<p> Worried over the private sector's lack of interest in public-private partnership (PPP) projects, the Union Ministry of Highways is planning to shift to cash contracts to achieve its road building targets this fiscal. <br /><br /></p>.<p>The ministry, which is receiving flak for poor progress in highway construction, is in discussion with the Planning Commission and Finance Ministry to shift PPP projects to the Engineering, Procurement and Construction (EPC) model. <br /><br />In the first phase, the ministry wants to shift around 15 PPP projects, which have been stuck at various stages, to the EPC model. Based on their success, the ministry will work to hand over its entire PPP target of about 2,500 km of roads for this financial year to the EPC model. <br /><br />In the next review meeting with Prime Minister Manmohan Singh, the Road Ministry is likely to suggest giving about 2,500 km of roads for construction under EPC rather than PPP. As just five months are left in this financial year, PPP targets are unlikely to be met, said an official. <br /><br />In PPP projects, a road developer builds the road and is allowed to recover his investment by collecting toll over a concession period of 30 years in most cases, while in the EPC model, the government pays the contractor, who then has to build the road and hand it over to the government. <br /><br />As financial institutions are reluctant to lend to highway builders fearing possible bad debt, the government feels that at least in the EPC model, the builder need not to worry about cash flow as the government itself gives money. Thus, the government bears the financial risk, while contractors have to just build the road. This will certainly attract more response from road developers, said the official. <br /><br />Over the last two years, construction of highways projects has suffered a huge setback, with the National Highways Authority of India (NHAI) being able to award only 1,116 km for construction in the previous fiscal, against the target of 9,500 km. In the current fiscal too the NHAI has only managed to award 123 km, while the target is 2,500 km.</p>
<p> Worried over the private sector's lack of interest in public-private partnership (PPP) projects, the Union Ministry of Highways is planning to shift to cash contracts to achieve its road building targets this fiscal. <br /><br /></p>.<p>The ministry, which is receiving flak for poor progress in highway construction, is in discussion with the Planning Commission and Finance Ministry to shift PPP projects to the Engineering, Procurement and Construction (EPC) model. <br /><br />In the first phase, the ministry wants to shift around 15 PPP projects, which have been stuck at various stages, to the EPC model. Based on their success, the ministry will work to hand over its entire PPP target of about 2,500 km of roads for this financial year to the EPC model. <br /><br />In the next review meeting with Prime Minister Manmohan Singh, the Road Ministry is likely to suggest giving about 2,500 km of roads for construction under EPC rather than PPP. As just five months are left in this financial year, PPP targets are unlikely to be met, said an official. <br /><br />In PPP projects, a road developer builds the road and is allowed to recover his investment by collecting toll over a concession period of 30 years in most cases, while in the EPC model, the government pays the contractor, who then has to build the road and hand it over to the government. <br /><br />As financial institutions are reluctant to lend to highway builders fearing possible bad debt, the government feels that at least in the EPC model, the builder need not to worry about cash flow as the government itself gives money. Thus, the government bears the financial risk, while contractors have to just build the road. This will certainly attract more response from road developers, said the official. <br /><br />Over the last two years, construction of highways projects has suffered a huge setback, with the National Highways Authority of India (NHAI) being able to award only 1,116 km for construction in the previous fiscal, against the target of 9,500 km. In the current fiscal too the NHAI has only managed to award 123 km, while the target is 2,500 km.</p>
