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Thursday, 25 December 2014 06:11
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Fixing NHAI process critical, that’s the CAG lesson

It is easy to get lost in the details of the R35,676 crore of losses the CAG says have taken place in Phases II through V of NHAI’s highway development process. Of this, R28,990 crore is in the future, the value of the extra toll users will have to pay, thanks to NHAI increasing the concession period of toll roads. It is important to keep in mind, as CAG itself acknowledges, the R28,990 crore will be collected decades into the future—the net present value of that is a much smaller R3,708 crore. What is important, as the CAG points out, is the ad hoc nature in which NHAI operates; in several cases, while Cabinet approval was taken for particular stretches of roads, other roads were substituted; and while NHAI justified increasing the concession periods by talking of ‘tollable traffic’ as opposed to ‘total traffic’, it applied this rule only selectively.

Since the CAG’s was a performance audit, important as the loss numbers are, it is vital not to lose sight of the larger picture—as CAG officials talking of the R28,990 crore illegal gain admitted at a press conference, if the concessions had not been lengthened, the government would have had to pay more to the concessionaires by way of viability gap funding. The biggest problem highlighted by CAG was the collapse in NHAI’s progress with the shortfall in awarding contracts averaging 59% between FY10 and FY13, and being as high as 90% in FY13. Apart from the problem in the way NHAI functions today—and there are many such problems—CAG found a delay of 100-373 days in signing the concession agreement in 21 of 94 projects reviewed. Getting approvals for rail over/under bridges ranged from 100-1,946 days in the 94 projects reviewed while the delay in environment clearances was between 26 to 1,350 days in 31 of 72 projects—surprisingly, given how most projects faced delays in getting land allocations, NHAI did not present CAG with details of how bad things were on account of this. How shoddily NHAI is being run is also brought out by the fact that, in 34 of 71 projects, the costs of shifting utilities exceeded the original costing by more than 100% and even reached 2,831% in one case. Given NHAI is a showcase effort for public investment, and has an outlay of R1.9 lakh crore so far, a serious revamp of the institutional set-up is called for.

 

 

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