After the dismal performance in development of roads during the previous financial year, the Ministry of Road Transport & Highways has now chalked out a fresh proposal to construct about 5,700 kilometres of fresh roads in the current year 2014-15.
Instead of banking mostly on the private-public partnership (PPP) model of road development, the Ministry has divided the development work between PPP and EPC (engineering, procurement and construction), where the financial onus — including land procurement — will be on the Government and the developer (public or private) as well as the obligation of building and handing it over to the Government.
“This is a lesson that we learnt the hard way. As close to two dozen projects, awarded under the PPP model, were stuck in the department so this time we did not want to take any chances this time. Therefore, about 2,500 kms have been reserved to be doled out under the EPC model,” said an official from the Ministry of Roads.
“The rest, which is about 3,200 kms will be awarded under the PPP mode. We are hoping for a positive change in the market situation, which should bring back investors trust in the sector,” he said.
While, the officials are positive about markets making a comeback and money coming into the sector with private players participating, they are a little jittery about the land acquisition process, which needs to be complete before awarding projects under EPC.
“With the new land acquisition act in place, which has led to three times escalation in land prices, the task at hand is Herculean. If NHAI manages to procure land within the set time frame for respective projects, then we foresee no problem in construction,” said the official.
According to the proposal, NHAI has worked out a plan for about 2,500 km of highway projects with a total project cost over Rs 15,000 crore under the EPC model, and 3,200 km PPP projects worth over Rs 35,000 crore.
The EPC projects include Rs 996 crore Talcher-Dubari-Chandikhole and Rs 675 crore Bijapur-Gulbarga-Homnabad stretches which had been bid out in 2012-13 on the PPP mode but failed to get any bidders.
“In the last two years, raising equity for highways under PPPs had become difficult and there were even signs of declining interest from developers. Market situation has to rebound and Government should also relax norms for bidders for regaining lost ground in the sector,” said an official.