In a state of progress
So Maharashtra might soon see a coastal road on the metropolis’ western seafront, a circular road that will ease traffic movement, be a drought free state, and several other novelties that were hitherto heard of only in other states or countries. Maybe not exactly soon, but if all goes well according to the Maharashtra Chief Minister Devendra Fadnavis’ plan, then most of these amenities will soon come to pass.
Consider some of the events happening at the Centre. Last month, the Union Surface Transport Minister, Nitin Gadkari, announced that road projects worth Rs 50,000 crore would soon be started in Uttar Pradesh. Considering that roads and highways projects have been dithering at a slow pace last three years, such announcements are music to one’s ears. According to reports, work on certain NHAI projects in the country involving Rs 17,290 crore is already underway in Uttar Pradesh.
While large infrastructure projects news are often heard about in northern India, Maharashtra doesn’t seem to lag behind. Besides being close to Mumbai, the commercial capital of India, Fadnavis is also going with some grand plans outlined for the state and city. At a recent gathering in the state, Gadkari had also mentioned plans to develop waterways on priority. As against the five waterways functional in the country, the government is planning development of 101 more.
A senior level executive at a Mumbai-based infrastructure firm says, “Recently, the Centre cleared three industrial townships and one of them is expected to come up at Shendra-Bidkin industrial park in Maharashtra. About 84 sq kms of land has already been allotted. Tendering process is currently underway and most infrastructure developers are looking forward to this.”
Close on the heels of the electoral victory, the Maharashtra government led by the BJP under the chief ministership of Devendra Fadnavis has given a big push to the industrial development in the state, allotting lands to foreign and domestic investors in Maharashtra Industrial Development Corporation (MIDC) zones near cities such as Mumbai, Pune, Nagpur, Nashik and Aurangabad. The foreign investors benefitting from the land allotment include TAG from Switzerland, IFB Automotive from Germany, Dongyang Mechanotronics from Korea, Datwyler Pharma from Belgium, Monopol Colours from Italy, and Germany-based KSPG Automotive, with the major domestic ones including CEAT Tyres, Sterlite Technologies, Gujarat Ambuja Exports, Inventys Research and World Textile Manufacturing.
These industries would create a direct 14,000 job opportunities in industrial belts such as Patalganga, Chakan, Shendra, Supa, Butibori, Ambernath, and Baramati, say reports. The investment in the allotted industrial land is planned around Rs 6,266 crore with CEAT alone bringing in Rs 400 crore in Butibori.
In order to create world class infrastructure in the metropolitan city, the Mumbai Metropolitan Region Development Authority (MMRDA) has earmarked a whopping sum worth Rs 45,000 crore to set up multi-model projects across the region. The state government also cleared various projects including two metro projects connecting Dahisar to Mankhurd, and Wadala-Kasarvadavali, said sources claiming that the Dahisar-Charkop-Bandra-Mankhurd entailed an investment worth Rs 25,605 crore and the Wadala-Ghatkopar-Thane-Kasarvadavali will cost Rs 19,097 crore and these projects were cleared in a recent MMRDA board meeting chaired by Fadnavis.
Apart from metro projects, the authority has also approved four flyovers and a road to decongest and ease the daily peak hour traffic at Bandra Kurla Complex involving an investment worth Rs 227 crore. While the 40-km and 36-station DCBM corridor will be entirely underground, the 32-km WGTK corridor will have 24 underground and six elevated stations. These metro corridors will be implemented by the state undertaking Mumbai Metro Rail Corporation (MMRC) in the next six to seven years and the projects will be funded by raising 50% of the loan from international agencies while the Centre will contribute 20% and the state and MMRDA will pitch in 30% of the funds by way of equity and sub debt, they added.
While all the above projects seem dream-like, road and highway developers are heaving a sigh of relief. Although most of them are slipping into the red because of the sheer lack of projects or poor returns, the situation seems to be changing now. Traffic on most roads have been rising consistently over the past two quarters, aided by a pick-up in economic activity, a trend that may continue for a while. Road traffic volume has increased in the past two quarters for most highways after remaining muted — and for some roads, even declined in the past two to three — due to a lethargic economy. Developers’ expectations of higher revenue from toll collections went awry as some of them erred during project bidding, while the drop in traffic made things worse. “Traffic has improved in the past two quarters. It is almost three to four percent up from the last quarter. Last two years, we have seen 0-1% growth, and in some instances, even negative growth. That is now turning around. When GDP was at eight percent, traffic was expected to grow at six to eight percent, but today we expect most roads to see traffic growing by seven to eight percent,” said Satish Parakh, managing director, Ashoka Buildcon.
Gaurav Soni, general manager at Udaipur-based KK Gupta Constructions, says, “The government must understand that the concessionaire has invested crore of rupees on highways and if decisions are not taken on time and designs are not approved faster, then the purpose of investing money is lost.”
In more news, the toll revenue of engineering and infrastructure construction company, Sadbhav Engineering Ltd (SEL) has increased by 54% to Rs 146.6 crore in Q3FY15. “As part of our overall growth strategy, SEL started the process of restructuring wherein it seeks to consolidate all BOT road projects in subsidiary company Sadbhav Infrastructure Project Ltd (SIPL),” SEL director Nitinkumar Patel said.
Considering that the coming infrastructure projects are going to be really huge in Maharashtra, the government will soon appoint a dedicated facilitator to work as a relationship manager for every project entailing an investment of over Rs 100 crore. What hangs fire is the issue of housing and commercial space in Mumbai alone. If reports are to be believed, very soon there will come a scheme to reduce the time taken for permissions on this front from 180 days at present, to a mere 30 days.
On the infrastructure for Mumbai, which the government intends to develop as a global financial hub, there is talk that work on multiple infrastructure projects is on and the government expects some progress shortly.
With just a month left for the Budget, infrastructure companies are hopeful that the government will take steps to boost public spending on infrastructure and initiate measures to rationalise subsidies. “There’s a lot of obscurity around the PPP model and it needs some kind of revival if concessionaires are to take it up,” said Soni.
Nandkumar S, senior director, India Ratings & Research, says, “Adequate project preparation (i.e., construction to commence only after all requisite resources (land, RoW, financing) and permits/approvals are in place) will help minimising execution delays and bottlenecks. Privately run assets and greenfield projects typically utilise fixed-price date certain contracts that provide both sponsors and lenders with some certainty that the project will be completed on time and on budget.”
Venkataraman Rajaraman, director, infrastructure and project finance at India Rating and Research, a Fitch Group company, says, “Most flyovers and interchanges that have come up recently are integral part of National Highways and therefore are under the scope of the concession agreements signed by NHAI with the developers. Obviously, as more NHs achieve commercial operations, so are the flyovers/bridges which form part of the highway projects under the concession agreement. A number of national highways are being operationalised and hence the spurt in flyovers is visible. We witness many flyovers now because of the necessity of by-passing major towns and cities with the intent of decongesting the city traffic with the by-passers. We believe that there will be more road projects that will be operationalised during this fiscal and next and consequently more flyovers. This is mainly attributed to the development of national highway projects.”