Business Standard, 11 April 2014: Whatever be the political coalition that comes to power at the Centre after May 16, the new government will have five ongoing projects to kick-start a sluggish economy. These low-hanging fruits of labour of the two-term UPA government – the eastern and western Dedicated Freight Corridor (DFC) projects, the first phase of the Delhi-Mumbai Industrial Corridor (DMIC), Metro rail projects in nine cities, airport modernisation in six cities, including Chennai and Kolkata, and power projects that have signed fuel-supply agreements (FSAs) – are there for the new dispensation to pluck.
Here’s a quick status check of these projects, which could help the economy beat the slowdown blues and earn brownie points for the new government
With 94% of the land for the projects acquired, and all major statutory clearances in place, DFC is on the fast-track, backed by institutional finance from the World Bank (eastern corridor) and Japan International Cooperation Agency (western corridor). Civil contracts for 1,100 km were given out in 2013. Contracts for another 1,100 km, worth over Rs 7,000 crore, are expected to be awarded in 2014. Aimed at decongesting freight routes, this project involves setting up high-speed railway corridors with Rs 95,000-crore investments. It is slated for completion by FY18.
If things go as planned, the ambitious DMIC project – building manufacturing centres and townships along the 1,483-km Delhi-Mumbai freight corridor – will see two groundbreaking events in 2014. In the October-December quarter, global bids are likely to be awarded for creation of truck infrastructure at four project sites – industrial townships at Dholera (Gujarat), Vikram Udyogpuri (near Ujjain, Madhya Pradesh) and two multi-modal logistics hubs at Shendra (Maharashtra) and Greater Noida. The pre-engineering master plans for the four sites are expected to be finalised by June. This will be followed by a contractor outreach programme in July. The $90-billion project spread over eight states had to be ring-fenced from political challenges. According to Shinya Ejima, India representative of Japan International Cooperation Agency, which is funding the project, such sovereign-guaranteed projects aren’t affected by change in governments at the state or Centre. But experts point out the government of the day could play a key role in accelerating the pace on the ground.
Metro rail projects under implementation in nine cities could be the cornerstone of any urban infrastructure development programme by the new government, says Rohit Inamdar, vice-president, Icra. Sector experts point out civil construction typically constitutes 35-50% of the project cost of a Metro system. Given the muted activity in other infrastructure sectors, construction companies have bid aggressively for work on superstructures and foundation work. A renewed thrust from the government will help improve cash flow for these companies and enhance economic activity on the ground.
The Airports Authority of India’s ongoing airport modernisation programme for Kolkata and Chennai airports, at Rs 2,325 crore and Rs 2,015 crore, respectively, will be re-started only after a new government takes office. So will bids for the upgrade of airports at Guwahati, Jaipur, Ahmedabad and Lucknow, amid criticism over the drafting of the concession agreements. Several political parties and AAI employees had opposed the modernisation initiative through the public-private-partnership route. Experts expect the new Navi Mumbai airport development project to gather stream in 2014, following a global tender earlier this year. A tender for construction of the terminal building for an international airport at Kannur (Kerala) was floated in February. AAI has plans to build 50 low-cost airports, providing a boost to construction companies. With two new airlines from Tata group – AirAsia and Tata-SIA – expected to take to the skies in 2014, the new government will have its hands full when it comes to the aviation sector.
Over the previous 12 months, 150 fuel supply agreements were signed between Coal India and power plant promoters, creating capacity for generating 75,000 Mw by 2015. Experts point out many of these projects will start firing in 2014, creating employment and spurring growth momentum.