A delegation of the Ministry of Road Transport and Highways (MoRTH) have left for Malaysia to meet senior officers and construction majors, after the latter expressed interest in funding infrastructure projects. The Government wants them to invest in projects under the newly-developed hybrid annuity model where the investor and the Indian Government would share the building costs.
“The last few years have been particularly bad for the infrastructure sector as the private participation in projects almost dried up for want of funds. This year, the interest has picked up a little bit but to meet the construction targets we will need a lot of funding,” said an official from the MoRTH.
“As the Minister (Nitin Gadkari) had said, we will look at funding partners overseas. This meeting will help us take a big step forward towards our constructions goals,” he said. According to sources in the MoRTH, the first meeting is scheduled for Sunday in Kuala lumpur, followed by another meeting on Monday. Secretary MoRTH Vijay Chhibber, along with Joint Secretary Rohit Singh and other senior officials, will make the presentations.
Under the newly developed hybrid annuity model, the developer will have to contribute just 60 per cent of the total project cost while the balance will be invested by the Government.The Government will collect the toll under this model and pay the developer annuity biannually towards recovering investment and interest costs and fee for maintenance works.
Under the existing public private partnership model called build-operate-transfer (BOT), the developer bears the highest risk burden -financial, operations and maintenance and revenue. It is estimated that the Government needs at least Rs2 trillion to fund 20,000 km of road construction under the National Highways Development Project over the coming five years.
“The Government will provide the initial 40 per cent of the project cost to the developer. And once the work starts, the developer has to fund the rest of the construction. The Government will also collect the toll to recover the construction costs over the next 17-20 years, depending of the construction work,” said the official.
Gadkari had on several occasions said that the Government has started talks with foreign banks and other overseas investors after major road developers in India shied away from parking in more money after several projects were delayed due to land acquisition issues and forest and environment clearances, escalating project costs.
In the past, Malaysian developers, like the RBM-PATI (JV), IJM-Gayatri (Malaysian-Indian JV), GMR-Tuni-Ankapalli Express limited (Indian-Malaysian JV), Madhucon Projects ltd-Binapuri (Indian-Malaysian JV), among others had invested in the Golden Quadrilateral programme under Phase-I of the National Highways Development Project.