Explore `leasing model’ for tunnelling equipment to build mountain roads: NHAI official

Our Bureau New Delhi | Updated on September 28, 2019 Published on September 28, 2019

A file photo of tunnelling work under progress in Udhampur, Jammu and Kashmir.

For the first time, NHIDCL incorporated a risk matrix specifically for geotechnical risks involved.


Construction companies bagging contracts from National Highway Authority of India (NHAI) for making roads in hilly areas need not buy expensive tunnel boring machines (TBMs) but can explore leasing them, said RK Pandey, Member-Projects, NHAI, while speaking at an Assocham conference on Friday.

Under the Bharatmala project, Road Ministry’s NHAI and National Highways Infrastructure Development Corporation Ltd (NHIDCL) have to build almost 400 km of tunnels. “If the lowest bidder, who wins a project, goes to buy a TBM, it may take two years for him to get a TBM,” Pandey said indicating the leasing may spread the risk.

As these projects – that involve building tunnels through high altitude areas or mountains – are much more expensive than the usual highway projects, both the government and private sector stakeholders want to cover their risks to the extent possible in the contract documents itself. The time and resulting cost over-runs could be much more than the project cost itself.

About 30 years ago, when hot mix plants were introduced, the government procured and shared them with the private sector. Now, the contracting has matured, allowing the private sector to invest and lease out TBMs, Pandey said.

Geotechnical risks

Geotechnical risks involved in Himalayan tunnelling projects are unpredictable. This can potentially result in huge cost and time over-runs, said Vinod Shukla, CEO, PEMS Consultants, while sharing the improvements required in existing contracts.

For the first time, NHIDCL incorporated a risk matrix specifically for geotechnical risks involved in such projects, pointed out Shukla. That said, he added, there were still a whole list of points that shift the uncertainty in the contract document more towards the private sector.

For example, there is a lack of local skilled engineers to handle tunnelling projects, huge weather risks, and the dispute settling mechanism which may delay plans. All of these together are a challenge when India is trying to improve its rankings in the ease of doing business, Shukla said.

Sanjeev Malik, Executive Director, NHIDCL, a body which is implementing several projects in the North East; and Jammu and Kashmir, noted that while there is scope for the government to take more risks, it is already taking several risks in the engineering procurement contract (EPC) mode of project implementation against the build-operate-transfer (BOT) model. In the EPC mode of project, the government funds the entire project, while in BOT mode, the private sector shares more risks, including funding.

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Published on September 28, 2019
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