With average road construction performance at a dismal low of 7 km a day, the Centre has decided for lucrative options to compensate the concessionaires involved in road constructions. At the same time, the Government is also considering to allow midway transfer of contracts by one developer to another wherever the projects are delayed due to need of equity.
The issues affecting the progress of road sector were deliberated during the urgent review meeting called by the Prime Minister Manmohan Singh on Monday. Top officials including the Secretary of Ministry of Road Transport and Highways (MoRTH) Vijay Chibber, Finance Ministry officials, Planning Commission officials and National Highways Authority of India (NHAI) Chairman RP Singh were present in the one-hour meeting.
Sources said that several issues figured in the meeting and prime concern was on financial aspects and why the developers have not been showing interest in this sector. “The PMO was told about the problems related to environmental and land acquisition clearness and protracted legal tussle over many issues. It was suggested for compensation to the developers wherever there are delays in any kind of clearances,” sources told The Pioneer.
With big players exiting from major road projects, the officials also pondered over allowing an easy exit or changeovers for the developers from existing or under construction projects.
Inordinate delays in clearances have been forcing companies to walk out from projects and according to NHAI sources many more companies may withdraw from road projects. GVK Power and Infrastructure and GMR Infrastructure has already terminated contracts for major highways — Shivpuri-Dewas Expressway in Madhya Pradesh and Kishangarh-Udaipur-Ahmedabad highway last month.
The meeting also discussed to dislodge the practice of NHAI’s evaluation of the Total Project Cost (TPC) and allow the developers or concessionaires to evaluate TPC. Sources said that the Government may allow the private parties to evaluate TPC and in this regard MoRTH and Finance Ministry will prepared a draft report.
“The Ministry also desired for a regulatory body as suggested by the Planning Commission for the road sector to expedite the development of roads and highways. We also talked about single window system to address the delays and impediments in this sector,” said a MoRTH official. .
The PMO has also been conveyed that the Ministry of Finance have been apprised about the situation seeking relaxation in cases where there is a need for the contracts to be transferred to other concessionaires before the two stipulated years norms. The existing norms do not allow any developer to transfer the contract to another during the first two years.
NHAI Chairman RP Singh last month had stated that roping private equity is a major problem and thus road construction of 20 km a day is not sustainable. The National Highways Builders Federation NHBF too had sought intervention from Finance Ministry and NHAI for liberalising policy on financing of road projects.
