Ministry to resume road project bids

After 18 months of muted activity, the Union Ministry of Highway and Road Transport is again pushing highway building by gearing up to invite bids for projects worth Rs 17,000 crore in the next few weeks.

“Six annuity projects worth Rs 5,784 crore and four toll-based projects worth Rs 11,274 crore will be opened for bidding by end of October,” a senior official from the Ministry told Deccan Herald.

The Ministry, which faced severe criticism for slow progress in highway building activities, is hoping to get good response from infrastructure developers for these projects.
Besides, the ruling dispensation at the Centre is also under pressure from its own leaders to expedite the highway projects to dispel criticism as the general elections is fast approaching.

The Union Highway Ministry had rejected the National Highway Authority of India’s (NHAI) suggestion to scrap the public-private partnership (PPP) projects.

It will award these projects on PPP basis and annuity mode. Annuity and PPP with toll are two forms of Build-Operate-Transfer (BOT) projects, based on which NHAI executes highway projects. In the annuity model, a road developer is awarded the projects and the cost of building the road is paid to him on a six-month basis after the projects starts commercial operations. This reduces the risks of the business operator to a large extent.
In the toll model, a developer builds the road and is allowed to recover his investment by collecting toll over a concession period of 30 years in most of the cases.

For the past one and a half years the building of highways projects suffered huge setback with the NHAI able to award only 1,116 km against the target of 9,500 km in the previous fiscal. In current fiscal, too, only 479 km was awarded against its target of 3,000 km by September. The primary reasons for poor response from companies to participate in roads works were lack of funds due to global economic slowdown, delay in getting land acquisition and environment clearances. Prime Minister Manmohan Singh is setting up a separate cell in the Cabinet Secretariat to remove the bottlenecks.

The government is addressing several of the issues, including de-linking of environment and forest clearances for starting the projects works. The ministry hopes these steps will encourage developers to participate in bidding.