Bharatmala project hit by delays, shortage of funds

Prime Minister Narendra Modi’s ambitious Rs 5.35 lakh crore Bharatmala Pariyojana, an umbrella project launched in 2017 and hailed as India’s biggest highways development plan, is beset by delays at multiple implementation stages amid funding shortages, according to a central government report reviewing its progress until September.

According to the report, a copy of which has been reviewed by Hindustan Times, project implementation under the programme could also be set back by delays in land acquisition, detailed project report (DPR) preparation, the bidding process, appointment of concessionaires and physical construction.

“ Projects implemented under Bharatmala Pariyojana could potentially be delayed during multiple stages across the project lifecycle,” said the National Highways Authority of India (NHAI) report.

The first phase under the project has an estimated investment outlay of Rs 5.35 lakh crore according to the investment plan approved by the Cabinet Committee on Economic Affairs (CCEA), spanning a period of five years (from FY 2017-18 to FY 2021-22).

The mammoth project is aimed at bridging critical infrastructure gaps through the development of economic corridors, so-called inter- corridors and feeder routes, border and international connectivity roads, coastal and port connectivity roads and greenfield expressways.

A total of around 24,800 km are being considered for construction in Phase I of the project. In addition, it also includes 10,000 km of work remaining under the National Highways Development Project (NHDP), an older initiative.

“Considering the massive scale of the program, it is extremely important to manage the implementation of the program and monitor its physical and financial progress through a robust Program Management Office (PMO). AT Kearny and CRISIL were appointed as the program management consultants (PMCs) to support...managing the implementation of Phase 1,” the report said.

Different components of the project will be implemented by the ministry of road transport and highways (MoRTH) through various agencies -- NHAI, National Highways and Infrastructure Development Corporation Limited (NHIDCL) and state Public Works Departments (PWDs) and state Road Development Corporations (RDCs).

Financial woes

The report has noted that the total capital cost for the awarded projects exceeds the cost approved by the CCEA by 50%. The total capital cost of 6,361 KM of projects awarded under Bharatmala is pegged at Rs 1.475 lakh crore.

Of this 4383 km of projects worth R1.03 lakh crore are those that have been awarded afresh by the scheme, with the remaining coming from existing and incomplete NHDP projects.

“The capital cost for awarded projects is Rs 23.1 crore per KM (total civil cost being Rs 17.5 crore per KM and cost of land acquisition and pre-construction activities being Rs 5.6 crore per KM). The total awarded cost exceeds the cost approved by CCEA by 50% ie Rs 15.5 crore per KM,” the report said, referring to the projects awarded afresh.

For Bharatmala projects, the proportionate increase in awarded cost over the approved cost is higher for the cost of land acquisition than the civil cost. The latter was 17.3 crore per km as opposed to an approved Rs 13.7 crore per km, and the former Rs 6.2 crore as opposed to a mere Rs 1.8 crore which turned out to be 3.4 times higher, according to the report.

Similarly, the financial liability for 1,978 Km of projects awarded under NHDP is Rs 44, 309 crore (23.3 core per km). The total awarded capital cost for NHDP projects also exceeds the cost approved by CCEA by 50% -- ie Rs 15 crore per km.

“Thus, the programme is running significantly behind its financial targets. This is likely to lead to more stringent award targets for the remaining part of the year,” the report said.

Lagging in other targets

Bharatmala projects with a total length of 8,134 km were targeted to be awarded by NHAI in the current financial year, of which only 268 km had been awarded till September 2018.

“Out of the 321 Km that was targeted to be awarded in the first quarter 118 KM have been awarded in the same period. Out of the revised award target of 2,707 KM of projects for the second quarter only three projects with a length of 150 KM have been awarded till September 2018, for the targeted ,” the report noted.

Bharatmala projects with a total length of 957 km were targeted to be awarded in this fiscal year(in Q3 FY 2018-19 and Q4 FY 2018-19) by NHIDCL. No project had been awarded until September 2018.

Delays in the project implementation stages of preparation of the detailed project reports (DPR), land acquisition and bidding process have been highlighted in the report.

“Of 122 projects with a total length of 5,944 KM targeted to be awarded till January 2018, bid documents have not been submitted for 58 projects having a length 3,209 KM,” the report said.

Out of 2,557 km of projects that were targeted to be awarded by September but ran into delays, land acquisition has not been completed for road projects with a total length of 1,920 km.

“In addition, it is seen that out of 482 KM projects that are in the target award plan for October, projects with length 437 KM have still not moved past the stage of land acquisition.” the report noted.

Similarly, out of 1,565 KM of projects targeted to be awarded in December 2018, projects with a length of 620 KM have also not moved past land acquisition stage.

The report also noted that 38 projects with a total length of Rs 1,368 KM have been in the bidding process for more than three months and have not been awarded.

In the post-award stage, the report observed issues with the appointment of concessionaires.

“It can be seen that 26 Engineering, Procurement and Construction (EPC) projects with a total length of 1,160 KM are still awaiting appointment (of concessionaires) after more than a month of being awarded,” the report noted.

Similarly, 39 projects (one based on the hybrid annuity model and one a build-operate-transfer toll project)twith a total length of 2,316 KM spread mainly across Rajasthan, UP, Maharastra, Karnataka, Andhra Pradesh and Gujarat are still awaiting the appointment of concessionaires after more than five months of being awarded.

“Going forward, the delay observed during the physical progress of the projects will also be highlighted,” the report concluded.