India woos foreign players to build highways

In a bid to woo global biggies to participate in the development of Indian highways, the government is considering a proposal to award much longer stretches of roads for construction under the National Highway Development Programme.

While the present practice is to limit a road contract to under 100 km, the proposal seeks to offer stretches between 300 and 500 km in length in the future.

This, it is hoped, will attract the likes of Leighton, Bechtel, Skanska, Fluor Engineering, and large international investors like Rothschild and Getty Family Trust to the country's road sector.

India's highway development programme has till now been largely dominated by domestic companies like DS Constructions, Soma, L&T, Essar, and GMR.

The cost per km of constructing a highway in India is in the range of Rs 4-6 crore. Most stretches of roads awarded so far are about 60 km long, with the project cost working out to less than Rs 360 crore (around $78 million).

In comparison, the project cost of a 300-500 km stretch will work out to between Rs 1,800 crore (Rs 18 billion) and Rs 3,000 crore (assuming a cost of Rs 6 crore per km), or over $650 million, at the higher end.

"If the ministry was to increase the length of the stretches, it would be a welcome change," said Ankineedu Maganti, director, Soma Enterprises Ltd.

This would result in more companies being interested in taking up maintenance and upgrade work as part of the contract, he said.

"As of now - on 50-km stretches - it is not viable to  also undertake maintenance work," he said.