'Pvt investment in highway building at Rs 98,100 cr'

PTI photo

Private investment to the tune of Rs 98,100 crore was roped in for construction of highways during the last five years, Parliament was informed on Thursday.

To encourage private sector participation through adequate incentives, the Ministry of Road Transport and Highways has adopted Hybrid Annuity Model (HAM) with an objective to maximise the quantum of implementation of highway projects within available financial resources of the government.

"Share of private investment in total road construction during the last five years is about Rs 98,100 crore," Road Transport and Highways Minister Nitin Gadkari told Lok Sabha in a written reply.

Citing reasons behind weak participation of private sector in road projects, the minister said one of the reasons could be that major highway developers had capacity constraints, including over-leveraged financials, due to excessive exposure to infrastructure projects including highways.

Besides, lack of availability of debt products and some banks reaching the ceiling as per sectoral exposure norms could be the other reason.

Under HAM, 40 per cent of the project cost is to be provided by the government as 'construction support' to the private developer during the construction period and the balance 60 per cent as annuity payments over the concession period along with interest on outstanding amount to the concessionaire. 

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