Poor decision making by the previous UPA regime, no flexibility options in concession agreements and lack of vision were responsible for bringing the highways sector to its knees, the NHAI chief said on Tuesday.
laying the blame on the erstwhile Manmohan Singh Government, NHAI Chairman RP Singh outlined the absence of a clear blueprint for roads and highways sector for the scuttled growth of the sector. The NHAI chief also blamed the Planning Commission for marginalising the Authority and the Transport Ministry.“The current problems are all because of poor decision making by the previous Government,” said Singh, speaking at the FICCI infrastructure summit.
“Efforts are on to bring the road sector on track with definite steps like putting in place a dispute redressal mechanism, rescheduling of premium for private developers, easier exit norms for developers and clause for making changes in Model Concession Agreement (MCA),” he said.Singh pinned the blame on aggressive bidding for the PPP projects by the private developers and an inherent tendency on the latter to pass on the risk to the Government when the project becomes unviable.
Singh called for the need to bring in total transparency in PPP projects from the bidding to the implementation stage.
“A major problem was with the interpretation of the Model Concession Agreement (MCA). The bureaucracy has the tendency to look for Government-centric interpretation of the clauses in the MCA much to the detriment of the private sector,” he said.“There are at least 20 areas in the MCA which require interpretation. Planning Commission was not willing to interpret MCA, leaving the developers with a no-exit situation,” said Singh.
Singh said, “The Planning Commission never did any exercise to assess what is the optimal grid of roads which is required in this country.”“The infrastructure situation in the country is dismal; the pace of investment is sub-optimal and unless we come out of the subsidy regime and inject substantially more funds into capital expenditure for asset creation, the situation will not look up,” he said.He said sector's problems were not unsolvable and could have been easily fixed if only decisions had come faster on policy issues. "Unfortunately the country is not matured to go into PPP mode," he maintained.
In a bid to revive investment in the sector, NHAI has sought easing of exit policy to enable divestment of equity to PE funds to bring liquidity into the system, and rescheduling of premium to start projects.Singh also blamed the Finance Ministry for the bad loans and growing number of non-performing assets in the banks because of the road sector.
"Department of Financial Services had previously instructed financial institutions that unless 100 per cent land was in possession with all environment clearances, no lending for road projects should be done," he said.“We have not got 100 per cent land even in Golden Quadrilateral project till today. It is not possible. These kinds of diktats by different government departments have resulted in the plight of Transport sector,” he said.
For three years, no environment clearance was given. A stitch in time could have revived the sector, said Singh.