ministry the work order for highway expansion has shot up by 122 per cent during the first three years of the Narendra Modi government with the pace of construction going up by 25 per cent.

In 2016-17, 23 km of roads were constructed per day, up from 16.6 km a day in 2015-16.

With the acceleration in award of works to road builders – over 11,000 km on an average in the past three years as against only 5,000 during the UPA’s corresponding period of reign — the view obtaining now among construction sector watchers is that this could translate into improved road construction achievement by April 2019 when the nation faces its next parliamentary election. For the current financial year, the government has set the target of awarding at least 30 per cent of highway projects on public private partnership (PPP) against last year’s 17 per cent projects. The overall target is to increase the national highways length to two lakh kilometres.

The introduction of 100 per cent Foreign Direct Investment in the Roads and Highway sector has come as a shot in the arm for the nation – greater access to capital to fund infrastructure and construction technology requirements is a much needed booster shot. According to industry estimates, with more overseas players entering the fray, investment in road projects is expected to double to Rs 9.8 trillion over the next five years. FDI will provide the required push to the primary market while boosting secondary market opportunities. For Indian project owners working primarily on an asset aggregation platform the availability of foreign capital comes as a godsend. It affords them a chance to take advantage of the technological excellence of international firms and to adopt global best practices in infrastructure development.

It is being expected that the ministry will be in a position to achieve more than 30 km of highway construction per day. That optimistic view is bolstered by the Motilal Oswal Report which suggests a pickup in project momentum. In the Union Budget 2017-18, the Centre has allotted Rs 64,000 crore to the NHAI for roads and highways and Rs 27,000 crore for the Pradhan Mantri Gram Sadak Yojana, a programme focused on rural roads. In May the maiden masala bond issue of the National Highways Authority of India received a strong response at the London Stock Exchange from investors, attracting bids worth over Rs 3,000 crore. Through the issue the agency aims to raise Rs 5,000 crore which will be used for India's infrastructure projects. There are also plans to set up logistics parks across the nation to aid the industrial flagship project ‘Make in India’ to subtract costs and to promote bio-fuels and electric vehicles. The current thrust areas of the roads ministry largely includes the states in the arc of the Himalayas like Uttarakhand and extends to the Northeast. In the final analysis based on the state of projects the total road-spend will be a whopping Rs 6 lakh crore!

As is his wont, Nitin Gadkari, Union Minister for Road Transport, Highways and Shipping, is given to maintain that the government will achieve 40 km road construction target by the end of March 2018. This when the NHAI could achieve only about 4,500-5,000km of road projects awards as on 31st March 2016-17 against the earlier plan of 15,000 km.

In conversation with this writer at a conference in Mumbai the lawmaker explained the road mission thus, “If the targets seem higher it is mainly on account of the government’s ambitions for national development and growth. It is a reflection of our commitment to historical transformation.”

 

Inroads Abroad

The ambitious streak is not limited to domestic projects. In early June the government was examining a proposal to launch a dedicated international subsidiary of the National Highways Authority of India (NHAI) to take up joint ventures for road construction in neighbouring countries like Iran, Nepal, Bhutan, Bangladesh, Myanmar and Sri Lanka. It is pointed out that the subsidiary NHAI International could be in the form of a special purpose vehicle (SPV) which will collaborate with foreign companies to bag international projects. The move is based on positive feedback from Sri Lanka with Colombo agreeing to allot a couple of road projects in the north of that country as also Iran with which India is collaborating in the development of Chabahar Port. The road and highway construction projects include tunnels, over-bridges and roadside amenities.

Further with an eye on the encirclement by China, India is working on a slew of linkages – road and bridge projects to improve connectivity with Bangladesh, Nepal and Myanmar. These strategic projects by the state-run National Highways and Infrastructure Development Corp. Ltd (NHIDCL) include a bridge on the Feni river in Tripura, which will connect Agaratala with Bangladesh’s Chittagong port and a bridge over the river Mechi which will link Bhadrapur in Nepal with Galgalia in Bihar. Other projects include a 300 km road network in Nepal’s Terai region. Another road network is being built to connect Aizawl in Mizoram with Kaladan in Myanmar and Imphal in Manipur with Tamu, also in Myanmar. India will invest Rs6,168 crore for widening and upgrading the 351 km road between Aizawl and Tuipang in Mizoram which is part of the Kaladan Multimodal Transit project, which will connect Kolkata with the Sittwe port in Myanmar, and then further to Mizoram by river and road. All these projects are part of the Great Asian Highway project, a 141,000 km road network connecting 32 Asian countries.

India is moving ahead with its plans of accessing transnational multi-modal connectivity to articulate its role in the proposed transportation architecture in the region and beyond. It has been instrumental in implementing the Rs 5,000 crore India-Myanmar-Thailand Trilateral Highway, which will run from Moreh in Manipur to Mae Sot in Thailand via Myanmar. The 1,400 km long highway to start soon will link the country with Southeast Asia by land, which would give a boost to trade, business, health, education and tourism among the countries.

Since the government could not meet its target of awarding 25,000 km of road projects last fiscal there is now a large pipeline of road projects to be awarded under the hybrid annuity model (HAM) and engineering, procurement and construction (EPC) models. Meanwhile the toll-operate-transfer (TOT) model for leasing operational highway assets to private players for maintenance and toll collection which was approved last year by the Union cabinet has elicited interest from several international funds. For instance, Spanish infrastructure firm Abertis Infraestructuras SA entered the fray in 2016 buying toll road assets in South India from the Macquarie Group.

It was said initially that monetisation of public-funded highway projects could result in funds in the range of Rs 80,000 to Rs 1 lakh crore. With the bidding of the first batch of highways to soon begin, the government is hopeful of raising the money to be reinvested in building new highways. Market feedback indicates that certain institutional investors from outside the country have long-term investment appetite and are keen to participate in operational highway projects with stable toll revenue outlook. Since several investors – these include the Canadian Pension Fund, Abu Dhabi Investment Fund and some from the US, Europe and Singapore – have at meetings facilitated by Morgan Stanley and Brookfield Asset Management, expressed interest in buying various national highway projects identified by the government for monetisation, the Ministry of Roads and Highways has been working to formulate a model concession agreement for its projects to suit the former’s requirements.

The government has been encouraging and facilitating private sector investment and participation in the roads sector through various policy measures and incentives. This has led to growing interest of global infrastructure firms in the roads and highways sector. A fresh infusion of capital and increased access to innovative construction technology will help speed up development,” says Bajrang Kumar Choudhary, Managing Director, Bharat Road Networks Limited, a leading BOT operator promoted by SREI Infrastructure Finance. The company is associated with the development, operation and maintenance of national and state highway projects in states like Uttar Pradesh, Kerala, Haryana, Madhya Pradesh, Maharashtra and Odisha.

Companies are keenly eyeing project tie ups with foreign firms in a bid to participate in road projects both under the new toll-operate-transfer and HAM models. A case in point being the road toll management company MEP Infrastructure Developers Ltd which is parleying with South Korean, Chinese and Japanese infrastructure companies to form joint ventures for road projects under HAM in India. The firm is planning to bid for about 6,500 km of road projects under HAM has over the past year won six projects along with the Indian unit of its Spanish joint venture partner Sanjose India Infrastructure and Construction Pvt. Ltd. Jayant Mhaiskar, Managing Director, MEP Infrastructure Developers Ltd, explained, “Partnership with overseas infrastructure firms will give MEP a foot in the door of the Indian roads market.

 

Technology Transformers

With global best practices coming into vogue, particularly in the last 15 years or so, it has to be said that there has been appreciable improvement in terms of the quality of roads being laid. Modern roads with high levels of logistic efficiencies and superior transportation standards are becoming the new normal. Aided by increased understanding and usage of Highway Construction Technology, which finds reflection in projects from beginning to end in terms of planning, design, construction, delivery and operation, roads, bridges and tunnels are increasingly becoming more efficient and safer for movement of people and goods.

Now with clear directives being issued by the ministry to constructors for a consolidated approach to existing projects, adherence to strict implementation timelines, stringent monitoring of work on rural roads, and enhanced use of technologies to ramp of road building, India looks to be on actions stations on the roads and highways front.

To ensure efficient execution of all projects and to minimise external dependence reputed contractors like GMR, HCC, L&T and IL&FS are known to deploy state of the art machinery and employ specialists divisions for tunneling, formwork, readymix concrete, asphalt, rock processing or precast. But very obviously considering the scale of the operations required to be accomplished across the nation more needs to be done to achieve the twin objectives of timely and qualitative completion of road projects.

Very obviously the answer lies in a next generation leap in areas like quality control, quality assurance, usage of alternate materials for soil-stabilisation, recycling of pavement materials, pavement preservation and cost-effective treatments to overcome poor performance of roads. Highway construction also takes into account factors such as current and expected traffic flows of the future -- currently slow average speeds on the highways due to high road density and non-availability of access-control measures allows cargo laden trucks to travel only 225-250 km per hour. There are then elements like geometric design of intersections and interchanges, pavement thickness and maintenance to be considered. Increasing demand to raise speed levels and quality of construction has led to use of innovative, cost saving and speed enhancing techniques. Firms like GMR took the early lead in introducing technologies for construction and maintenance of roads, highways, bridges and tunnels. These included solar lighting for highways and advanced tolling system with Electronic Toll Collection. Despite these introductions Indian roads are still regarded as lagging behind western countries owing to codes that have been in existence for far too long and also due to recalcitrance to change.

“Advanced technological solutions and equipment and change in existing operational methodologies are required to achieve high growth targets in the roads and highways segment,” says Ankineedu Maganti, Managing Director, Soma Enterprise Ltd.

Ergo, India’s emerging roads and highways landscape present a huge growth opportunity for technology providers. Global Road Technology, an Australian firm which has set up base in Pune, provides disruptive, and mine management technologies to create better and safer roads. Ben James, Chief Executive Officer, GRT, says, “The road sector in India is in desperate need of new technologies. Not only to improve speed and quality, but also to introduce more environmentally friendly construction techniques to cut down on quarrying, transportation of materials and use of water and fuel. Overall the fundamentals of the roads and highways space continue to present a major opportunity and we are investing accordingly.”

 

Equipment Push

It is not difficult at present to view the roads and highways sector as the bread and butter source for most construction equipment manufacturers. Even for digger giant JCB, which has positioned itself as a one stop shop for all equipment required for India’s infrastructure needs, there is no denying that it is the roads and highways sector which drives business volumes. Jasmeet Singh, Head, Corporate Communications and External Relations, JCB India Limited, explains, “When we look at the development around us it is clear that it is predominantly riding on the shoulders of the roads and highways. Essentially that means not just for us individually as a company, but even from the construction equipment industry perspective, the road and highways sector becomes a very important parameter of growth. As of now it is absolutely without doubt the star, the No 1 contributor.”
Spurred by the huge business prospects from the road sector, Volvo CE recently launched the midsized P6820C tracked paver. Powered by Volvo’s D6E COM IIIA/EPA Tier 3 engine, the paver is considerably more powerful than its predecessor, while providing lower fuel consumption and less noise. Dimitrov Krishnan, Vice President and Head, Volvo CE India, dilating on the reasons for the product’s launch, says, “We are seeing more interest in equipment at the lower end of the scale as construction of smaller roads in more rural areas gathers pace. This reflects a maturing of the road network in India with many major routes now well into development, requiring work on the byways which will feed the arterial roads.”
Schwing Stetter India, one of the country’s leading concrete equipment manufacturers, recently partnered with GOMACO Corporation to secure sales and service rights for the latter’s range of concrete paving products across the country. The company plans to target $10million in sales in India during its first year of association on the strength of the government’s roads and highways development drive. Anand Sundaresan, Chairman, Schwing Stetter Sales and Services Pvt. Ltd. said, “This is a great opportunity for concreting all the roads in the country. We are pleased to join the world leader in this space.”

Assuredly more such progressive partnerships will be needed to be formed as India looks to implement its road targets of 30 or 40 km or even higher per day. As Vivekanand Vanmeeganathan, Country Head & Managing Director, Caterpillar India observes, “There will be a growing requirement for players in the construction sector who can provide 360 degree solutions.”

Looks like the injection called reform could prove to be a big draw as India’s road builders’ step up the momentum of their work. The pachyderm’s lazy trot could soon metamorphose into a happy run.

Roads: Vital Stats

· India has a road network of over 4,689,842 km, the second largest in the world.
· National highways account for only two per cent of total road network but transport more than 40 per cent traffic.
· In 2016-17, 23 km of roads were constructed per day, up from 16.6 km a day in 2015-16.
· Roads space is forecasted to grow at CAGR of 36 per cent during 2016-2025.
· The overall target is to increase the national highways length to two lakh km.
· Out of 73 roads to be constructed along the 4,057 km-long India-China border only 21 ready.
· Investment in road projects is expected to double to Rs 9.8 trillion over the next five years.
· 2017-18 budget allocation: Rs 64,000 cr to NHAI for roads and highways; Rs 27,000 cr for PMGSY
· Total expected spending on road projects – Rs 6 lakh crore
· Road construction target by the end of March 2018 – 40 plus km

 

Slaying The Road Dragon

As the Chinese People’s Liberation Army nibbles away at India’s frontier’s posing a grave threat to security, there is increasing concern in the portals of power about the slow pace of road infrastructure work. The Indian government programme to construct border roads has not made much headway with completion deadlines being regularly revised.
Notwithstanding the recent commissioning of the 9.2 km long Bhupen Hazarika Setu on the Brahmaputra to be followed by the construction of a 2,000-kilometer highway in Arunachal Pradesh at a cost of $6 billion, infrastructure development on the Indian side seen as a fillip for speedy armed deployment along the northeastern border, is largely perceived as laggard and not keeping pace with the strides of the aggressive neighbour.
Consider the following: work for 73 roads along the 4,057 km-long India-China border were sanctioned by the UPA government in 2005 with a 2012 date of completion, but only 21 of them are ready. The targets have now been revised by the NDA to 2020.
Now with Beijing upping its infrastructure ante close to India’s Chicken’s Neck, this doesn’t go well with national security concerns. A serious review of how to quickly address the deficit is now taking place among the minders in New Delhi. Admittedly, the attention paid to border roads over the years by the Border Roads Organisation has been lopsided and riddled with many challenges including poor execution and monitoring, lack of expertise and resources, shortage of road construction and tunneling equipment for mountainous terrain, hurdles in the form of environmental and labour laws.

At present work is being carried out by three agencies: the Defence Ministry, with 33 staff roads under its wing has only completed 9; the Indo-Tibetan Border Police (ITBP) with 27 roads has barely completed five, while the China Study Group with 13 roads has only managed seven.

In recent years road development authorities have made several briefings to the Parliamentary Standing Committee on Defence, which share their concerns at the niggardly inadequate pace of work.

While that has assuredly led to matters being flagged, proposals to submit the task of building roads in mountainous terrain to private construction agencies instead of the Border Roads Organisation have been shot down on account of the huge disparity in the cost of construction — while the former offers a bill of Rs 6-7 crore per kilometre of road, the latter charges Rs 1.5-3 crore.
Very clearly India’s roads and highway minders need to first slay the internal devils stonewalling construction work on the borders. That should then allow the Indian Army to take on the Chinese dragon breathing down the Chicken’s Neck.


The Plastic Path

Tamil Nadu has shown the way for the country by using plastic trash to construct sustainable roads. The southern state has utilised a total of 1634.27 tonne of plastic waste to lay around 643.26 miles length of rural roads over the last five years. It is reported the movement to minimise plastic waste has gained strength with the help of groups engaged in collection, segregation, and shredding of plastic waste. The roads have been found to be perfectly safe and even much more durable than traditional roads. It takes 10 tonne of bitumen to construct a kilometre long road a width of 3.75m. In the case of polymer roads usage of a tonne of plastic and 9 tonne of bitumen leads to the saving of one tonne of bitumen amounting to about Rs 50,000.
Based on the technology, the country today has approximately 1 lakh km of plastic roads. The effective and low-cost technology has turned the harmful and toxic waste into a useful resource. The technology owes its existence to Prof R Vasudevan of the Department of Chemistry, Thiagarajar College of Engineering, Madurai. According to Vasudevan, plastic has good binding properties and roads constructed with such material are water-resistant, can withstand three times the load taken by normal roads and are longer lasting.

 

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