In what comes as a boost for India’s roads sector, the China Railway Construction Corporation has expressed keen interest in participating in the projects of the National Highways Authority of India. CRCC, which is one of the world’s largest integrated engineering contractors and construction groups with over $100 billion of revenue, promises to throw up intense competition to local firms, including L&T.

Speaking to Bloomberg TV India , NHAI Chairman Raghav Chandra says the authority can consider annuity payments in dollar on a case-by-case basis and that too with the approval of the Finance Ministry.

The NHAI has already bid out 55 projects worth ₹45,000 crore spanning over 3,000 km. By the end of FY17, the NHAI expects to invite bids for more than 10,000 km of projects, he said. Excerpts

What discussions did you have with CRCC in terms of the nature of the projects and what were they are interested in?

A senior delegation comprising 11 delegates from the CRCC , headed by their Chief Economist Zhao Jinhua, had come over. We had detailed discussions about our methodology of bidding.

We made it very clear that the NHAI follows an internationally acceptable transparent form of bidding where we follow an electronic platform of e-tendering, and that we do not give projects on a nomination basis or a government-to-government basis.

But they showed a lot of interest in the projects and said they would be bidding competitively for our projects.

Among the projects they said they would be interested in are those on the PPP mode and the engineering procure and construction (EPC) mode.

They were appraised on our forthcoming projects such as Vadodara-Mumbai Expressway, for which we will launch the bidding in a few days.

They told us that they we would be bidding for our projects spread over 10,000 km this year itself. They asked us about our specifications.

We have agreed to share our respective standards and specifications and the Indian Roads Congress (IRC) manuals. We told them that any international specification is acceptable, provided it is higher than the IRC specifications. They asked us whether they could import equipment from China or from some other country. We said there is no ban on import of equipment for construction; it can come in duty free.

We also said they can bring in materials; may be in some cases like steel there would be a minimum import price (MIP) restriction. They asked us whether we can denominate the payments in dollars so to avoid currency risk. We said, on a case-by-case basis, with the approval of the Finance Ministry, we can consider it if there is an interested investor before the bidding process begins for a particular project.

So we said we are open to all kinds of suggestions, including thinking about structuring a project, provided all the suggestions can be discussed before we bid it out. Once we bid it out, it is difficult for us to alter the specifications in the transparent international competitive bidding processes that we follow.

Chinese funds are expected to come in at very low interest rates. What is the expected internal rate of return (IRR) from their side?

CRCC is China’s largest construction company. They looked into our methodology, where we usually look at a project IRR of 15 per cent.

They will revert to us with their opinion. But they seemed very happy with the discussions. They have already opened an office in New Delhi. They expect to bid for several of our projects.

What possible funding options were discussed?

They will be funding their projects themselves through their international banks and through the Bank of China. We told that, if needed, funding from Indian banks is also possible. They will have to apply to the Indian banks just like any other investor. But we will give all support to it.

What is the project pipeline in FY17 and FY18?

We have already bid out 55 projects for a total stretch of 3,000 km worth ₹45,000 crore. By the end of FY17, we expect to bid out more than 10,000 km of projects and award large number of these projects.

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