The National Highways Authority of India has decided to appoint an external auditor to investigate cases where there are wide discrepancies between the NHAI-approved project cost and the bank loans taken by developers.
“I am going to retroactively assess some instances where such discrepancies occurred. So I am in the process of identifying which are the ones where there are such sweeping differences,” NHAI chairman Raghav Chandra told The Hindu in an exclusive interview.
Earlier this week, Roads Secretary Vijay Chhibber had told The Hindu that banks have killed the roads sector by not doing due diligence and giving inflated loans to developers far above the NHAI-determined project cost even before land acquisition was done.
The NHAI is also taking other steps to reduce incidence of such discrepancies, Mr. Chandra added.
“One step is to sensitise the banks, to caution them that they have to be careful. The second is to do our own due diligence a little more closely on the TPC [total project cost] of the project… At that stage, I have sensitised my officers to raise the issue in case they find sweeping discrepancies between the project cost and the loan amount. Fourth, to have an external auditor to check out in case there is a wide discrepancy to assess whether this was really called for, are there cogent reasons for it or not,” he said.
However, he said incidence of such discrepancies does not make a fit case for blacklisting. “It is ultimately their choice, if a bank is naïve enough to give a high loan,” he said, adding that he would like to analyse the effect of such a variance and determine whether they have a significant role in delays in projects or the projects not being able to take off.
The State Bank of India, IDBI, Yes Bank, and IDFC all have high exposures to the road construction sector, he said.
Regarding a recent Crisil report saying that one of the major problems plaguing the road sector was delay in land acquisition and environmental and forest clearances, Mr. Chandra said that while there was a problem, the NHAI was taking every possible step to address it.
“The fact is that land acquisition and forest and environmental clearances have been historically a big issue… I have asked my chief general manager (land acquisition) to tour each State and to meet the Chief Secretaries along with my entire team in each State. He has already covered 2-3 States. And I think in the next month he would have covered the entire country, wherever our highway projects are,” he said.
The chairman also added that there was currently a more accommodative environment in this regard. “There is, of course, a more congenial environment in that the Environment Ministry…for the first time I find they are understanding and empathising with us…We find that environmental clearances are coming in faster,” he said, adding that there are some issues still being raised by the National Green Tribunal.
However, he added that the new legislation regarding land acquisition has increased litigation. “Earlier there used to be litigation only about compensation. Now people want to litigate about compensation, but they use other excuses, procedural excuses… They have a wider canvas of issues on which to litigate,” Mr. Chandra said.
