Traffic moves along National Highway as road construction takes place in Bangalore, India. (Photographer: Namas Bhojani/Bloomberg)

Why New Road Orders Have Slowed Down 

The 710-kilometre expressway connecting Mumbai with Nagpur in the east could be delayed by at least two years as Maharashtra is yet to acquire 60 percent of the land for the project.

While the highway is being constructed by the state government, the land hurdle is symptomatic of the slow pace of construction in India. Even the National Highway Authority of India has awarded contracts for one-tenth of the 10,000-km targeted in the year ending March, data from the Ministry of Road Transport and Highways show. The agency now aims to build 3,500 km highways this year. That’s less than half of previous year’s 10,000 km.

Land acquisition issues have delayed road contracts awarded by the NHAI in the first half, Teena Viramani, vice-president at brokerage Kotak Securities Ltd. said. That stems from the change in the law that makes it must to acquire 90 percent of the land before a contractor can begin work.

NHAI earlier gave out projects even if the land acquisition was not completed, leading to disputes, delays and cost overruns, Viramani said. “It wanted to address the issue before awarding the project. Once a significant chunk of land is in place, the probability of a delay is much lower.”

Resistance from farmers has stalled progress of the Mumbai-Nagpur expressway, developed by the Maharashtra State Road Transport Corporation. It was expected to be operational by 2019.

The corporation, the nodal agency for the project, has proposed to the state to relax the criteria to float the financial bids. It’s already received pre-bid interest from 33 players and is expected to release the request for proposal by January.

“If we wait until 90 percent of the land acquisition, another four months would be lost. Now at least the RFP process could get completed,” said KV Kurundkar, joint managing director at MSRDC.

Yet, that won’t kickstart the construction phase. The letter of approval to the bidder would be given only after 90 percent of the land is acquired as per the Highways Act, he said, which could be by April 2018. And it would take another three years for the actual construction to be completed.

Even the NHAI is looking to fast-track process to meet its scaled-down target, the agency said in a statement. The state-run road builder plans to invite bids for 3,500 km by December-end, taking the total contracts to 8,400 km.

The issues are getting resolved now and bids have been called for November, December, and even January, said Virmani. “The opportunity is going to be huge and bulkier towards the fourth quarter.”