To expedite highway projects, the Government has decided to make award contract rules flexible allowing changes even after the agreement is made. The National Highways Authority of India (NHAI) has prepared the draft which makes provisions for making changes in the model concession agreement (contract between Government and road developer) if the project gets stuck due to unforeseen reasons.
In its present form, model concession agreement (MCA) has no provision for adding changes thus making contracts very rigid and tight-fitted inconveniencing both the Government and the developer even as it added to project delays.“In the newly drafted MCA, the NHAI has provided clauses to give powers to change bidding documents if the projects are stuck midway,” said a senior NHAI official.
“Currently, the MCA rules do not give any provision for making changes or additions at any stage. The outgoing Government (UPA) was forced to come up with a policy for rescheduling premium as well as an exit policy for developers when over two dozen road projects got stuck at various stages of implementation, mostly for paucity of funds,” said the official.The NHAI has already forwarded the proposal to the Ministry of Road Transport and Highways for approval.
During 2010-2012, the road developers had bid aggressively under Public Private Partnership when the UPA Government awarded a record 147 road projects worth Rs1.50 lakh crore. With world markets affected by the downturn, which also slowed down India’s growth story, costs went up putting brakes to several projects.At present, road projects worth Rs60,000 crore are awaiting completion.“The purpose is to create space to make adjustments in the project costs due to delays that happen at various clearances level (forests and environmental permits, land acquisitions) and steeply increase project costs,” said the official.
“In cases of any differences, the Ministry or the NHAI should be able to take decisions at our end rather than taking matters to the court,” said the NHAI official.Due to the economic slowdown in the past couple of years, awarding of contracts for national highways has slowed down. Besides, issues related to environment and forest clearances, and land acquisitions have been major impediments in the completion of Rs60,000 crores worth of highway projects.
Many road projects were halted as developers were cash strapped and lenders were shy of putting in money in the sector, forcing the Government to allow them to reschedule the payment of premiums.“The Highways Minister (Nitin Gadkari) is also keen that that we make provisions for making changes to the contract rules to ensure that projects are not stuck in red tape. He had said that there was a need to add provisions which allow changes in the MCA if the nature of the project requires it for any valid reasons,” said a senior official of Road Ministry.