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The Big Interview with Mr Kamal Nath

Projects

"The system will be refined"

In this exclusive interview, Kamal Nath, Union Minister of Road Transport & Highways tells Niranjan Mudholkar of his big plans to build India’s road network faster and better than before

How is the 100-day programme for your Ministry shaping up? What will be the concrete outcomes of this programme that will help you further steer the sector’s growth?
When it comes to matters related to road infrastructure, 100 days is adequate to take stock and plan ahead for the next 4-5 years time horizon. As it can be observed there are many issues which were impeding the award process of NHAI. We have placed concentrate suggestions in remedy in this regard before the Prime Minister and also have put up the necessary proposal for additional resources with the Finance Ministry and Planning Commission.
We have formulated Annual work plans to achieve the 20 km roads a day target. NHAI has started working on an annual action plan. As a result, a Work Plan has been formulated for awarding 12,000 km in this fiscal year and 11,000 km in the next year. It has been tentatively estimated that a sum of Rs 98,173 crore would be required to implement 12,000 km to be awarded this year. Out of which, Rs 54,622 crore is expected to come from private sector and a maximum of Rs 43,551 crore would come from the Government.
These plans would require a change in the working culture at NHAI as also its restructuring. Restructuring is in the process of implementation. If granted the financial and manpower resources, we are sure that we would be able to move ahead to reach our target.

During your road show in Zurich, you have suggested a paradigm shift in the approach to road development saying that it should not be merely viewed as asset creation – it has to have service orientation. Could you please elaborate on this? And how do you plan to implement this?

Highways should be seen as facilitators and also as force multipliers. A World Bank study had assessed that every single rupee invested in the highway sector yields Rs 7 in terms of economic value. Development of the highways adds to the connectivity which is so essential for the people to transmit, transfer and commute. Hence the construction of highways does not merely lead to asset creation, but the said creation should be such that the service levels required by the users are satisfactorily met. For this we should be shifting to performance oriented parameters and we are doing precisely that.

You have also proposed to split the National Highways Authority of India and create a separate Expressways Authority, which would singularly concentrate on construction of expressways across India. Why is this necessary and by when can the industry see this happening?
Earlier, the entire GQ was intended to be converted into six lanes and to expressways. However, it has been now decided that unless there are sufficient traffic levels which would justify six laning or creation of expressways we will not go ahead with this plan. Only where traffic levels are sufficient to justify construction of expressways we will go ahead with it.
Construction of four Expressways, namely Vadodara-Mumbai, Chennai-Bangalore, Kolkata-Dhanbad and Delhi-Meerut aggregating to about 1,000 km is also being initiated under the NHDP-Phase-VI by taking up feasibility studies.
The prospect of having a new Expressway Authority is being considered to look after development of Expressways in the country. The expressways will ease out traffic congestion and provide quick, fast and cheaper transport. We have 200 km of expressways in the country so far and we have plans to construct 1,000 km till 2015.
The Ministry has appointed a consultant to look at the feasibility of 15,600 km of expressways in the country. This would be in addition to the plans of constructing 1,000 km of expressways.
According to estimates, expressways use 40% less land than ordinary roads to transport same amounts of goods and people while cutting vehicle emissions and traffic accidents by one third. Hence, depending on the magnitude of total stretches which will be available, the need for an Expressways Authority will be decided.


The stakeholders in the road construction industry face various challenges. The key of these include land acquisition, multi-level administrative as well as environmental clearances and lack of finances at feasible rates. How will your ministry tackle each of these issues?
We do understand and are aware that the stake holders in the construction industry face many challenges. To meet issues related to land acquisition NHAI is creating 150 special land acquisition units to provide the necessary support to state level authorities to conclude land acquisition.
As far as environmental clearance issues are concerned this needs to be taken up at the Ministerial level and one of the suggestions which we have put forth is the creation of “Group of Ministers” structure, which when created, can discuss such issues which can be better dealt with at that level.
Coming to the lack of finance for highway projects, wherever technical issues impede such availability, such as related to the security structure, suitable modifications in MCA can be expected to solve this issue.
Regarding availability of finance itself, it does not appear to be an issue of any serious import since the credit out-go from the banking industry during this year appears to be well above the levels seen during the last year. We have no complaints related to lack of finance.

There have been reports in some media that the Ministry of Finance has not approved your proposal of setting up the ‘Road Finance Corporation?
These reports are wrong. It is a very important and complex matter and hence will take some time. I can only say that it is still under consideration.

Use of advanced technology and implementation of modern management concepts like project management are also critical to ensure faster implementation of infra projects. Will your ministry take some efforts to encourage the industry on such aspects?
As it can be seen, use of advance technology and import of machinery in application thereof is freely permitted by the Government. Projects Implementation in BOT mode, which is the predominant mode right now, is generally with the assumption that private sector efficiencies can be better harnessed in the PPP mode. Hence, there is no special effort which the government is required to take in this regard.
We would promote use of appropriate technology and standards so as to improve the quality of feasibility reports and to ensure timely taking up of projects and ensure time management so as to avoid cost over runs.

When it comes to the collection of revenues, we are still decades behind despite the fact that this is how the government gets the money back. When will the government have any system in place or a model to ensure there is proper collection, maintenance, operations and accounting of the road tolls?
We agree that we need to have an integrated system for toll collection which would enable the users to pass through toll plazas without actually having to stop and wait to pay toll in cash, if a pre-paid card system can be in place, applicable across India. Such systems are available abroad and it enables the users to pass through toll plazas, the system automatically registering their passage and debiting their account, which will ultimately be paid through an electronic clearing system. Each operator gets their revenue directly through a centralised system.
In India most of toll collection now is manually affected and the possibility of leakages is quite high. We are hence in the process of developing an integrated system which will enable us to electronically control toll collection and distribution.
We are also looking into the possibility of separate specialised world class tolling companies to handle tolling. We are getting good response and there are various companies who have shown interest in it.

Most Indian roads are not suitable for multi-axle trucks. As a result, we end up spending more on the maintenance, repairs and re-construction of these roads. Is there a mechanism in place to take care of this?
In terms of life cycle cost of highways, it is a proved fact that if the construction cost is kept low compromising on quality, then the maintenance cost will be high. That apart, the overall cost on the economy of any sub-standard construction and maintenance will be high. It needs be said that most of the highways developed under NHDP are suitable for multi-axle trucks, though this may not be true for other Indian roads.
There is only one solution to this issue, that all roads are developed giving due consideration to quality, and particularly for national highways, which carry 70% of the freight, that these are developed with no compromise on quality in such a way that it’s life cycle cost is kept low rather than the initial construction cost.

It will be critical to integrate the rail-freight corridor (connecting Delhi-Mumbai-Kolkata) with the road network. What steps are being taken to ensure this?
The Golden Quadrilateral (GQ) connecting the four Metros in India is generally in alignment with the rail network and hence we do not see any issues in integrating the rail freight corridor with the existing road network.

During your tenure as the Commerce Minister, you kept India’s flag flying high on the global trade front without compromising the livelihood of millions of farmers. One of the biggest drawbacks of our economy is our inadequate rural infrastructure. How will you address this?
Highways are all about connecting people. One of the aims of our government is to have inclusive growth and this will be possible if we can include the rural masses as true participants in the economic success of India. As it can be seen the GQ and the NS-EW Corridor provides the backbone chain to the highway network, and all other economic centres of our country will be connected to either of these. Ultimately, every village will be connected through the rural road network.
Road development will be an optimum mix of roads that serve the economically advanced areas as well as the backward areas. My challenge is to ensure inclusive growth. We also want to ensure that important ports, airports, tourist places, religious places to be well connected with quality roads. All state capitals will be connected to four laned the National Highways.
In our opinion, once this network is ready then connectivity will ensure higher living standards through better employment which will be available to the rural masses.

Any special message to our readers?
The road sector is the engine of growth of the country. The success of this sector depends heavily on the support of all the stake holders who matter.
To bring the road sector to new heights there is a need to build the confidence among the stake holders i.e. developers, contractors, consultants, concessionaires, investors, etc.
During several rounds of meetings with the stake holders, I believe that there are certain concerns of the stake holders which need to be addressed.
As a Minister, I am committed to their concerns. I am hopeful that the system will be refined which would certainly boost the confidence of the investors.

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