“We have proven track record of completing projects on time and our core competency in EPC of road projects is time tested and firmly established,” says Yogesh Kumar Jain, Managing Director, PNC Infratech
PNC Infratech Ltd is one of the pioneers in infrastructure construction, development and management, having wide experience and proven expertise in the execution of major infrastructure projects. The company has been a major contributor to the development of roads and highways in India. In an exclusive interview with ACE Update, Yogesh Kumar Jain explains the company’s future plans and what challenges lie ahead on the road in building India’s road network.
The country’s roads and bridges infrastructure, was valued at $ 6.9 billion in 2009 is expected to touch US$ 19.2 billion by 2017. How do you think India can achieve this target?I implicitly believe that road construction industry in India has huge potential and should be able to deliver and meet the targets in terms of quantum, time and also investment, provided the project sponsors and proponents from the government create an enabling framework and adopt a proactive and participative approach that could unleash the potential. Given the inherent investment and implementation capabilities of road construction companies in India, no challenge is too big to meet, its only question of what should be done to unleash their potential.
The government has decided to invest Rs 5 lakh crore in the road sector in the next 5 years. How exactly will this help to boost road facilities and infrastructure in the country?The total aggregate length of national highways in India is over 90,000 km. The development requirements include strengthening and widening of existing roads, construction of bypasses, cross drainage structures, grade separators, elevated roads, under passes and road over bridges etc. Even we assume Rs 10 to 12 crore is spent on augmenting or upgrading each kilo-metre stretch of highway, government should be able to develop 50 per cent of the entire network over the next five years, which would certainly boost the whole highway infrastructure in the country in a big way. As national highway network carry about 40 per cent of total road traffic including freight and passenger, the proposed development will greatly help in accelerated economic development of the country.
How as a company you plan to support the government in building the country’s road infrastructure?Our company has successfully completed 44 major projects and is currently constructing 20 road and bridge projects on EPC format that include national highways, state highways and expressways of aggregate contract value over Rs 7,500 crore. Total length of roads including bridges being executed by is over 2,500 lane-km. We would be completing 15 of these ongoing projects with an aggregate length of over 1,700 lane-km, before end of the current financial year. In addition, through our various subsidiaries and associate or joint venture companies, we are also implementing 7 BOT or OMT road projects, of which five projects are already operational. We are also in the process of bidding for more than 20 road projects with more than Rs 15,000 crore estimated value in the next two months only.
We have proven track record of completing projects on time and our core competency in EPC of road projects is time tested and firmly established. Another significant competency of our company has been having end-to-end construction capabilities in-house, right from the mining till final product stage that includes mining (boulders for aggregates), state-of-the-art stone crushers, transportation vehicles, concrete and bituminous plants, paver finishers, rollers and other equipment. These distinct abilities give our company a great control over execution, quality, time and cost of our projects even in challenging situations and times. We undertake construction activities of our entire fund based projects (BOT Toll and BOT-Annuity) on our own, which makes us the least dependent on third parties in implementation and delivery of projects. Given the capabilities and competencies in terms of investment, development, construction and O&M of road projects, we should be able to support the government’s initiatives significantly in building the country’s road infrastructure in sustainable manner.
What are the challenges road developers face when working on road building projects?Many of the challenges faced by road developers are similar to those faced during implementation of other infrastructure projects. Typically road building projects can be categorised into two modes, fund based such as BOT-Toll or Annuity and non-fund based essentially EPC. There are certain common risks and challenges for both the modes that include delays in land acquisition, utility shifting, environmental and forest clearances and shortage of raw materials leading to inflation in cost of construction etc. However, in case of BOT projects, whether it’s on toll or annuity any delay in implementation and commissioning of project would increase burden of interest on debt and in case of toll projects the potential challenge would be unpredictability of future traffic and revenue levels. Moreover, many of road developers having being highly financially leveraged, further sourcing of funds for their BOT projects is also becoming difficult.
With a country having 4.7 million km of road network. Is there a need to increase participation of PPP projects for building roads and highways in India?Yes, continuous and active private sector participation in investment in to the roads and bridges infrastructure is not only a necessity but an imperative to meet the infrastructure needs of the country including road sector. However, due to various reasons as discussed earlier, investment by private sector in to infrastructure has been subdued over the past few years, which needs to be revived by taking wide ranging confidence boosting measures including re-looking at the risk allocation framework and exit mechanism etc by government. Government should also facilitate availability of funds for the projects at lesser cost and longer tenures to encourage private sector participation and stimulate investment cycles.