Henal Jhaveri

MMS Finance
Roll no.-116

The Road to Kolkata: NH-34 and PPP in India (Case Summary)

In 2014, Arjun Dhawan (MBA 2004), President of HCC Concessions, was working
towards the completion of his largest road development project yet. The route, a
250-km stretch leading from the critical eastern Indian port of Kolkata into the
interior of the province of West Bengal, is a prime example of both the benefits
and the drawbacks of Public-Private Partnerships in the Indian transportation
sector. Despite delays and political pressure, HCC Concessions has nearly
finished building the road, and now is receiving offers to purchase the project's
equity.
On the background, the Indian economy was in the phase of slow growth during
2014. This was due to several reasons like high deficits which led to crowding out
of private borrowing, hesitation to allow foreign investment and so on. The
manufacturing sector of India was in a stagnant position. The main reason for
this was the lack of a robust infrastructure network in the country. Roads are the
primary component of this infrastructure challenge. The government wanted to
address this issue and hence started working aggressively towards it. They then
started experimenting with Public Private Partnerships.
HCON won the bid to construct a 4-lane stretching about 250kms. During the
project, HCC faced several problems. These challenges were less technical and
more political and legal in nature. Despite the high number of obstructions, the
project was completed and was regarded a jewel in the crown. Arjun Dhawan had
then received 3 proposals of parties wanting to purchase some stake in the
project. Dhawan needed to carefully evaluate all the proposals for their viability
and plan his potential exit.

Current Status

NH-34 is the busiest road in Bengal running 610 km from Bakkhali in South 24-
Parganas to Dalkhola in North Dinajpur providing connectivity between south and
north Bengal. A new toll plaza had come up at km 297 and falls between Farakka
on Murshidabad-Malda border and Raiganj in North Dinajpur in October 2016.
Meanwhile, angry over the start of toll collection at the newly commissioned toll
plaza, lorry drivers and vehicle owners blocked the NH-34 in Malda for several
hours during the day. They were angry because the toll collection had been
started despite non-completion of the four-laning of the entire 100 km stretch
between Farakka and Dalkhola.
The construction of NHAI's four-lane project
between Krishnagore and Behrampore on NH-34, which had hit a roadblock in
August 2014, was resumed in November 2016. The NHAI project
director, Sailendra Sambhu, said the work was allegedly halted due to
complications over land acquisition and funds crunch. Problems over acquiring
land was faced at some places, such as Plassry, Debagram
and Beldanga in Murshidabad. HCC Concessions Ltd is building a 256 km stretch
of NH-34 from Behrampore in Murshidabad to Dalkhola in North Dinajpur at an
estimated cost Rs 4,300 crore and on a concession period of 30 years.
Henal Jhaveri
MMS Finance
Roll no.-116