It is now over two months since the Cabinet approved Rs16,000 crore worth of highway projects under the Public Private Partnership (PPP) mode. But despite several rounds of bids offered by the Ministry of Roads, Transport and Highways (MoRTH) for inviting private developers for the projects, they have found no takers.
Ministry officials are a worried lot, as this time they are unable to attract developers even after easing norms. Recently, the Cabinet Committee on Economic Affairs gave its approval to MoRTH to amend the Model Concession Agreement (MCA) as may be required from time to time; and to decide the mode of delivery of projects.
Earlier, it was a one time agreement, which was watertight, leaving no space for amendments inconveniencing both the developers as well as Government. Now they have added more flexibility to suit both parties. last year, the Government also gave its nod for premium restructuring to help private road developers.
“let alone PPP, it is difficult to find developers even in for the Engineering- Procurement-Construction (EPC) mode, where the risk burden is on the Government. In the past, the private developers have lost a lot of money and are wary of investing in the sector,” said an official from MoRTH.
Minister of Roads and Highways Nitin Gadkari had admitted at a public meeting last month that, at least, for the next two years only Government-funded projects would be possible as the private developers are not coming forward for bidding processes under PPP mode. “The road building target of 30 km per day is an impossible one. This fiscal, it seems that we may not only fail to achieve our road building target of 8,500 km but also award target of 7000 km,” said the official.
Records show that against the ambitious target of 9,500 km of road length for the financial year 2012-13, only 1,116 km could be awarded during the year by the NHAI and 1,436 km against the target of 4,030 km for 2013-14. The road sector has been witnessing a continued decline in private sector investment over the last two fiscal years where 21 road projects worth nearly Rs26,000 crore failed to attract bids.