CRISIL Research has lowered its execution forecast for the National Highways Authority of India (NHAI) projects for fiscal 2019 to 3,600-3,800 km from the earlier anticipated 4,300 km, but is still 22 per cent higher than fiscal 2018. The firm estimates around 800 km of execution is at risk this fiscal, as dated on November 2018, because many hybrid annuity model (HAM) projects are still awaiting appointed dates for a longer duration after they were awarded. The appointed date is the de-facto starting date of a project, when the NHAI hands over its contract letter to a developer or concessionaire. As on November 2018, CRISIL Research analysed 40 HAM projects amounting to 1,913 km (over 55 per cent of total HAM awarding that year), awarded by NHAI in fiscal 2018. In all, 3,400 km of HAM projects were awarded last fiscal. Its analysis indicates that many have achieved financial closure but most are still awaiting appointed dates on account of delays in land acquisition or regulatory clearances. The firm’s interactions with stakeholders indicate that land acquisition for most of the projects awarded are in the advanced stage, but lenders will begin disbursements only after the mandatory 80 per cent land is at least at the 3G stage. “As per MOSPI, execution in NHAI projects increased 23 per cent YoY to 1,363 km in H1 FY2019. We expects the run rate to continue, with NHAI execution expected at 3,600-3,800 km in FY2019, albeit pending appointed dates would be a drag,” cities Hetal Gandhi, Director, CRISIL Research. The situation with projects awarded under the engineering, procurement, construction (EPC) model is better than HAM. Typically, land acquisition is higher in EPC than HAM, because the NHAI gets an additional 150 days’ buffer on account of time taken by developers for financial closure. A sample of EPC projects awarded last fiscal shows that 54 per cent have started execution. Some projects in the advanced stages of execution are yet to receive the balance right of way, potentially affecting execution. In case 100 per cent of land is not provided on time, road developers have two options: Await right of way from NHAI and execute projects once received, or, de-scope part of the project for which land is not available and adjust the project cost on a pro-rata basis. However, the outcome will depend on individual stretches and is finalised based on negotiations with NHAI.