Given the prevalent poor market conditions, the Prime Minister’s Office in consultation with the Finance Ministry has agreed to convert 50 per cent of targets for privately funded road building projects to public funded projects.
In a meeting with Road Ministry officials, the PMO gave a go-ahead to dole out 1000 kilometres of road construction targets, which were initially planned under public-private partnership (PPP), under the Engineering, Procurement and Construction (EPC) mode.
At the beginning of the financial year, the Government had planned to build 3200 kilometres of highway under PPP. “This year, we have so far not even met 25 per cent of our set targets. We had originally planned 3,200 kilometres under PPP, but could award contracts for just about 700 kilometres so far. Hence, looking at the market situation we realistically re-set our targets,” said a senior official at the Ministry of Roads, Transport and Highways (MoRTH).
“Even the targets for EPC projects have been revised to 5000 kms from the initial target of 6950 kms. We still have a financial quarter to go and are hoping to award at least 1000 kilometres of roads under EPC,” said the official. The official said that they had asked the PMO and Planning Commission to revise the targets at least two months back, as no private bidders were forthcoming to bid under PPP.
While this year, the Government has only been able to award about 22 per cent of its target under PPP mode, even last year the situation was grim. In the financial year 2012-13, the NHAI had planned to give away 9,500 kms of road building projects but ended up awarding only 1,116 kms of road projects, which is only 11 per cent of its original target.
Officials in the Ministry say that although PPP is the only way forward for the infrastructure story in India, situation has remained bleak for a few years now. In the highways sector- of the 39 projects awarded since 2010 to private concessionaires, 23 are yet to take off owing to cash crunch. “The industry is going through a particularly rough patch as there is no equity in the markets. We have to tread with caution before we award any new projects as there are no lenders and the developers are also a worried lot,” said a senior official.
While the(MoRTH is working on bailing out the existing private concessionaires by rescheduling their premiums so that they can start their projects pending since 2010, they are also treading with added caution in doling out new road projects.