Time for action

The lack of land and environmental clearances, often stated as one of the main reasons for project delays, has claimed its latest victim. GMR Infrastructure, led by Chairman GM Rao, has terminated a contract with National Highways Authority of India (NHAI) for six-laning of the ambitious Kishangarh-Udaipur-Ahmedabad highway project. GMR had bagged this Rs 7,200-crore – one of NHAI’s biggest – by a premium of Rs 636 crore. The environmental clearance for the project was granted in June 2012, but forest clearance was delayed, due to which the environment ministry could not clear the project. Being the country’s first mega-highway project, this development has huge significance and its cancellation can cause NHAI to lose revenue to the tune of Rs 636 crore annually, which increases by5 per cent every successive year. Is GMR’s decision strategically correct? Also, what will be NHAI’s next step? Only time will tell.