O/o Principal Director Commercial Audit & MAB-I
New Delhi
Indian Audit & Accounts Department
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India has a National Highways network of 65569 km which is 1.7 per cent of the
total road network of the country and it carried over 40 per cent of total traffic.
The role of developing, maintaining and managing National Highways has been
entrusted to NHAI which was established in 1988 by an Act of Parliament as a body
corporate to discharge its functions on business principles.
Performance Audit on “ Implementation of Public Private Partnership in NHAI” was
taken up in August/September 2012 by this office along with 5 other MABs
(Mumbai, Kolkata, Hyderabad, Chennai & Ranchi)
A PA was earlier conducted during 2006-07 and the findings reported in C&AG’s
Report No.16 of 2008.
A sample size of 94 projects/stretches of NHDP Phase II,III,IV,& V was selected for
the PA
The committee on infrastructure in 2005 approved the broad contours of NHDP
which included 7 phases.
Phase I & II were taken up under the EPC mode.
From phase III onwards GoI started awarding NHDP projects under the PPP mode.
Two main modes of execution under PPP were BOT – Toll basis & BOT – Annuity.
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BOT Toll : The concessionaire is responsible to finance,
construct, operate and maintain the road stretch. He is
entitled to collect and retain the toll collected during the
concession period. In case the estimated toll collection ,
falls short of the project cost including return on
investment, NHAI provides finance to meet the gap in the
form of viability gap funding. In certain cases, the
concessioner may offer premium.
BOT Annuity : In this mode, the responsibility for
construction, operation, finance and maintenance rests
with the concessionaire and the toll collection
responsibility rests with NHAI. All construction and annual
maintenance costs are initially borne by the concessionaire
and the same are fully reimbursed by NHAI by way of
annuity payments determined at the time of bidding.
Indian Audit & Accounts Department
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Structure of the Report
The report consists of following chapters:
 Introduction
 Planning
 Financial Management
 Award of Projects and the Concession Period
 Execution of Projects
 Revenue from Toll and Premium
 Monitoring of Projects
 Conclusion
Indian Audit & Accounts Department
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Whether project identification/prioritization was done in a
transparent manner;
Financial Management of funds was sound and mobilisation of
resources was efficient.
Whether the bid evaluation procedures were well established and
functioning;
Whether the projections made in DPR/ Feasibility Report were sound
and borne out by subsequent events;
Whether the concessions were awarded on equitable basis and in the
public interest;
Whether projects were completed within estimated cost, desired
timeframe and that public/Govt. interest was adequately protected;
Whether the revenue management system in toll collection was
effective.
Whether suitable mechanism for monitoring of projects was
established at Ministry as well as at NHAI during execution and O&M
stage.
Indian Audit & Accounts Department
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Review of DPRs/Feasibility Report, Sample Surveys and Statistical Analysis
Reports.
Review of records of various phases of NHDP, selection of stretches under
respective phases, appraisal of projects at various levels viz. Authority/Ministry,
PPPAC, EoGM/GOM/CCI etc.
Terms and conditions of Model Concession Agreement and other related
agreements
Traffic and Revenue assessments and projections.
Departmental, technical and financial estimates prepared as per DPRs
System of evaluation of bids
Work Plans of NHDP and Budget Provision for release of funds to MoRTH/
NHAI
Operation and Maintenance (O&M) for project implementation.
Financial Management system of NHAI
Indian Audit & Accounts Department
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The main criteria used for identification of road stretches under Phase I & II was the
development of Golden Quadrilateral and the north-south, east-west corridors. The
criteria used for identification of road stretches under other Phases (III, IV & V)
were requisitioned. However, no information was provided on criteria used for
identification / prioritization of stretches.
Ministry stated that road stretches were selected on the basis of availability of land,
traffic volume etc.
Work Plan, Targets and achievement
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GOI constituted BK Chaturvedi committee to resolve procedural impediments to
NHDP as well as take a holistic look at financing needs and arrive at a financing
plan.
The B.K.Chaturvedi Committee Report (27 August 2009) suggested a work plan for
2009-10 to 2013-14 wherein NHAI should award at least 21,000 Km over the first
three years so as to achieve the objective of constructing 7000 Km per year (equal to
20 Km per day). This work plan was approved by MoRTH in November 2009
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NHAI did not achieve the target of widening and up gradation of National
Highways @ 20 Km per day during the last four years. Average
achiev33ement ranged between 3.06 Km to 17.81 Kms per day during
2009-10 to 2013-14.
Corporate or Strategic plan of NHAI
Till 2009, NHAI did not have a Corporate or Strategic plan for systematic
implementation of NHDP.
Although NHAI drew up a corporate plan in 2009; the same did not include
any strategy, procedures or guidelines for timely implementation of highway
projects.
The corporate plan drafted by NHAI dealt mainly with restructuring the
administrative setup of NHAI by creations of RO’s and decentralization of
power.
Indian Audit & Accounts Department
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To achieve the targeted length as per the work plan, a financing plan for the year 200910 to 2030-31 was prepared by BK Chaturvedi committee in 2009.
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Position of Financial Plan for the last five years ending 2012-13
Year
Projected
Construction
expenditure as per
FP based on B. K.
Chaturvedi
Committee
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Percentage of
actual work done/
awarded with
reference to
projected targets
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Actual project
construction
expenditure
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2008-09
2009-10
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13,423.00
26.46
2012-13
11529.88
16,419.00
45.72
13618.53
15,585.00
23,222.00
81.34
10.47
13280.01
13996.28
Total
68,649.00
Actual borrowing
Percentage
of
actual borrowing to
proposed
borrowing
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1631
2304.01
141.26
5336
1550.64
29.06
7455
2465.83
33.08
9155
12511.52
136.66
21922
2902.07
13.24
45499
20703.18
45.50
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2010-11
2011-12
Borrowing as per
FP recommended
by B. K. Chaturvedi
52424.70
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NHAI did not spend the funds available as projected in the B.K Chaturvedi
Committee Report. The length of roads awarded by NHAI was only
16036.81 km as against 42391 km projected. Despite this NHAI
continuously resorted to borrowings leaving surplus cash balance.
Borrowings projected by B.K. Chaturvedi Committee and the amount
actually borrowed by NHAI there against showed a mismatch that ranged
between (-) 13.24 per cent and (+) 41.26 per cent.
Despite shortfall by 18.66 per cent in achievement of targeted length during
the year 2011-12, the actual borrowing against approved borrowing was
higher by 36.66 per cent. This was due to raising funds of `10,000 crore at
the rate of interest of 8.20 percent and 8.3 percent during the year through
Tax Free Bonds under Section 10(15) (iv) (h) of the IT Act.
It was also noticed that at the end of 31 March 2012, out of total surplus fund
of ` 11002.11 crore, an amount of ` 9928.31 crore was kept as Fixed
Deposits with banks by NHAI.
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Procedure adopted for award of Projects under NHDP : MoRTH first identifies the road stretches eligible for upgradation/widening
and then proposes their inclusion under NHDP. The proposal for approval is
then submitted to the Cabinet Committee on Infrastructure (CCI). On
approval by the CCI, MoRTH transfers the stretches so approved to NHAI
for implementation.
 DPR/Feasibility consultant and financial/legal consultants are appointed by
NHAI and a draft CA is prepared based on MCA. The proposal is submitted
through MoRTH to PPPAC & later to CCEA/CCI for final approval.
 Projects are awarded to concessionaire after EOI/RFQ,RFP.
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Mode of delivery of NH Projects :– In its 2009 report, the B.K.Chaturvedi Committee recommended a revised
strategy for implementation of road projects whereby all the three modes
of delivery i.e. BOT (Toll), BOT (Annuity) and EPC are to be
concurrently taken up rather than sequentially
– A road project prima facie not found suitable for BOT (Toll) could be
implemented directly on BOT (Annuity) after approval of IMG.
– However, before implementing a project on EPC basis, it will be
compulsorily tested for BOT (Annuity). In cases where there is no
unanimity in IMG, the matter is to be placed before EGoM.
Restructuring of projects
– Restructuring includes combining of two projects, postponing
construction of part of a certain stretch, deleting of structures,, increasing
the cost/VGF/Annuity etc. As per the PPPAC guidelines restructuring
could be taken up only after the approval of PPPAC.
– Instances were noticed where the projects were restructured at RFP/RFQ
stage and fresh RFQs were not invited which is indicative of non
transparent/ non competitive bidding
– The projects were eventually awarded at higher VGF/TPC as against
DPR
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Restructuring of Jaipur-Tonk-Deoli project
◦ Restructured from six/ four lane to four / two lane, due to inadequate
response from the bidders .The original estimated TPC was Rs. 1183.6
crore.
◦ NHAI restructured the project without obtaining the fresh approval of
PPPAC/CCEA.
◦ Work was awarded at a TPC of Rs.792.06 crore with Rs.306 crore as
VGF (38.63 per cent).Whereas the earlier project was approved without
VGF.
Restructuring of Jalandhar-Amritsar project
• The original project stretch of 69 kms was divided into two sections of 20
Kms (Section 1) and section of 49 Kms (Section 2) due to high stretched
cost/non viability of stretch.
• Section 2 was four laned on BOT at a cost of Rs.437 crore in 2008. No
decision about the remaining 20 Kms (section 1) was taken
• The cost of four laning the 20 km. stretch at 2008 rates was Rs.178 crore.
NHAI is now considering six laning of this stretch at an estimated cost of
Rs.523 crore.
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Restructuring of Kishangarh-Udaipur-Ahmedabad
• Initially two separate sections (i) Kishangarh to Udaipur (315Kms)
and (ii) Udaipur to Ahmadabad (242.51Kms) were approved by
CCEA in January 2009 and January 2010 at a TPC of Rs.3384 crore
and Rs.1750 crore respectively.
• Subsequently in January 2011, when the bidding process was at an
advanced stage of RFP, as per the advice of NHAI, MoRTH decided
to take up these projects as one Mega project.
• The TPC of the combined project was Rs.5387.30 crore as against
the TPC of two individual projects of Rs.5134 crore (Rs.3384crore +
Rs.1750 crore), ie Higher TPC of Rs.253.30 crore.
• Though the project was awarded at a premium of Rs 636 Crore, the
same could not materialise.
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Restructuring of Kamptee – Kanhan and Nagpur Bypass
• To make the project viable, NHAI added the maintenance and tolling of
already four laned stretch of Nagpur- Hyderabad section of NH-7 from Km
14.600 to Km 36.600 (22.015 Kms) as sweetener.
• The total construction cost of this stretch, completed by NHAI including
Butibori ROB, was Rs.104.00 crore (Rs.80.00 crore + Rs.24.00 crore).
• Thus NHAI gave a positive grant of Rs.559.21 crore which worked out to
47.77 per cent of the TPC and is in violation of the ceiling limit of 40 per cent
of the TPC imposed by the CCEA.
• The amount of excess grant works out to Rs.91.00 crore (i.e. 7.77 per cent of
Rs.1170.52 crore).
Restructuring of Kanpur-Kabrai
– The Concession Agreement was entered into on a TPC of Rs.373 crore as per
the estimate of the final feasibility report (May 2010) which included the cost
of Rs.21.76 crore for the grade separator and service road at Km 41.557.
– However, neither the CA had any provision for the grade separator (including
service road at Km.41.557) nor was the cost of the grade separator and service
roads excluded from the awarded TPC.
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Capacity of the road / Design service volume
 Manual of Specifications and Standards for two/ four laning of National Highways
through PPP (May 2010) stipulates following parameters for augmentation of the
facilities and upgradation of the project highway:
Nature of Tarrain
Plain
Capacity of road / Design service volume
(in PCU per day)
Without paved shoulder
With minimum 1.5 m paved
shoulder
15,000
18,000
Capacity of Four-lane highway
Nagpur-Betul and Lucknow Raebarelli projects were approved for four
laning on annuity basis, despite the fact that the minimum threshold limit of 18000
PCUs per day for four laning was not expected to be achieved in the next five to
12 years from the date of award. Unwarranted four laning of projects resulted in
extra burden of ` 1724.10 crore on road users apart from increased user fee which
is higher by 66.67 per cent for four lanes as compared to two lanes.
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The following projects were approved for six laning on BOT (Toll) basis,
despite the fact that the minimum threshold limit of 60000 PCUs per day
for six laning was not expected to be achieved in the next 10 to 25 years
Sl. no.
1
2
3
Project
Successful
Bidder/Conce
ssionaire
Varanasi- Aurangabad
M/s. SOMA
ISOLUX
KishangarhAhmedabad /
M/s GMR
Infrastructure
Ltd
Aurangabad-Barwa
Adda
Average
volume of
total traffic
(year)
18407 (2010)
35245 (2011)
M/s KMC
Km
192.400
Approval of
CCI
January 2009
Year of
achieving
Threshold
capacity for
six lane #
2034
555.500
September
2011
2022
218.75
March 2012
2024
22000
(2012)*
Indian Audit & Accounts Department
Levy of toll
by the
Concessionai
re
September
2011
Not started till
August 2013
Not started till
March 2013
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per the procedure defined in MCA, the carrying capacity of the respective highway
at the end of proposed concession period would be the guiding principle for
determining project specific concession period and the year in which the design
capacity would be reached would be the last year of concession.
 Concession period is the period during which the Concessionaire is entitled to collect
toll/Annuity for the construction of project highway.
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NHAI worked out Concession period on the tollable traffic instead total
assessed volume of traffic (which should be the total carrying capacity of the
road)
• This has resulted in fixing of longer concession period which would prove
beneficial to the concessionaire .
• During these extended concession periods, the Concessionaires’ would
collect toll at least to the tune of ` 28095.54 crore, while the roads would
become congested for the toll paying users
Inconsistency in considering traffic volume- On the contrary, in other three
cases (Agra- Aligarh, Raibareilly- Allahabad and Kishangarh- Ahmedabad) it
was noticed that total traffic was taken for determining the Design Capacity/
Concession Period of the project. Thus there was no consistency in fixing the
concession period based on traffic census.
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Conditions precedent to be fulfilled by NHAI:
1) Procurement for the concessionaire at least 80% right of way
of the total area required for the project.
2) Procurement of approval from railway authorities for
construction of road over bridge/ under bridge.
3) Procurement of permits relating to environment protection.
Financial Closure : is the date on which financing documenst for
funding by lenders become effective and the concessionaire gets
immediate access to such funds.
Appointed Date : is the date on which financial closure is achieved
or an earlier date which both the parties may determine by
mutual consent and shall be deemed to be the date of
commencement of the concession period. All conditions
precedent should either be fulfilled or waived before fixing the
appointed date.
Indian Audit & Accounts Department
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Out of 94 projects, although 60 projects were due to be completed by end of March, 2014,
only 5 projects were completed within time. Delays in completion of projects against
scheduled completion date ranged from six days to 1249 days.
Types of delay
Scheduled days
Minimum delay in
days
Maximum delay in
days
Delay in signing CA
(84projects)
45 days from the
issue of LoA
3 days
373 days
Delay in Appointed date (35
projects)
180 days from the
signing of CA
1 days
790 days
Delay in financial closure
(35 projects, >100 days
delay)
180 days from the
signing of CA
2 days
1007 days
Delay in getting RoB
approval 76 projects
180 days from the
signing of CA
43 days
1946 days
Environmental Clearance. 72
projects
180 days from the
signing of CA
26 days
1350 d ays
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Withheld amount account
• In Six laning projects, toll collected is deposited in Escrow Toll Collection Fee Account to be
utilized for construction of the project highway. In case the Concessionaire defaults in
achieving milestones, the toll will be deposited in a separate escrow sub account i.e. “Withheld
Amount Account”.
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Such withheld amount will not be released till the Project Milestone immediately after the
latest defaulted Milestone is achieved.
• Interest accrued on the same shall be disbursed to NHAI under all circumstances i.e. even if the
Project milestone is not achieved, due to Authority default.
• In case of four projects, an amount of Rs.2084.59 crore was not withheld or was prematurely
released to the Concessionaire.
Partial Tolling
 CA (prior to 2006-07) provides that the Concessionaire would be entitled to collect toll on the
project highway after completing at least 50 km of continuous stretch and in case the
Concessionaire defaults in completing the entire project highway within the schedule project
completion date, any fee notification issued earlier for levy of toll on part completion, would be
de-notified immediately. Fresh fee notification would be issued only after completion of the
entire project
 NHAI allowed tolling on four partially completed stretches though the projects were not
completed on scheduled completion dates. The fee notifications issued were not de-notified, &
resulted in extra burden on the road user’s Rs. 161.67 crore.
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Punch List Items
 IE/IC can issue a Provisional Completion Certificate(PCC) on substantial
completion of the project. The PCC shall contain a list of outstanding items (i.e.
the Punch List).
 All items in the Punch List shall be completed by the Concessionaire within
90/120 days of the date of issue of the PCC and for any delay thereafter, NHAI
shall be entitled to recover damages from the Concessionaire.
 Out of 94 projects, PCC was issued in 33 completed projects with Punch List
items. NHAI however did not take action to levy damages of Rs.69.42 crore in 13
projects.
Change of Scope (CoS)
 MCA provides that for execution of additional works and services not included in
the scope of the project, the costs arising out of any change of scope order issued
during the Concession period shall be borne by the Concessionaire subject to a
ceiling limit prescribed as a percentage of the project cost and thereafter would be
reimbursed by NHAI.
 CoS was observed in 23 projects
 The financial impact of positive and negative works out to ` 856.80 crore in 22
projects and ` 37.72 crore in 6 projects, respectively.
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Utility Shifting
 As per MCA, the shifting of utility work like electricity lines,
water pipe lines should be carried by the concessioner with the
assistance of NHAI.
 Based on the estimates prepared by the respective state
government agencies the work is got done by the concessioner
and the cost of work is reimbursed by NHAI to the concessioner.
 Audit examination revealed wide variations between the cost
estimated by the DPR consultant and the actual cost incurred by
concessioners. The variation ranged b/w 2.34% to 2831.43%
Variation in TPC
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TPC worked out by DPR consultant and approved by NHAI was
less than the TPC assessed by the concessionaire by
Rs.36612.91 crore.
 The higher TPC worked out by concessionaire allowed them to
avail higher amount of borrowed funds.
Indian Audit & Accounts Department
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As per Rule 3(2), of NH Fee Rules, 2008 NHAI is required to commence
collection of toll within 45 days from the date of issue of provisional
completion certificate or issue of toll notification, whichever is later. Required
action for fee notification is to be initiated at least 120 days prior to likely date
of completion of the project.
Out of 20 selected Annuity projects, six projects were completed and were
eligible for toll collection. Audit scrutiny of these projects revealed as under:
In 6 Annuity projects, delay in achieving COD ranged from 101 days to 906
days which resulted in foregoing of toll revenue of ` 259.47 crore.
Delay in issue of toll notification, after the date of PCC ranged from 37 days
to 596 days which resulted in foregoing of toll revenue of `157.65 crore.
In 3 annuity projects even after issue of toll notifications, delays were noticed
ranging from 51 days to 214 days, resulting in forgoing of toll revenue of `
13.72 crore.
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Additional Concession Fee
 MCA provides that the concessionaire shall pay to NHAI additional concession
fee to be calculated as specified in the respective CAs in case of six laning
projects. NHAI can conduct traffic sampling for continuous seven days to
check the veracity of the Concessionaires’ statement
 In three six laning projects, short realisation of additional concession fee
amounting to Rs.29.79 crore was noticed
Toll revenue of ` 303.62 crore diverted as investment rather than being spent
on construction work
 MCA as well as the Escrow Agreement provides that the withdrawals from the
Escrow account during the Concession period can only be appropriated as per
chronology specified in the CA such as taxes due, construction of the project
highway, payment of Concession fee etc., and if any balance available, it can
be utilised as per the instruction of concessionaire.
 In two projects (Delhi Agra and Pune Satara) toll revenue amounting to
Rs.303.62 crore was used for investment rather than construction work of the
projects.
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Inadequacies in accountability
• Substantial manpower (officers and officials) of NHAI was on deputation
from various government departments. The ratio of persons on deputation to
regular employees was 83:17 as at March 2013. NHAI suffers from lack of
continuity/ institutional memory and is deprived of the services of experts in
the field of project management.
Need to monitor project wise profitability
 NHAI does not maintain project wise accounts which are essential to assess
the profitability of a particular project. As such, it was not in a position to
assess whether its decisions to go in for improvements to particular stretches
were economically viable and profitable. NHAI was also not in a position to
provide accurate information to its senior management or MoRTH which
could be used while preparing future plans or to assess justification for
revenue sharing.
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Independent Engineer (/IC)
• As per MCA the IE is to be appointed within 90 days from the
date of signing of CA.
• Delays were noticed in appointing IC/IE ranging from 6 days
to 725 days in 84 out of 94 selected projects
Safety Consultant (SC)
• As per MCA the SC is to be appointed within 90/120 days
from the date of signing of CA.
• Delays were noticed in appointing SC ranging from 34 days to
1408 days which resulted in compromising with the safety
aspects required during the pre-construction as well as during
the construction period.
• In 19 CAs there was no provision for the appointment of
Safety Consultant at all.
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Premature release of grant
• In BOT (Toll) projects, Equity support (VGF) shall be due and payable to the
Concessionaire after it has expended the prescribed percentage of Equity, and
shall be disbursed proportionately along with the loan funds thereafter
remaining to be disbursed by the Senior Lenders under the Financing
Agreements and should not be in material breach under the CA.
• In six projects, Audit noticed that the Authority prematurely released grant
amounting to Rs 769.53 crore due to treating advance to EPC contractor as
expenditure and inclusion of loan amount already released while working out
the pro-rata amount of loan remaining to be released while calculating the
amount of grant.
Non Maintenance of the Project Highway
 MCA provides that the Concessionaire shall operate and maintain the Project
Highway in accordance with this agreement either by itself or through the
O&M Contractor. Further, it provides for damages for breach of the same at
higher of (a) 0.5 per cent of Average Daily fee, and (b) 0.1 per cent (zero point
one per cent) of the cost of such repair or rectification as estimated by the IE.
 In five projects an amount of Rs.62.93 crore stood recoverable for non
maintenance of project highway by the concessionaire.
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Non-Setting up of PPP Project monitoring units
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‘Institutional mechanism for monitoring of PPP projects’ issued
(August 2012) by Planning Commission and provides for setting up
of a two tier mechanism.
◦ PPP Monitoring Unit (PPPMU) at NHAI level
◦ PPP Review Unit (PPPRU) at MoRTH.
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Based on the reports furnished by PPPMU to PPPRU the latter was
required to send quarterly reports to Planning Commission with a
copy to Ministry of Finance.
Planning Commission was required to prepare a summary of these
reports along with recommendations relating to further
action/improvements which were to be placed before CCI.
Audit observed that NHAI did not set up PPPMU till February 2014.
As regards MoRTH, reply with regard to setting up of PPPRU was
awaited (February 2014).
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Recommendation 1: Transparent objectives and criteria need to be framed
while identifying and selecting the road stretches for up gradation.
Recommendation 2: Timelines for approval of phases of NHDP/approval of
projects need to be formulated and appropriate monitoring mechanism
devised with identified responsibility centres and timelines.
Recommendation 3: NHAI may develop an effective financial management
system so that inflow of funds can be synchronised with the requirement
and avoid surplus/idle funds.
Recommendation 4: While restructuring projects, technical and financial
feasibility may be strictly adhered to and cost of the project should be
revised with due diligence. Concession period after restructuring should
also be determined as per revised projections of the traffic. Restructured
projects should go through fresh bidding process to ensure
competitiveness and transparency.
Recommendation 5: At the time of up-gradation of the projects from 2-lane
to 4-lane and from 4- lane to 6-lane, the Manual for Specification and
Standards may be followed consistently.
Recommendation 6: At the time of determining the concession period, NHAI
may ensure consistency in adoption of the norms for traffic i.e. total traffic
or tollable traffic.
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Recommendation 7: NHAI may have improved co-ordination with the state
governments and increase the effectiveness of its Land Acquisition Units so
that land can be handed over within the scheduled time and projects can
also be completed without delay.
Recommendation 8: NHAI may consider including the estimated cost of
utility shifting in the TPC for the project itself rather than reimbursing the
cost of execution to the concessionaire in order to avoid large variations.
Recommendation 9: NHAI would need to initiate timely action for issue of
fee notification and plan in advance for levy of toll fee to avoid loss on
account of delayed collection of toll.
Recommendation 10: NHAI needs to critically review the system of
declaration of Appointed Date and also design a mechanism to ensure that
the concessionaire does not derive undue advantage of the funds at its
disposal by diverting toll revenue into financial instruments rather than
investing them for approved project purposes.
Recommendation 11: NHAI needs to ensure that norms for release of grant
are consistent across concession agreements. Due diligence needs to be
exercised over release of grants to concessionaire to avoid premature
release of grant.
Recommendation 12: MoRTH/ NHAI needs to urgently set up Performance
Review Unit/ Projects Monitoring Units and ensure that the requisite
reports are placed before the CCI.
31
Thank You
Indian Audit & Accounts Department
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MoRTH had set a target for widening and up gradation of Highways at 20 km
per day. Achievement there against during 2009-10 to 2012-13 ranged between
3.06 km and 17.81 km per day despite availability of sufficient funds.
Inconsistency in adopting carrying capacity/tollable traffic for determining the
Concession Period by (NHAI) resulting in fixing higher concession period,
consequently unwarranted burden of ` 28095.54 crore (NPV: ` 3233.71 crore) on
road users by way of toll for the extended period apart from leading to traffic
congestion towards the end of the concession period.
NHAI incurred an expenditure of ` 856.80 crore on account of change in scope
of 23 projects, out of which ` 662.53 crore was due to faulty Detailed Project
Report (DPR)/Feasibility Reports
NHAI could not start toll collection in six completed annuity projects due to
non-achievement of Commercial Operation Date (COD) in time resulting in
non-realisation of estimated toll revenue of ` 259.47 crore. Toll of ` 171.37 crore
could not be collected due to delay in issue of toll notification (` 157.65 crore)
and failure to commence toll collection after issue of toll notification (` 13.72
crore) for these projects.
33
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Two projects were approved for 4-laning despite the fact that the minimum threshold traffic was not
expected to be achieved in the next five to 12 years. Unwarranted 4- laning would result in extra
cost of construction ` 1724.10 crore which was avoidable apart from increased user fee to be paid by
road users which is higher by 66.67 per cent for 4-lane as compared to 2-lane.

The Total Project Cost (TPC) worked out by the concessionaires was higher as compared to TPC
worked out by the Authority. TPC worked out by the concessionaire ranged from 0.32 per cent to
223 per cent, which benefited the concessionaire with lesser residuary risks.

The projects considered unviable on Build Operate and Transfer (BOT)-Toll either by DPR
consultants/Authority/Public Private Partnership Appraisal Committee (PPPAC) or during bidding
process were re-structured after making major changes in the initial project parameters to make them
viable, but fresh RFQ were not invited in such cases, which showed lack of transparency and
competitive bidding.

NHAI’s decision to allow tolling on four partially completed stretches resulted in extra burden on
the road users amounting to ` 161.67 crore.

Toll amount of ` 902.89 crore collected by the concessionaires in three 6-laning projects was not
transferred to 'withheld amount account' though milestones were not achieved.

In four projects, NHAI prematurely released grant amounting to ` 769.53 crore
by considering amount of advance as expenditure and by incorrectly working out
the pro rata amount of loan remaining to be released while calculating the
amount of grant.

NHAI is managing its staff strength mostly with officials on deputation from
other government departments and by appointing consultants. Department of
Personnel & Training (DoPT), Ministry of Personnel, Public Grievances &
Pensions, Government of India, directed MoRTH in November 2009, to ensure
that within two years, the structure of NHAI be reformed to provide for its own
independent cadre through direct recruitment and absorption of deputationists.
However, as at the end of 31 March 2013, the ratio of persons on deputation to
regular employees was 83:17.

NHAI did not adhere to basic accounting principles and Accounting Standards
issued by the Institute of Chartered Accountants of India. Resultantly, the Profit
and Loss account did not depict overall profitability of NHAI.
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MoRTH first identifies the road stretches eligible for upgradation
and then proposes their inclusion under NHDP.
The proposal is submitted to CCI/CCEA.
On approval by CCI/CCEA, MoRTH transfers the stretches to
NHAI for implementation.
NHAI engages the DPR/ Feasibility consultant.
NHAI appoints financial and legal consultant to prepare DCA.
The complete proposal is submitted to PPPAC through MoRTH
for approval.
On approval by PPPAC the project is submitted to CCI/CCEA for
final approval.
The process of engaging a concessioner commences which
consists of RFQ, RFP.
After award, the bidder forms a SPV who executes the work.
Indian Audit & Accounts Department
36
Sl. No.
Records/files/information sought
from MoRT&H
Status
1
Basis of selection of stretches taken No records were furnished.
up for upgradation and norms/criteria
adopted
for
identification/prioritization
of
stretches under NHDP phase II to V
2
Approval of NHDP Phases II, III, IV Only one file related to approval of phase IV
&V
(15000 km.) was furnished.
3
Work plans as well as financial plans Work plans for two years 2011-12 & 2012-13
of NHDP for the last five years
were only furnished.
4
Project specific files
5
Quarterly reports of PPP PRU No records were furnished.
(Project review unit) for the last five
years
Only 10 files out of 31 requisitioned were
furnished & these were either incomplete or
contained partial information.
37