Impact of Central Road Fund provision
ROADS & HIGHWAYS

Impact of Central Road Fund provision

There have been ongoing speculations that amendment in the Central Road Fund (CRF) provisions as proposed in the recent Budget may hit NHAI significantly. “Partly yes,” says Devayan Dey, Director-Capital Projects and Infrastructure, PWC, as non-discretionary allocations from CRF can now be at the discretion of the Ministry of Finance. “Also, partly no,” he adds, because when patterns are looked at retrospectively, it appears that this was being planned for quite some time. 
Within budgetary allocations, the cess component had reduced to a third from about Rs 60 billion in FY13 to about Rs 23 billion in FY17. However, the net allocation to NHAI had increased 22 times from ~ Rs 17 billion in FY13 to about ~ Rs 370 billion in FY19 (revised estimates). 

The Ministry of Finance seems to be taking due cognisance of the requirement. However, Dey highlights a concern: A majority of the funding source (60 per cent in FY17) still remains through bonds. Rising coupon or principal obligations along with growing annuity commitments can have an impact on financial sustainability in future years.

A back-of-the-envelope calculation indicates that about Rs 2 trillion will be needed to construct 40 km a day on EPC or item rate (assuming four lane on an average with land and other ancillary costs). “Fund availability with NHAI certainly makes it clear that if projects are constructed strictly on EPC or Item Rate mode, the target may not be achievable practically,” says Dey. “The HAM projects awarded in the past two years may provide a push in the short term (without requiring complete capital investment).”

That said, Dey throws up some questions to ponder upon: Is the figure of 40 km a day still relevant today? With the push to dedicated freight corridors, inland water transport, airline routes, and each being strategised to take a fair share of freight and passenger transport, are we not duplicating investments? Do we still need extensive capacity augmentation or is it now time to focus on maintenance and asset management instead? 

SHRIYAL SETHUMADHAVAN

There have been ongoing speculations that amendment in the Central Road Fund (CRF) provisions as proposed in the recent Budget may hit NHAI significantly. “Partly yes,” says Devayan Dey, Director-Capital Projects and Infrastructure, PWC, as non-discretionary allocations from CRF can now be at the discretion of the Ministry of Finance. “Also, partly no,” he adds, because when patterns are looked at retrospectively, it appears that this was being planned for quite some time. Within budgetary allocations, the cess component had reduced to a third from about Rs 60 billion in FY13 to about Rs 23 billion in FY17. However, the net allocation to NHAI had increased 22 times from ~ Rs 17 billion in FY13 to about ~ Rs 370 billion in FY19 (revised estimates). The Ministry of Finance seems to be taking due cognisance of the requirement. However, Dey highlights a concern: A majority of the funding source (60 per cent in FY17) still remains through bonds. Rising coupon or principal obligations along with growing annuity commitments can have an impact on financial sustainability in future years.A back-of-the-envelope calculation indicates that about Rs 2 trillion will be needed to construct 40 km a day on EPC or item rate (assuming four lane on an average with land and other ancillary costs). “Fund availability with NHAI certainly makes it clear that if projects are constructed strictly on EPC or Item Rate mode, the target may not be achievable practically,” says Dey. “The HAM projects awarded in the past two years may provide a push in the short term (without requiring complete capital investment).”That said, Dey throws up some questions to ponder upon: Is the figure of 40 km a day still relevant today? With the push to dedicated freight corridors, inland water transport, airline routes, and each being strategised to take a fair share of freight and passenger transport, are we not duplicating investments? Do we still need extensive capacity augmentation or is it now time to focus on maintenance and asset management instead? SHRIYAL SETHUMADHAVAN

Next Story
Infrastructure Transport

PM to Inaugurate Indore Metro Phase 1 and Datia Satna Airports on May 31

Prime Minister Narendra Modi is scheduled to inaugurate the first phase of the Indore Metro Rail project, along with the Datia and Satna airports, via video conferencing during his visit to Bhopal on May 31, according to a senior Madhya Pradesh cabinet official.During his day-long visit to Bhopal, the Prime Minister will also participate in a conference organized to commemorate the 300th birth anniversary of Devi Ahilyabai Holkar, the historic queen of the Malwa kingdom, now part of Madhya Pradesh, as stated by the Parliamentary Affairs Minister and Cabinet spokesperson Kailash Vijayvargiya.It..

Next Story
Infrastructure Transport

Kochi Metro Holds Talks with BPCL to Restore Greenery on Medians

Kochi Metro Rail (KMRL), facing increasing criticism for not maintaining the green spaces along the medians in the metro corridor, has initiated discussions with Bharat Petroleum Corporation (BPCL) and the Ernakulam District Horticulture Society to revive the project.Sources reveal that KMRL is also making fresh efforts to find sponsors to care for and maintain the gardens located between the metro pillars. Previously, several sponsors had withdrawn, which led to the neglect of these green areas.There are 989 medians along the 28-km Kochi Metro stretch. Of these, 465 are under the National Hig..

Next Story
Infrastructure Transport

Rajasthan CM Approves DPR for Jaipur Metro Phase-2 Expansion

Rajasthan Chief Minister Bhajanlal Sharma approved the detailed project report (DPR) of Jaipur Metro Phase-2 and forwarded it to the Central Government.The construction work for the project is set to begin once the Union Ministry of Housing and Urban Affairs grants approval to the DPR.Phase 2 of Jaipur Metro had been announced in the state budget for 2025-26.The project, covering a 42.80-km stretch from Todi Mode to Prahladpura, will be implemented by the Rajasthan Metro Rail Corporation—a newly formed 50:50 joint venture between the state and Central governments. The corporation will be res..

Advertisement

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Advertisement

Talk to us?