Highway development activity expected to gather momentum

Highway development activity expected to gather momentum

In this extract from its report on the Roads and Highways sector, CRISIL Research reviews the road development activity and provides an assessment of the expected implementation of the NHDP and other road projects.

With the Government’s continued focus on road development, CRISIL Research estimates that the potential investment in the road sector over the next five years (2009-10 to 2013-14) will grow at a CAGR of 16 percent. State roads will lead the future road investments by contributing 39 percent to the total investments followed by National Highways and rural roads.

NHDP: Implementation expected to be on fast lane

The significance of road transport has enhanced manifold in the recent years, aided by the expansion and improvement in the highway network. Though NHs constitute a mere two percent of the country’s total road
network, this arterial network handles over 40-45 percent of the total road-based traffic. The National Highways Development Project (NHDP) launched in 1998-99, is being implemented over seven phases. In the last five years (2004-05 to 2008-09), around 6,900 km were completed at a CAGR of nine percent in NHDP. This pace is expected to accelerate with close to 18,000 km being completed at a CAGR of 12 percent over the next five years i.e. from 2009-10 to 2013-14.

Phase-wise expected progress

Phase I: Substantially completed

Phase I mainly comprises the Golden Quadrilateral (GQ), port connectivity and other stretches. As on March 31, 2009, around 93 percent of Phase I was complete and the balance seven percent under implementation.

Phase II: Largely under implementation 

Phase II comprises North-South and East-West Corridors (NSEW). The total length of NSEW Corridor is 7,274 km. Around 3,680 km is expected to be completed between 2009-10 and 2013-14. Similar to Phase I, majority of the projects in Phase II are under cash contracts.

Phase III: Expected to witness maximum action

Phase III involves four-laning of two-laned roads, which mainly connects State capitals and important places to Golden Quadrilateral (GQ) and Corridors. A length of around 8,092 km, out of the total 12,109 km, is likely to be completed between 2009-10 and 2013-14.
 
Phase IV: Slow progress

Phase IV involves improvement of National Highways to two lanes with paved shoulders. The total length of this phase is 20,000 km out of which we expect around 1,095 km to be completed between 2009-10 and 2013-14. Recently, few bids have been invited under this phase. We expect these stretches to be implemented under cash contracts since these stretches would be less attractive.

Phase V: Future action phase (significant awarding expected)

Like Phase III, Phase V is also witnessing some action. This phase involves six-laning of the existing four-lane NHs. The total length of this phase is 6,500 km out of which we expect around 4,058 km to be constructed during 2009-10 and 2013-14. In this phase, the Government aims to implement all projects under BOT-Toll basis.

Phase VI and Phase VII: Not much action on ground

Phase VI includes development of around 1,000 km of expressways; Phase VII includes ring roads, flyovers, and bypasses on selected stretches of NH. Until date, only one stretch has been identified under Phase VII, no stretch has been identified in case of Phase VI. Going forward, we do not expect much action to happen in these two phases. We expect around 226 km to be constructed under these phases between 2009-10 and 2013-14. Since these phases contain expressways and ring roads, they will be built on stretches with excessive traffic; hence, we expect