JOIN USNo takers for highway development under PPP model
With private sector shying away from investing in the development of State highways, the State government has approached the Centre seeking increase in Viability Gap Funding (VGF) for the development of roads under public private partnership (PPP) from 40 to 50 per cent of the total cost of the project.
The private investors are not coming forward to take up road development due to low vehicular traffic on the State highways. They are finding the proposed PPP projects financially not viable. The projects can be made attractive by increasing VGF, which is normally shared equally by both the State and the Centre, official sources said.
VGF is an one-time grant provided by the government (either Centre or State government or both) as financial support to PPP projects in infrastructure. The objective of VGF is to make a project commercially viable for the private partner.
Efforts by the State government to woo private investment in State highway development have not yielded results on the expected lines. The new Congress government has in its revised budget 2013-14 announced to take up nine State highways on PPP model under Operation Maintenance and Transfer (OMT) basis. Investors will be allowed to collect toll from the road users for 10 years, as per the budget announcement.
Interestingly, the Karnataka Road Development Corporation Limited (KRDCL) had in March this year invited Request for Proposals (RFP) from private firms for developing eight of the nine State highways announced in the budget. But, there were no takers.
Eight highways
The eight State highways are as follows: Kalmala Junction to Sindhanur, Hattiguduru to Bidar, Krishna Bridge near Bijapur to Lokapur, Sankeshwara to Yadawad, Hunagund to Belgaum, Hiriyur to Bellary, Bilikere to Belur via Hassan and Andhra Pradesh border to Shahapur.
According to the data obtained from State Infrastructure Development Department, the State government has so far been able to implement only one PPP road project (State highway) under OMT basis -- Whagdhari-Ribbanpally (SH-10) road in north Karnataka – against 14 approved by the Centre under VGF scheme. Work on another State highway, Dharwad-Alnavara is under way.
Whagdhari-Ribbanpally road, which passes through Gulbarga district, was approved in 2008. As many as three roads were sanctioned in 2009 and nine in 2012. Despite repeated efforts, the KRDCL could not get private investors to take up the project, officials said.
When contacted, KRDCL Managing Director R Srinivas said investors have not shown interest in taking up these roads. However, efforts are being made to implement them.