Tuesday, September 7, 2010

Sector Update: Infrastructure; Road development in India

Infrastructure

Road development in India

Implementation of reco. by B.K. Chaturvedi driving the new awards 

Adoption of the B.K. Chaturvedi report recommendations has cleared the long pending issue related to MCA & RFP, RFQ. Consequently, the road sector has seen a significant pick up in the awarding activity- 4,940 km of new projects being awarded over the last 9 months compared to just 1,877 km in FY08-09. This yields a monthly run rate of close to 550 kms of new project awards. The run rate has further increased to 700 kms With 2871 kms of new project awards, in the first 4 months of FY11 itself. 

NHAI expects to award 18,000 kms over FY11-12

NHAI's FY11 target stands at 11599 kms of new awards. Add to it the 8250 km as spill over from FY10 targets, the cumulative target stands at 19856 kms of new awards. Though such a steep target is unlikely to be achieved over FY11, we would like to that the 8250 kms spil over from FY10 targets already have the requisite clearances and are ready for awards. NHAI expects to award ~9000 kms each in FY11E & FY12E, taking the overall tally to 18,000kms on new road awards over FY11-12. However, based on the monthly run rate of ~550km/per month over the last 9 months and ~700 km for YTD FY11, we expect NHAI to award 7000-7500 kms in FY11E.

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