NHAI and state agencies must co-ordinate at every level

NHAI and state agencies must co-ordinate at every level
“If the land acquisition issues are sorted out in time, all the road projects will be completed within the stipulated time,” says Vinod Agarwal, Managing Director, GR Infraprojects Ltd.
 The Cabinet Committee has approved new models of engineering procurement and construction (EPC) agreements to promote new highway development. How do you look at this?The new EPC agreement is very positive and addresses various issues of contractors in right prospective. Bonus for early completion has been incorporated in the agreement to motivate the contractor and also payment for the maintenance period has been provided.
Apart from that, the land issue has been specifically discussed; 90 per cent land is required for declaring the date of appointment. Escalation clause has also been incorporated.
The quantum of maximum loss to be paid for the contractor due to force major event has been specifically mentioned in the agreement.
Appointment of various technical consultants and its scope has been simplified in the new model. It also says that utility shifting is to be done by the contractor. Initially, all the payments for the same should be done by the contractor and the same has been reimbursed to the contractor.
In addition, pre-closure of contract has been specifically mentioned in the contract. As all the critical issues have been addressed in this new EPC agreement, we feel that contractors can forecast or consider all its risk factors before the submission of the bid for EPC projects.
Road Transport and Highways Minister Dr C. P. Joshi has emphasised on the need to streamline land acquisition process to fast-track the road construction projects by NHAI and state agencies. How will it help the road construction projects?Dr C.P. Joshi is right. There must be a co-ordination between NHAI and state agencies at every level. Only signing of state support agreement between NHAI and state government is presently not serving any purpose. If the land acquisition issues are sorted out in time, all the road projects will be completed within the stipulated time. Apart from that, in our opinion contractor also pledges its support to NHAI and the state government is to acquire a land for the project.
With the government allowing 100 per cent FDI in the road sector, many foreign investors have formed consortiums with Indian companies to participate in the development of road projects in India. How will it help EPC sector?Foreign investment in road sector at any percentage is good for a country. As EPC player, we need more road projects with reasonable rate of interest, so that we can get opportunity to work as an EPC contractor in certain projects. Now, Indian banks are charging more on interest rates to the developers. More FDI in the road sector eases pressure on Indian banks, and developer can bid more PPP projects under the scope of FDI.
Indian EPC players have not performed well outside country; what is the reason for it? It is true. We are established in Nigeria for the last 1 year and trying for some road projects there. A few Indian companies are already working in Nigeria, but their conditions are not good. Still we are assessing the ground realities. We could not able to access the reasons of non-performance outside country whether it is due to problem in government side or contractor side.
What are the challenges being faced by the company?The challenges are common to the road industry; there isn’t any specific challenge that we have faced. The companies are facing various issues such as bitumen adulteration, POL adulteration, procedures for mining approvals for the road projects, abnormally increase in royalties and state taxes, labour issues, pollution control board approvals, etc. All these have to be addressed immediately.
Brief us about your expansion plans and how will you fund it?We are very conservative about our expansion plans. We are regularly bidding for cash contracts and selectively bidding for PPP projects. We have two annuity projects: one project is in operational stage and second is under construction. For all projects we have used our internal resources. The order book of the company as on April 1st 2013 is around ` 2,250 crore. We are already doing emulsion business in Udaipur and expanding the emulsion business in other parts of India. We are also looking for water supply management projects in association with foreign players. The company is also planning to start board, crash barrier, and thermoplastic paint manufacturing units in India. As the company, which qualifies for more than ` 1,200 crore EPC or PPP model projects, is expected to take big size projects in upcoming months. We are already working with ITNL/Unity and expected to get some orders from Galfar in road EPC projects.
Funding for the future expansion may be offloading of shares in the completed BOT (build–operate–transfer) or annuity projects. We are also planning for public issue if market conditions are improved. Our performances are appreciated by various banks, and they are supporting us in all the levels.

23