Confronting Issues: 12fth Plan Infrastructure Development Confronting Issues: 12fth Plan Infrastructure Development
Confronting Issues: 12fth Plan Infrastructure Development Confronting Issues: 12fth Plan Infrastructure Development

Various issues need to be addressed for the realization of infrastructure development initiative by the government during 12fth plan, reports P.P. Basistha.

The government has targeted a mammoth capital investment of $1 trillion for the development of infrastructure sector. However, before channelizing the investment for the infrastructure development programmes, many issues involving pre-feasibility studies, finance, litigation and others will have to be addressed, in order to neutralize time and cost overruns on the part of the project implementing agencies and developers.

A major issue that primarily needs to be addressed, is linking of funds with the pace of the project developments during different phases of construction. The implementing agencies and the contractors now regret that flow of funds are not actually linked to the pace of the development of the project. According to Mr. Chakanbabu, Executive Director, Central Public Works Department, “large scale cost overruns take place as the flow of funds from the implementing agencies are not synchronized according to the project schedules. Faced with delayed release of payments, the contractors ultimately resort to arbitration, as a result the project implementing agencies finally end up in paying up the contractor, eventually raising the cost of the project.” He explains, “the basis for liking of funds to the projects is actually based on the nature of the project. A project in its initial stages may need good deal of excavation or foundation work to be carried out, requiring adequate finances but in many cases owing to inadequate funding leading to cost and time overruns occurs to the project.”

Echoing his viewpoint, Mr. S.S. Johar, Chairman, C&C Constructions stating, “delay in approvals increases capital investments for the project. Dispute settlement process continues to be time consuming between the contractor and project implementing agencies. Delay in approvals continue to take place from local bodies. As a reason, actual project estimates made by the contractors goes haywire resultantly delaying the project.” “Despite the project being approved, providing physical possession of the land to the contractor gets extended by the project implementing agencies owing to lack of timely clearances.”

Agrees Mr. S.K. Kulkarni, Head-Business Development, GMR Highways says, “to make the projects commercially sustainable for the contractor, it is vital that frequent design changes have to be curtailed by the project implementing agencies. The overloading of vehicles should be stopped to minimize the maintenance cost of the BoT project developers.”

Confronting Issues: 12fth Plan Infrastructure Development

Obtaining timely clearances from local and other bodies continues to be major contentious issue behind development of projects. Mr. N Seethaiah, MD, Madhucon, Project Limited points out saying, “obtaining permission from the railways for constructing road over bridges, takes lot of time. Besides, getting right of way for aggregate quarries both for hydro, road and other core infrastructure projects by the contractor gets delayed, as the project implementing agencies, as well as the client continues to leave the onus of the same with the contractor. It is quite important that implementing agencies like NHAI or NHPC should get in place the right of way at the conceptualizing stage of the project.” According to Mr. Seethaiah, “single window departments should be in place at the central and state levels for project clearances where multiple bodies are involved.” Similar views are endorsed by Mr. Y.R. Patel, Chief Coordinator, Civil, Patel Infrastructure Private Limited. He says, “it is much pertinent that at least 80% of the land should be in possession with the project implementing agencies which is not the case.”

Mr. Nihar Ranjan. Dash, Director, Ministry of Steel points out, “getting possession of land and iron ore mines to support greenfield steel units continues to be major issue both with the government and private sector. The issues may be of local, the state and of central levels.” Getting possession of Chiria mines by steel authority of India Limited for the brown field expansion of its flagship Bhilai steel plant got delayed, before the PSU steel producing major finally got possession of the same owing to delayed environmental clearances at the central and state levels.

Private Investment

Confronting Issues: 12fth Plan Infrastructure Development
According to the infrastructure investment programme of the government, sizeable part of the targeted investment will come from private sector during the 12th plan period. Speaking at the recent conference on public private partnership in the development of infrastructure, Prime Minister, Dr. Manmohan Singh said, “PPP will continue to be the preferred mode of the government for development of infrastructure, as it will improve the quality of the projects as desirable construction practices will be put in place supported by the government. The ‘Model Concession Agreement (MCA) procedure of the government has been successful in attracting private investments in road, port and airport infrastructure development programme. However, it is quite important to note that, preliminary study, essentially involving bankability of the projects and finally their awarding is done in an appropriate manner, so the project becomes sustainable in the long run for the implementing agencies as well as the contractor.”

Confronting Issues: 12fth Plan Infrastructure Development
Making the projects bankable is a major issue for the present public private partnership initiative of the government. Experts unanimously point out that the loophole lies in improper selection of the project consultants by the project implementing agencies and project contractors for the preparation of the detailed feasibility report of the concerned project. According to Dr. M.L. Roychowdhury, Senior Project Consultant, Ghezri Eastern India Limited and Faculty of Civil Engineering, IIT Kharagpur and Dr. M. Bhowmick, Senior Faculty, Transportation, Indian Institute Management Kolkata, “making an appropriate assessment of traffic flow in any road or port infrastructure project is a much critical task. Estimated traffic flow in the project can go through changes owing to socio-economic factors, political, domestic as well as international economic factors. Assessment of the present and future situation is of vital importance. It should take into account holistic factors, to somewhat make an appropriate traffic projection by the project implementing agencies and that is where the role of consultants engaged for preparing the DPR’s actually come in to identify a bankable project, the area ironically which leaves much to be desired from consultants."

Confronting Issues: 12fth Plan Infrastructure Development

The experts point out examples of projects involving newly commissioned International Container Transshipment Terminal at Cochin by Dubai Ports World, or expansion of iron ore and coal handling terminal by Paradip Port, Hooghly River Bridge or second Bally or Vivekananda Bridge in Kolkata created through colossal investments. Second Bally bridge is the largest ever PPP initiative formed through a consortium of Indian and foreign companies. All the projects are yet to attain the desired commercial viability owing to inadequate traffic flows or volatility in traffic. The observations to an extent are approved by Mr. K. Suresh, Principal Secretary, Planning, Government of Madhya Pradesh, Member Secretary State Planning Commission and previous Chairman Chennai Port Trust.

However, speaking to NBM&CW, Mr. Pratip Chaudhuri, MD, State Bank of India & Ms. Chanda Kocchar, MD, ICICI Bank said, “it is pertinent that to make a more realistic assessment of traffic flows, historical traffic data should be made available by the state and the central government bodies to the project consultants. This will allow identification of bankable projects. On top of inadequate data, two to three weeks time is given to bidders for submission of request for qualification, which is grossly inadequate as they are not able to carry out bankability studies for the proposed project.” They said, “electronic tax collections should be in place to prevent possible leakage of revenue flow from the projects. Standardization of traffic flow studies have to be done. Due to non availability of standardized studies, financial leakage from the project takes place, as a result the projected cash flow is not realised from the infrastructure project.”

Confronting Issues: 12fth Plan Infrastructure Development
They insist, “to make GDP grow at 9 percent, it will be always essential for the government to develop infrastructure, as a reason issues of funding, especially those involving long gestation period will have to be addressed. Setting up of infrastructure, debt funding have to be made. Projects attracting less premium will have to be supported by viability gap funding.”

However apart from requisite financing, there are manifold risks that need to be addressed by project implementing agencies for timely completion of the projects. According to Mr. Kamal Verma, CEO, SREI Infrastructure, “there are prevailing risks in way of timely completion of projects. It is quite necessary that the risks should be identified and solutions to tackle the risks are put in place well in advance during the conceptuali- zation of the project.” He elaborated, “the risks are in nature of market revenue, design operating (for PPP projects), construction in terms of design, legal, environmental, and political.”

Confronting Issues: 12fth Plan Infrastructure Development

Legal risk is a major area of concern that should to be addressed. Expansion of major port projects, involving high capital investment have been slowed down by litigation issues. This is despite the government having a proper revenue sharing agreement in place for the concessionaire. Having been long overdue, the bidding process for Jawaharlal Nehru Port Trust’s 4th container terminal finally got through after four years, not before Mundra Port and Special Economic Zone (MPSEZ), moved the Mumbai high court after it was declared security clearance for the project by the Union Government. The lag in project was also due to a case fought by APM-Terminals after it was excluded from bidding due to a Government Policy. Bidders for the project included, DP world Private Limited, MPSEZ, Adani Enterprises Limited-Isolux Corsan Concessions SA, GVK Developmental Projects Private Limited, Samsung C&T Corp and Sterlite Industries (India)-Leighton Contractors (India) Pvt Limited.

The project is likely to be developed by PSA-ABG, emerging as the highest bidder, would be India’s largest container terminal by capacity and cost. The terminal will handle about 4 million TEU’s a year. However, commissioning of the terminal is projected to face cost escalation by about Rs.1,000 crore from its original cost of Rs.6,700 crore owing to two years delay over litigation. According to Shipping Ministry, there would be escalation clause for the project. The terminal is expected to take two years to complete post awarding of the tenders. However, as per recent reports, PSA is expressing its apprehensions in signing the concession agreement. The component of the 4th terminal will include construction of back yards, berths having length of 2kms.

The importance of addressing the confronting issues emanates from the fact that, in the present context of economic volatility, getting requisite finance back up for long- term projects is getting difficult owing to lesser availability of finance. Protracted delay in creating new projects, arising out of the issues may delay finance availability altogether, thereby hurting the business interest of all stakeholders in the sector in mid-term and long-term. This will ultimately take its toll on the economic growth.
Considerations for Site Selection for Engineering Plant Projects
Site selection is the first and most important factor for location of any Engineering Plant Project as they involve huge construction costs. An unsuitable or wrong project site can result in great loss and may also lead to delays or failure of the project. Anil Kumar Nanda

Read more ...

Construction Mishaps - A Question Mark on Quality & Safety
Zainab Faridi compiles a series of recent construction mishaps that not only underscore the perils faced by Indian construction workers but also expose the urgent need for stricter quality check parameters, a skilled workforce, accountable project management

Read more ...

Decarbonizing Construction Industry for a Greener Future
A recent report by Deliotte - Shell indicates that the construction sector accounts for 37% of global CO2 emissions, of which 16% represent embodied carbon, that is carbon dioxide coming from material sourcing and manufacturing, logistics, and construction

Read more ...

Policy Prescription for Circular Economy to Boost Infra Construction
At a time when India is pushing policy reforms in a big way to provide a major boost to its economy, the generation of colossal 9.46 million tons of plastic waste every year and 150 metric tons of construction waste annually (about 40% of the global

Read more ...

7 Years of RERA Of Promising Gains, Challenges & Pitfalls
After seven years of its journey, the landmark reform of RERA (Real Estate Regulatory Act) has made some remarkable gains in terms of regulating the sector and protecting the interests of homebuyers. Especially considering that two crucial years were

Read more ...

National Ropeway Development Programme to Boost Real Estate
A massive USD 15 billion National Ropeway Development Programme of the Central Government, currently underway, will provide a major aerial connectivity boost to real estate, especially in Tier 2-3 cities that have high tourism potential. A Rs 1.25 lakh crore

Read more ...

J&K Realty and Infrastructure Development on Fast Track
As Jammu & Kashmir prepares to host G-20 Tourism Meet in Srinagar from 22-24 May 2023, the strides made by the Union Territory on urban development (in a run up to this conclave following the abrogation of Article 370 in August 2019), will provide

Read more ...

Ashoka Buildcon Achieves Largest Continuous Concrete Pour for Building Project
Ashoka Buildcon Limited has several prestigious projects under its belt and has to its credit notable record-breaking achievements - the latest being casting of a raft with 12400 cubic meters of concrete. With this feat, the company is eager to get

Read more ...

Investment Bonanza in UP to Fast-Track - Real Estate & Infrastructure Development
Riding high on landmark reforms and performance-driven governance, Uttar Pradesh has received a record investment proposals of over 33.50 trillion from Indian and foreign investors at the recently organised 3-day Global Investor Summit (GIS) in Lucknow

Read more ...

Mega Projects: Redefining Geographies
Mega infrastructure projects like flyovers, elevated roads, highways, metros, bridges, tunnels, expressways, etc, are redefining how we interact with our surroundings; in fact, Infrastructure is intrinsically linked to everyday life and is a defining

Read more ...

Major Connectivity Projects to Transform Urban Development Landscape of Delhi-NCR
With some state elections and general elections in sight, the Modi government has pulled out all stops to put its mega infrastructure projects on fast track for the socio-economic upliftment of people. A number of such key infrastructure projects

Read more ...

Women in Construction - Diverse Perspectives Will Drive Progress
India’s construction industry is advancing and embracing new technologies, and thereby throwing up exciting opportunities for women to grow professionally in traditionally male-dominated roles. With the advent of robotics, digital twins, and remote

Read more ...

Dola Roychowdhury - Founder Director, GCube Consulting Engineers LLP
The pay parity issue is very subtle and fragmented. It doesn't exist at entry levels any longer - but tends to widen as you go up the chain and hit that invisible ceiling. Compared to the global gender ratio of about 12%, India's female ratio is much lowe

Read more ...

Minimol Korulla - Maccaferri ISEAP
The global Infrastructure Construction industry currently has a female workforce ratio of 10% to 14%, while in India it is 8% to 12%. However, the representation of women in senior managerial roles is less than 2% - both globally and in India. The lack

Read more ...

Rubee Kongbrailatpam - Public Works Department, Manipur
The shift in perspective towards women's roles in the construction industry and the de-genderization of roles is a significant step towards creating a more inclusive and diverse workforce. Stereotypes and prejudices against women in construction

Read more ...

Dr. Ambika Behl - CSIR-Central Road Research Institute
Gender-based discrimination, the harsh work environment of construction sites, lack of knowledge about the industry, and a shortage of successful women in construction as role models, present significant barriers to entry for women. In India, the

Read more ...

Atasi Das -  G R Infraprojects, Gurugram
It's time to change the myth that "the infrastructure industry is a man's world and that it is not really a place for women." By promoting equal opportunities and gender sensitivity in the workplace, we can encourage more women to pursue a career in

Read more ...

Shruti Choudhari - BL Kashyap and Sons
Over the past decade, we have witnessed significant changes at BL Kashyap, including women-led planning, design, and HR departments. We have a majority of women in the tender and contracts department as well as women on-site in key roles during

Read more ...

Sandhya Rasakatla - Hindustan Zinc
Gender-based bias and stereotypes continue to be prevalent in many industries, including the construction industry, where women often face challenges due to the perception that they are less capable than men. However, it is important to recognize

Read more ...

Yogeshwari Rane - Hindustan Zinc
As we are moving towards highly mechanized mines, the overall perception of mining industry as a male-dominated industry is changing since it is no more about just physical labour. As the mining industry has traditionally been considered a physically

Read more ...