Reflecting the pathetic state of road construction in the country, the National Highways Authority of India (NHAI) has been able to award only 479 km of road-building projects to private concessionaires as against its target of 3,000 km till September. This is 16 per cent of its goal.
In the last financial year, the NHAI had planned to construct 9,500 km of roads but ended up at meagre 1,116 km. In other words, only 11 per cent of the original target was met.
Officials in the Ministry say that out of 39 projects awarded since 2010 to private concessionaires, 23 are yet to take off due to poor market situation. “The industry is going through a particularly rough patch. We have to tread with caution before we award any new projects as there are no lenders and the developers are a worried lot,” said a senior official.
“Till last year, the problems were more about land acquisitions, environmental clearances, shifting of utilities, but this year, it is mostly about liquidity,” said the official.
While the Ministry of Roads, Transport and Highways (MoRTH) is trying to bail out the existing private concessionaires by rescheduling their premiums so that they could start the projects awarded by 2010, they are also treading with caution in doling out new road projects.
“Public-Private Partnerships (PPP) have been facing rough weather in the recent past, but we certainly do not intend to junk the model and switch over to cash-contracts. We need to innovate and try all options before taking such a step,” said an official.
“The Ministry has decided that it will take up projects primarily on Build-Operate-Transfer (BOT)-Annuity mode, where the pre-construction status is taken care of by the government. All requisite land acquisition, environmental clearances, shifting of utilities and due permissions are in place and the developer only has to build,” said a senior official.
The official said that the Ministry could also consider combining annuity and toll, which would make it lucrative to investors and limit the ministry's pay-out burden.
The NHAI had suggested dumping of the PPP model, as it favoured the engineering, procurement and construction (EPC) mode but road ministry officials denied it as a solution.