Construction of Four Lane divided carriageway from Chettikulam (Km.

7/300) to
Natham (Km.36/690) Stretch of Madurai-Natham Section (Package-II) of NH-785 FINAL FEASIBILITY
on EPC mode under Bharatmala Pariyojana Phase-I in the state of TamilNadu. REPORT

CHAPTER - 2

2 OVERVIEW OF NHAI ORGANIZATION & ACTIVITIES, PROJECT

FINANCING AND COST RECOVERY MECHANISMS

2.1 NHAI Establishment

The National Highways Authority of India was constituted by an act of Parliament, “the
National Highways Authority of India Act, 1988”. It is responsible for the development,
maintenance and management of National Highways entrusted to it and for matters
connected or incidental thereto. The Authority was operationalized in February 1995 with
the appointment of full time Chairman and other Members.

2.2 NHAI Vision

"To meet the nation’s needed for the provision and maintenance of National Highways
network to global standards and to meet user’s expectations in the most time bound and
cost effective manner, within the strategic policy framework set by the Government of
India and thus promote economic well being and quality of life of the people".

2.3 NHAI Mandate

National Highways Authority of India (NHAI) is mandated to implement National

Highways Development Project (NHDP) which is

 India 's Largest ever highways project

 World class roads with uninterrupted traffic flow

The National Highways have a total length of 71772 km to serve as the arterial network
of the country. The development of National Highways is the responsibility of the
Government of India. The Government of India has launched major initiatives to upgrade
and strengthen National Highways through various phases of National Highways
Development project (NHDP), which are briefly as under:

NHDP Phase I: NHDP Phase I was approved by Cabinet Committee on Economic

Affairs (CCEA) in December 2000 at an estimated cost of Rs.30,000 crore comprises
mostly of GQ (5,846 km) and NS-EW Corridor (981km), port connectivity (356 km) and
others (315 km).

NHAI 2-1 FEEDBACK INFRA IN JV WITH

MUKESH & ASSOCIATES
Construction of Four Lane divided carriageway from Chettikulam (Km.7/300) to
Natham (Km.36/690) Stretch of Madurai-Natham Section (Package-II) of NH-785 FINAL FEASIBILITY
on EPC mode under Bharatmala Pariyojana Phase-I in the state of TamilNadu. REPORT

NHDP Phase II: NHDP Phase II was approved by CCEA in December 2003 at an
estimated cost of Rs.34339 crore (2002 prices) comprises mostly NS-EW Corridor (6161
km) and other National Highways of 486 km length The total length of Phase II is 6647
km.

NHDP Phase-III: Government approved upgradation and 4 laning of 4035 km of

National Highways on BOT basis at an estimated cost of Rs.22207 crore (2004 prices) on
March 05, 2005. The upgradation and 4 laning at 8074 km at an estimated cost of
Rs.54339 crore in April 2007.

NHDP Phase V: CCEA has approved on 5.10.2006 six laning of 6,500 km of existing 4
lane highways under NHDP Phase V (on DBFO basis). Six laning of 6,500 km includes
5,700 km of GQ and other stretches.

NHDP Phase VI: CCEA has approved in November 2006 for 1000 km of expressways at
an estimated cost of Rs.16680 crore.

NHDP Phase VII: CCEA has approved in December 2007 for 700 km of Ring Roads,
Bypasses and flyovers and selected at an estimated cost of Rs 16680 crore.

NHDP status
Status of NHDP as on 31st March 2017 is shown in Table 2.1.

Total Already Under Contracts Balance

Length 4/6 Implemen Under length for
(Km.) Laned tation Implementat award
(Km.) (Km.) ion (No.) (Km.)
NHDP GQ 5,846
5,846 0 0 -
-100.00%
NS - EW
Ph. I & II 7,142 6,563 305 28 274

Port
Connectivity 435 381 54 7 -

NHDP Phase
11,809 7,507 2,357 72 1,945
III
NHDP Phase
13,203 3,773 6,373 105 3,057
IV
NHDP Phase
6,500 2,544 1,424 32 2,532
V
NHDP Phase
1,000 - 184 9 816
VI

NHAI 2-2 FEEDBACK INFRA IN JV WITH

MUKESH & ASSOCIATES
Construction of Four Lane divided carriageway from Chettikulam (Km.7/300) to
Natham (Km.36/690) Stretch of Madurai-Natham Section (Package-II) of NH-785 FINAL FEASIBILITY
on EPC mode under Bharatmala Pariyojana Phase-I in the state of TamilNadu. REPORT

Total Already Under Contracts Balance

Length 4/6 Implemen Under length for
(Km.) Laned tation Implementat award
(Km.) (Km.) ion (No.) (Km.)
NHDP Phase
VII 700 22 94 4 584
NHDP Total 46,635 26,636 10,791 257 9,208
Others (Ph.-I, Ph.-II &
2044 1,736 308 17 -
Misc.)
SARDP -NE 110 107 3 1 -

Total by NHAI 48,789 28479* 11,102 275 9,208

*Total 20,000 Km. was approved under NHDP Phase IV. Out of which 14,799 Km. as
assigned to NHAI remaining Km. with MORTH.

A map showing status of NHDP as on 30th November, 2016 is shown in fig 2.1

NHAI 2-3 FEEDBACK INFRA IN JV WITH

MUKESH & ASSOCIATES
Construction of Four Lane divided carriageway from Chettikulam (Km.7/300) to
Natham (Km.36/690) Stretch of Madurai-Natham Section (Package-II) of NH-785 FINAL FEASIBILITY
on EPC mode under Bharatmala Pariyojana Phase-I in the state of TamilNadu. REPORT

Fig. 2.1 Status of NHDP

NHAI 2-4 FEEDBACK INFRA IN JV WITH

MUKESH & ASSOCIATES
Construction of Four Lane divided carriageway from Chettikulam (Km.7/300) to
Natham (Km.36/690) Stretch of Madurai-Natham Section (Package-II) of NH-785 FINAL FEASIBILITY
on EPC mode under Bharatmala Pariyojana Phase-I in the state of TamilNadu. REPORT

2.4 NHAI Organization

A full time Chairman heads NHAI Member Finance, Member Administration, Member
Technical head their respective departments and report to the Chairman. A detailed
organizational chart of NHAI is given in Fig. 2.2

2.5 Finance Mechanisms

NHAI proposes to finance its projects by a host of financing mechanisms. Some of them
are as follows:

2.5.1 The Government of India-Budgetary Allocation

In a historic decision, the Government of India introduced a Cess on both Petrol and
Diesel. This amount at that time (at 1999 prices) came to a total of approximately
Rs.2000 crore per annum. Further, Parliament decreed that the fund so collected were to
be put aside in a Central Road Fund (CRF) for exclusive utilization for the development
of a modern road network. The developmental work that it could be tapped to fund, and
the agencies to which it was available were clearly defined as:

1. Construction and Maintenance of State Highways by State Governments.

2. Development of Rural Roads by State Governments

3. Construction of Rail over- bridges by Indian Railways

4. Construction and Maintenance of National Highways by NHDP and Ministry of Road

Transport & Highway

Currently, The Cess contributes between Rs.5000 to 6000 crore per annum towards
NHDP.

2.5.2 Loan Assistance from International Funding Agencies

Loan assistance is available from multilateral development agencies like Asian

Development Bank and World Bank or other overseas lending agencies like Japanese
Bank of International Co-Operation.

2.5.3 Market Borrowing

NHAI proposes to tap the market by securities cess receipts.

NHAI 2-5 FEEDBACK INFRA IN JV WITH

MUKESH & ASSOCIATES
Construction of Four Lane divided carriageway from Chettikulam (Km.7/300) to
Natham (Km.36/690) Stretch of Madurai-Natham Section (Package-II) of NH-785 FINAL FEASIBILITY
on EPC mode under Bharatmala Pariyojana Phase-I in the state of TamilNadu. REPORT

2.5.4 Private Sector Participation

Major policy initiatives have been taken by the Government to attract foreign as well as
domestic private investments. To promote involvement of the private sector in
construction and maintenance of National Highways, Projects are offered on Build
Operate and Transfer (BOT) basis to private agencies. After the concession period, which
can range up to 30 years, this road is transferred back to NHAI by the Concessionaires.

NHAI funds are also leveraged by the setting up of Special Purpose Vehicles (SPV). The
SPV borrow funds and repay these through toll revenues in the future. Some more models
have emerged for better leveraging of funds available with NHAI such as Annuity, which
is a variant of BOT model.

Fig. 2.2 Organizational Chart

2.6 Cost Recovery Mechanism

The Government of India takes policy initiatives for attracting private investment as
follows:

 Government will carry out all preparatory work including land acquisition and
utility removal. Right of way (ROW) to be made available to concessionaires free
from all encumbrances.

NHAI 2-6 FEEDBACK INFRA IN JV WITH

MUKESH & ASSOCIATES
Construction of Four Lane divided carriageway from Chettikulam (Km.7/300) to
Natham (Km.36/690) Stretch of Madurai-Natham Section (Package-II) of NH-785 FINAL FEASIBILITY
on EPC mode under Bharatmala Pariyojana Phase-I in the state of TamilNadu. REPORT

 NHAI / GOI to provide capital grant up to 40% of project cost to enhance viability
on a case-to-case basis.

 100% tax exemption for 5 years and 30% relief for next 5 years, which may be
availed of in 20 years.

 Concession period allowed up to 30 years and during this concessionaire will

collect toll.

 Toll rates will be decided based on type of vehicle and loading capacity of
vehicle.

 Arbitration and Conciliation Act 1996 based on UNICITRAL provisions.

 In BOT projects entrepreneur are allowed to collect and retain tolls.

 Duty free import of specified modern high capacity equipment for highway
construction.

NHAI 2-7 FEEDBACK INFRA IN JV WITH

MUKESH & ASSOCIATES