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India eyes record road network expansion

Discussion in 'World Economy' started by Soumya_india, Jun 17, 2011.

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  1. Soumya_india

    Soumya_india 2nd Lieutant FULL MEMBER

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    India will award a record 7,300 kms of road building contracts this year worth about $12 billion, as a huge privatisation drive makes developers more willing to take on projects and foreign funds eager to invest, a top official at the National Highways Authority of India said on Friday.

    The new contracts will help India meet its target of building 20 kms of roads per day as part of a massive overhaul of its infrastructure sector, boosting the country's economic growth, said J.N. Singh, member (finance) at the NHAI.

    "Compared to the last 4-5 years, the sector has substantially matured," Singh told Reuters in an interview.

    "Whichever side of India you go, you will see road building at a very hectic pace going on right now."

    Overseas private funds such as the UK-based 3i and Morgan Stanley are showing a greater appetite for investing in projects while domestic constructors are getting more and more capable of taking on big projects, he said.

    INVESTOR FRIENDLY REFORMS

    Investments in India's road-building with the NHAI will rise about 40 percent to $10 billion in this fiscal year compared to the last, Singh said, of which about 60 percent will come from private funds.

    NHAI will also aim to raise at least $445 million in bonds in the same period, he said.

    An uptick in interest will give a boost to the government's ambitious target to pour $1.5 trillion into infrastructure in the 10 years to 2017 to help unclog its congested roads and ports, and build world class airports and underground metros.

    "The development community has reached a good amount of maturity," Singh said. "The smaller players are becoming middle sized players, and the middle sized players are willing to take a big role.

    "We are seeing a good number of players having gotten an equity contribution from private equity players as well as venture funds."

    Investor friendly reforms also helped attract cash, Singh said. For example, the government recently tweaked building contract rules to give more flexibility to companies wishing to sell their project to another developer, he said.

    However, hurdles from land acquisition hassles to bureaucratic red tape continue to smother faster construction and funding, with many of the government's targets missed. Losses from poor infrastructure have long been seen as a brake on growth in Asia's third-largest economy.

    About 20-25 percent of current road projects under construction have been delayed by months or years, Singh said, often because of land acquisition problems. "It continues to be as tough as it was," he said of purchasing land for projects.

    India built about 1,800 kilometres of roads (1,120 miles) of roads in the fiscal year 2010/11, about five kms a day, a knock-on effect of the global financial crisis, Singh said. India will build at 20 kms a day by 2014, he added.

    India's road network is the world's second largest, but its densely populated cities are heavily congested and inter-city highways clogged up with trucks, tractors and even livestock in more rural areas. Slow delivery times raise business costs for companies and help stoke the country's high inflation.

    The government has pushed privatisation in infrastructure. In roads, New Delhi has all but stopped paying a company to build on contract. Rather, firms now bid to build a road and operate it themselves, collecting toll fares for a fixed period under a model known as build-operate-transfer (BOT).

    That trend has helped slash construction delays, he said, as there is an incentive for road builders finish the job as quickly as possible and start collecting tolls.

    "There has been a dramatic shift to the BOT mode," Singh said. "Earlier there was no incentive to finish the project on time."

    http://in.reuters.com/article/2011/06/17/idINIndia-57754120110617?feedType=RSS&feedName=topNews&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+reuters%2FINtopNews+%28News+%2F+IN+%2F+Top+News%29
     
    Last edited: Jun 17, 2011
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  2. Mr.Ryu

    Mr.Ryu Captain SENIOR MEMBER

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    Good for us lets hope there is less corruption at least now.
     
  3. shodhansaher

    shodhansaher FULL MEMBER

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    This is but the next step in India's path to upgrading it's infrastructure. However, India needs to look beyond merely building highways. Highways do serve an enormous role in the movement of people across regions, but rail links and ports need to be treated with equal importance since freight traffic is much quicker and cheaper by these means.
     
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  4. DaRk KnIght

    DaRk KnIght Lt. Colonel ELITE MEMBER

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    The road to development passes through ROADS.

    We must invest as mush as possible in this sector.
     
  5. shodhansaher

    shodhansaher FULL MEMBER

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    Agreed, which is why I never said roads should be abandoned, just that its important to look beyond the next 10-15 years.
     
  6. Welcome

    Welcome 2nd Lieutant FULL MEMBER

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    it's really good but we need to also work on power projects.
     
  7. Mahakaya

    Mahakaya 2nd Lieutant FULL MEMBER

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    Hold up guys, DO NOT GET TOO EXCITED JUST YET. WAIT FOR THE NHAI TO HAND OUT CONTRACTS FIRST!!

    We always come up with tall claims and then have our foot in our mouths, so everyone please save it, lets see how much gets done before we start feeling happy about it.

    ^^^ As for power projects, not enough is being done but there are multiple bottle-necks and in the coming days you will see many private developers going bust. Only recently coal India said that they could only fulfill the additional 45 MMT(Million Metric Tonnes) of the 100 MMT promised to the private players. There goes your power, get used to more power cuts and more expensive power since the s$@! hole coal India can't produce enough coal despite sitting on 30000 crores of cash.....

    As I have always said, this country is going to the gutters and all because of Congress and us Indians who can't get over dynastic politics and give another party such as the BJP a good shot at the center....
     
    Last edited: Jun 18, 2011
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