Overview
Roads and highways sector
India has one of the largest road networks in the world, spanning over 5.8 million km. Of this, around 2% are National Highways, 3% are State Highways and the remaining belongs to district and rural road network. Over 64.5% of all goods in the country are transported through roads, while 90% of the total passenger traffic uses road network to commute.
During the last five years there has been a significant growth in the road transportation network. The Government of India has allocated more than Rs 1.18 Lakh crore to the Ministry of Road Transport and Highways (MoRTH) as outlay for FY 2021-22. Further, the government has identified various economic corridors to play an enabling role in transforming India’s economy to grow to USD 5 trillion by 2025. Importance to the sector is also exhibited by the fact that it accounts for approximately 18% of the National Infrastructure Pipeline. Various state governments have also considered developing critical road corridors as a catalyst of economic development.
In order to ensure timely completion of projects, the government has taken proactive measures to revive languishing projects, solve operational issues, provide time bound dispute resolution, expedite land acquisition, provide enhanced focus on road safety and adopt technology enabled solutions
Lately the focus of the sector has been on road safety, green initiatives, digital transformation and augmentation of funding sources.
The Covid-19 pandemic has led to a slowdown in infrastructure investments, construction progress, asset monetisation (due to uncertainty in demand). The sector still faces various other challenges viz. lack of feedback mechanism, contracting companies experiencing financial distress, competing challenges in the bidding process, delay in financing which may significantly impact project progress.
Client issues
- Strategy and Operations: Lack of clear objectives and complications in understanding the critical factors for successful implementation of projects. Further, improper structuring have also led to limited success in projects achieving its objectives.
- Finance: Lenders/financial institutions have been cautious in lending to infrastructure. Delay in achieving financial closure, inadequate debt-servicing and lower investment returns have led to low interest within the lending community. In addition, high input costs and lack of liquidity have also disincentivised private sector entities. Implementing agencies are in search of more innovative financing methods and revenue enhancement methods to attract private sector investments.
- Contract management and disputes: Weak accountability framework combined with contract related disputes, inability to fulfill contractual obligations due to force majeure events and contentious claims management result in sub-optimal utilisation of time and resources. Lack of sufficient safeguards in contracts results in excessive claims thereby affecting project viability.
- Asset management: Most of the implementing agencies view construction and operation cost to be separate activities. Adequate measures in relation to operations and maintenance activities are not undertaken thereby leading to reduced economic benefit over the asset life.
- Business processes: Inadequate organisational capability and systems to facilitate, monitor and implement project progress results in delay in execution.
- Safety and sustainability: The social welfare and safety perspectives that needs to be considered during the operation/functioning of roads such as prevention of road crashes, reduction in fatalities, decrease in emergency response times etc. have not been given due importance in project design as well as implementation.
Our service offerings
Strategy and Operations
- Market assessment/Market entry strategy and portfolio strategy
- Review of capacity and operational issues, Iidentification of gaps and develop mitigation strategies
- Feasibility studies and business plans
- Market sounding
- Transport planning
- Strategy formulation and operational improvement
- Advisory in policy related matters in relation to regulation and financial aspects
- M&A options analysis
- Revenue enhancement strategies
Financial Advisory Services
- Transaction advisory services
- Portfolio financing options
- Commercial and Financial due-diligence
- Valuation services
- Debt syndication
- Project debt restructuring
- Value for money analysis
- Medium Term Financial Planning
Risk Advisory Services
- Bid advisory and end-to-end bid process management
- Contract
Asset Management
- Road asset management solutions
- Implementation support
Business Process Improvement
- Capacity building, Organisational restructuring, design and corporate governance
- Advisory and implementation support in technology – enterprise applications, asset efficiency tracking, MIS systems
Road Safety
- Strategy formulation, policy design and action plan preparation
- Road safety assessment/audit including crash analysis and interventions for blackspots, high-risk corridors
- Preparation of road safety investment plans and innovative financing
- Data driven solutions in crash analysis and investigations
How PwC can help
Strategy and Operations
- Development and review of policy, strategies impacting the sector.
- Growth/revenue enhancement through analysis of revenue trends and identification of new sources of growth/future customer needs in the transport and logistics sector
- Assistance in formulating tolling strategy including tolling revenue estimates and preparation of ETC roadmap
Financial Advisory Services
- Preparation of medium-term financing plans
- Debt syndication for commercial borrowing and commercial due diligence
Risk Advisory Services
- Provide bid advisory services using risk matrix, financial modeling and commercial due diligence framework.
- Bid process management, financial closure, post-award contract management for successful planning and implementation of project.
Asset management
- Advisory services on implementation of road asset management systems and implementation support assistance of projects including review of technical reports, traffic reports, financing agreements, assumption verification, risk mapping, implementation support
Business Process Improvement
- Provide capacity building, institutional strengthening and restructuring services to firms
- Develop and implement monitoring and evaluation framework to effectively verify progress with key performance indicators.
Road Safety
- Formulate long-term strategic vision along with implementation plans and investment planning
- Develop data-driven crash analytics solutions, crash investigations
- Assess impact of safety interventions including crash risk assessment and audit
