123 road projects involving Rs 8,508 cr stuck in arbitration

According to official data, as many as 123 highway projects out of a total of 406 awarded so far by the National Highways Authority of India since 2000 are caught in the arbitration tangle. The disputes have arisen due to reasons like input cost escalation, royalty charges on minerals, entry tax and removal of public utilities on acquired land for road construction.

"Very few cases are stuck over problems relating to land acquisition. They are mostly over removing utilities and other issues which are to be taken care of by the private developers themselves," a senior government official said. Among the major companies engaged in arbitration is Larsen and Toubro which has five projects under dispute settlement involving an amount of Rs 576.45 crore. Similarly, Hindustan Construction Company has three projects worth Rs 73.54 crore under arbitration.

Nagarjuna Construction has two projects undergoing dispute settlement involving Rs 66.39 crore and Gammon India has three involving Rs 61.04 crore. The official said it is convenient for both field officers as well as private parties to blame disputes on land issues. If a private party has problems over acquiring a few km of land somewhere, at least they should develop road on whatever land they have and not delay it.

"Similarly, even the engineers on field do not at times complete their home work and encounter problems after a projects starts. Then it is obviously easy blaming disputes on land acquisitions," the official said.

Out of the 123 projects under arbitration, 103 cases are being settled at the Dispute Review Board formed by the NHAI, while the rest are under various courts.

As many as 119 projects under dispute are on Engineering-Procurement-Construction (EPC) basis, while the rest are on build-operate-transfer (BOT) annuity basis. In an EPC contract, the government pays the entire cost of developing a project to the private contractor upfront, while in the BOT-Annuity arrangement, the government gives the investment for construction and maintenance of highways in six monthly instalments.