To benefit Rs 25,000 crore worth pending projects; all future projects to be fast-tracked

About 2,500 km highway projects valued at about Rs 25,000 crore which were stuck pending environment clearances, can now move forward. This follows a Supreme Court decision on Tuesday that permitted de-linking of environment clearance from forest clearance.

Firms whose projects will get a leg up include C&C Construction, Gammon, Coartal-SREI, Soma, Simplex Infra and PNC. The disputed project of Kishangarh-Udaipur-Ahmedabad highway, on which GMR and the National Highways Authority of India are trying to find an out-of-court solution, has also got the clearance.

Though the projects had Environment Ministry nod, the developers were unable to start work because from mid-2011onwards the clearance involved approval from the forest department as well. In effect, work on highway development could not start even if there was a small stretch on which forest or tree-felling clearance was required.

Apex court ruling

The current ruling comes after the Environment Ministry moved the Supreme Court seeking de-linking of environment clearance from forest clearance for highway projects.

Earlier this year, the NHAI had moved the Supreme Court on the issue, but withdrew the case after the Environment Ministry filed a petition on the same. The issue escalated after highway developers started withdrawing from projects they had bid for, citing delay in clearances. “With the Supreme Court’s decision, projects for developing over 2,500 km of highways will automatically get environment clearances. The cost of these projects is about Rs 20,000 crore as per the Government’s total project cost estimates…,” R. P. Singh, Chairman of NHAI, Business Line.

Usually there is a variation between Government’s project cost estimates and developer’s estimates due to cost and time over runs between the initial bid and award stage.

Additionally, because of the Supreme Court directive, environmental clearance has also come through for 200 km of highways, with an estimated cost of Rs 2,000 crore, which are at award stage.

The Environment Ministry is also addressing some of the other hurdles facing highway projects. “One is about relaxing norms on sourcing earth, soil, or mud from areas of below five hectares,” said M. Murali, Director-General, National Highways Builders Federation.

Another move under consideration that will inject funds into the sector is relaxation of exit clause for developers, allowing developers to exit entirely from projects after completing construction. A proposal to this effect will be moved to the Cabinet soon.

“Private equity funds, financial investors will be keen to invest in highway projects now, as risks for highway projects will reduce,” said Singh. “We expect the highway sector to be back on track over the next few months.”

(This article was published on March 13, 2013)
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