With KNRCL being among the dominant players in infrastructure projects, specific to irrigation projects, K Jalandhar Reddy, Executive Director, KNR Constructions, shares more on the segment and construction opportunities coming along with river linking projectswith SHRIYAL SETHUMADHAVAN.
How do you view the current growth and construction opportunity in the segment?
India Water Vision 2025 estimates that the gross water demand for multipleuses will double 25 years from now, with corresponding investment needs of Rs 200 billion per year. As of now, India’s irrigation infrastructure is expanding by 1.8 Mha of irrigation potential with a public outlay of Rs 70 billion per annum. Six states – Uttar Pradesh, Tamil Nadu, Andhra Pradesh, Telengana, Bihar and Odisha – together account for 50 per cent of the irrigation potential created and 45 per cent of net area irrigated in the country. In many irrigation commands, command areas effective irrigated area has declined owing to deterioration in distribution infrastructure. The overall results of the current growth of the sector and the construction opportunity are just average.
How do you view the availability of funds for project execution?
Water resources projects are planned, funded, executed and maintained by state governments as per their own resources and priorities. To supplement their efforts, the Government of India provides technical and financial assistance and encourages sustainable development and efficient management of water resources through various schemes and programmes, such as the Accelerated Irrigation Benefits Programme (AIBP) under the PradhanMantriKrishiSinchayeeYojana (PMKSY). Under PMKSY, 99 ongoing irrigation projects were identified for completion in mission mode by December 2019. The total requirement of funds for completion of these projects was estimated at Rs 775.95 billion with central assistance of Rs 313.42 billion. The Telangana government is all set to complete its prestigious Rs 800 billion Kaleshwaram mega irrigation (and drinking water) project in addition to the Palamurulift irrigation scheme of Rs 320 billion and Baghiratha drinking water scheme of Rs 400 billion by resorting to institutional borrowings and budgetary support. Other states such as Uttar Pradesh and Maharashtra are also working out the same model.
How do you view the construction opportunities in the sector for the next five years?
The river interlinking programme is of national importance and has been taken up on high priority. Under the National Perspective Plan (NPP) prepared by the Ministry of Water Resources, the National Water Development Agency (NWDA) has already identified 14 links under the Himalayan Rivers Component and 16 links under the Peninsular Rivers Component for inter-basin transfer of water based on field surveys, investigation and detailed studies. The interlink project has been split into three parts: a northern Himalayan rivers interlink component, a southern peninsular component, and an intrastate rivers linking component. The Prime Minister is planning to speed up the ambitious Rs 5.5-trillion river interlinking plan, which aims to link rivers through a network of reservoirs and canals across India. A separate ministry, namely Jalasakthi, has been formed to give greater impetus to irrigation, drinking water and waterways. The recent presidential address also alluded to the Government’s spending of Rs 25 trillion to this sector. NWDA has received 46 proposals of intra-state links from nine states: Maharashtra, Gujarat, Jharkhand, Odisha, Bihar, Rajasthan, Tamil Nadu, Karnataka and Chhattisgarh. These river linking projects will provide substantial growth opportunities to EPC contractors, including KNRCL, in the next five years.
Any recommendations to give a further fillip to the sector?
Implementation of the river interlinking programme under the National Perspective Plan (NPP) will give benefits of 35 million hectare of irrigation, raising the ultimate irrigation potential from 140 million hectare to 175 million hectare and generating 34,000 MW of power, apart from the incidental benefits of flood control, navigation, water supply, fisheries, salinity and pollution control, etc. The funding pattern for this programme is to be finalised. Creation of the Jal Shakti ministry may be a first step in this direction. Increased fund allocation has to be made by the Budget as a follow-up to boost irrigation and drinking water to villages.
Considering irrigation and other construction segments, which sectors will the company’s business focus on?
As a prudent measure to grow profitably and maintain a light balance sheet, KNRCL has always maintained a reasonable balance between building an order book and on/before schedule delivery via faster execution. The company’s guiding principle is to quote projects with a reasonable EBITDA and avoid accumulating projects with aggressive quotes and limit the number of projects to such an extent that monitoring and execution can be perfected and completed in a timely manner. The ongoing thrust on NHAI’s Bharatmala projects, upcoming river linking projects in various states, state-level highway projects, new urban and metro flyover projects and river bridge projects by the Railways are opening up enormous opportunities to construction companies and developers giving growth and opportunities in the ratio of 09/10.