In a bid to revive the road sector and also insulate the National Highways Authority of India from heavy financial claims and disputes, the government will now allow harmonious substitution of the concessionaire in ongoing and completed national highway projects awarded under Public Private Partnership on Build-Operate-Transfer mode.

The measure has been initiated taking into account the subdued investment climate in which there is lack of interest on the part of highway developers to bid for projects under Public Private Partnership and also the difficulties being faced by concessionaires in achieving financial closure for many of the projects awarded in the recent past.

The proposal for substitution of the concessionaire in ongoing and completed national highway projects was approved by the Cabinet Committee on Economic Affairs last month.

The decision permitting substitution of the existing concessionaire is applicable to ongoing two-laning and four-laning national highway projects where financial closure has been achieved by the concessionaire but Commercial Operation Date not yet declared by NHAI, Six-laning national highway projects where financial closure has been achieved by the concessionaire but project completion certificate not yet issued by NHAI, completed two-laning/four-laning/six-laning national highway projects awarded under Public Private Partnership on BOT mode and all new national highway projects under Public Private Partnership on BOT mode that are yet to be bid out.

A concessionaire seeking substitution has to make a written representation to the lender’s representative with a copy to NHAI. The lender’s representative, in turn, would ask for approval from NHAI for substitution.

Upon receiving the request from the concessionaire, the lender’s representative would assess as to whether substitution by a nominated company is in the interest of the project. If satisfied, the lender’s representative in consultation with the concessionaire would invite, negotiate and procure offers either by private negotiations or public auctions or tenders for takeover and transfer of the project including the concession to the nominated company.

Selection of the nominated company and valuation of equity is to be done by mutual consent of the lender’s representative and the concessionaire.

The NHAI, upon receiving the proposal of the lender’s representative, would satisfy itself about the credentials of the substituting entity and give its decision regarding the substitution. It may levy a penalty, subject to a maximum of 1 percent of the Total Project Cost, on the concessionaire seeking substitution for any default. No penalty, however, would be levied if the concessionaire had been unable to fulfill his obligations because of delays on NHAI’s part in land acquisition and obtaining statutory and regulatory approvals.

The nominated company would have to form a special purpose vehicle for taking over the project along with the rights and obligations of the concessionaire.

Subsequent to the substitution, in case of completed projects, the leading substituting entity is required to maintain at least 51 percent holding in the project SPV.

Substitution would be permitted only once during the construction period.

Highway developers are opposed to the provision that allows NHAI to levy a penalty on the concessionaire in case of any default.

“It won’t be appropriate to penalize the concessionaire,” said M. Murali, Director General, National Highways Builders Federation.

“In case of completed projects where toll collection has already commenced, it is obvious that the concessionaire fulfilled his obligations. Therefore, there is no cause for levying penalty. Even for projects at the execution stage, a penalty would place additional financial burden on the outgoing concessionaire. It must be kept in mind that many projects under execution have been impacted because of lack of equity. With the penalty clause, it is going to be very difficult to attract investors,” he added.

Source –http://www.projectsmonitor.com

In February this year, while presenting the Union Budget for the year 2013-14, Finance Minister P. Chidambaram had announced the Centre’s decision of constituting an independent regulatory authority for the road sector.

“The road construction sector has reached a certain level of maturity. But it faces challenges not envisaged earlier, including financial stress, enhanced construction risk and contract management issues that are best addressed by an independent authority. Hence, government has decided to constitute a regulatory authority for the road sector,” Chidambaram said in the Budget speech.

At present, the National Highways Authority of India, responsible for development, management and maintenance of national highways, functions as an executing agency as well as regulator. The dual role is perceived by many as contradictory.

The Ministry of Road Transport and Highways created a task force in April to expedite the setting up of the regulatory authority for the road sector. The task force released its draft report on the constitution and structuring of the proposed regulator last month.

The draft report suggests setting up the proposed regulator through an ordinance/executive order and then subsequently converting the same into an Act of Parliament for adequate enforceability and acceptance.

The regulatory authority, in addition to facilitating the expeditious implementation of the National Highways Development Project, would address the concerns of all stakeholders including road users.

A source associated with the road sector told Projectmonitor that in the current scenario, with general elections due in less than a year, setting up the regulatory authority could be an uphill task.

“The process of setting up the regulatory authority, which includes seeking the Parliament’s nod and selection of members, would take more than a year after the Cabinet’s approval. The question is whether the government has enough time in its hand,” the source said.

Interestingly, the Planning Commission is opposed to the proposal for setting up an independent regulatory authority for the road sector.

“An independent regulatory authority would dilute the powers of the Planning Commission. Currently, the Model Concession Agreement as well as rules and regulations concerning the sector are drafted by the Planning Commission. Once a regulator is in place, these could very well get challenged,” the source said, adding that the proposal for setting up an independent regulatory authority might not find favor with the NHAI for the same reason.

Source-http://www.projectsmonitor.com

India, at present, faces a grave economic crisis due to low growth, high inflation, high fiscal deficit and highest ever trade and current account deficit. No doubt the slowing down of the global economy has had a significant impact on the country but the present economic adversity is largely attributable to domestic factors such as excessive monetary tightening, delays and uncertainty over key economic legislations, project delays on account of stalled environmental clearances and land acquisition hurdles, pause in reforms and lack of willingness to take decisions in the government.

“The decision of the MoRTH to adopt the EPC mode raises the question as to where the funds are going to come from in the prevailing economic scenario,” a source associated with the road sector told Projectmonitor.

“On one hand, the government is trying to cut costs by imposing various restrictive measures, and on the other, it adopts the EPC mode for construction of national highways. In case of PPP projects, even when viability gap funding is sought, the concessionaire meets minimum 60 percent of the cost. At present, the MoRTH is relying heavily on just EPC mode for meeting its targets but this may not be feasible in the long run because of various constraints. The focus, instead, should be on both modes, PPP as well as EPC, for boosting the highway sector,” he added.

The EPC mode is different from the conventional item rate contract. Unlike in item rate contract, which is prone to excessive time and cost over runs, the EPC mode assigns the responsibility of investigation, design and construction to contractors for a lump sum price awarded through competitive bidding with provision for index-based price variation.

In a bid to ensure smooth implementation of national highway projects under the EPC mode, the MoRTH, of late, has initiated a number of measures. Included among them is the decision to conduct review meetings for national highway works in respective states. Earlier, the review meetings with officials of state Public Works Departments were held in New Delhi. Under the new initiative, a month-wise schedule for holding the review meetings, starting from June 12th, 2013, has been worked out for the current year. The concerned Chief Engineers are required to convene review meetings for national highways and Central Road Fund works in states under their jurisdiction in accordance with the schedule.

Plans have also been drawn to organize training programmes covering the EPC mode of construction for state PWD officials, concerned officials in National Highways Authority of India and the MoRTH, consultants and contractors.

Source-http://www.projectsmonitor.com

“In last six months, the average per day ridership of Delhi metro has risen to 2.01 million per day,” he said.

The highest ridership was recorded on July 1, at a massive 2.36 million on the 190-km long metro line.

According to figures provided by DMRC, the per day average ridership was 18 lakh in the first six months of 2012. It increased to 19.61 lakh per day in the second half of the year.

Singapore had a per day average ridership of 1.94 million in 2012 on its 148.9 km-long network, while Taipei had an average ridership of 1.71 million per day in May 2013. The length of its network is 115.6 km.

Hong Kong metro, meanwhile, had an average ridership of 4 million per day in 2012 on its 115.6 km-long line.

IANS

New Delhi: In a bid to increase its ridership, the Delhi Metro is now trying to attract more people to travel in the lean hours, its chief said Monday.

The Delhi Metro presently has an average ridership of 20.1 million people per day. However, according to officials 60-65 percent of this is in peak hours – 9 a.m. to 11 a.m. and 5 p.m. to 8 p.m.

Of this, nearly 40 percent ridership is between 9 a.m. to 11 a.m.

“The average capacity of a coach is 300 people. However, on an average ,only 78 people travel in every coach each day. This is because the lean hours have very low foot fall,” the DMRC chief said.

“We can get in touch with groups like those going to some gurudwara, temple or mosque, or school, senior citizens etc. to increase ridership in lean hour,” he said.

Giving examples from other countries, the DMRC chief also said that staggered office timings can also help changing this scene.

Mangu Singh added that DMRC was also contemplating introducing a system where those who use metro parking but do not travel in the metro will be fined.

“A lot of people park their cars in DMRC parking but do not board the metro. We are contemplating to introduce a system where metro parking would be on the basis of a smart card. Those who do not board the metro in a fixed time will be fined,” he said.

IANS

New Delhi: Commuting to Delhi University’s South Campus will be much easier for thousands of students as Delhi Metro has decided to construct a station at Dhaula Kuan especially for them.

The 59-km long Mukundpur-Shiv Vihar metro line will have an elevated station at Dhaula Kuan, adjacent to Atma Ram Sanatan Dharma College of South Campus, the spokesperson said.

“The station will have entry/exit points near the foot over-bridge on the route. It will also help in easing traffic there,” he said.

Apart from South Campus headquarters, seven other colleges are located near Dhaula Kuan, and every year thousands of students take up undergraduate and postgraduate courses here.

Delhi Metro in its 140-km Phase III project is aiming at connecting North Campus to South Campus. Commuters would have to change trains at Azadpur and INA stations to reach their destination.

By 2021, as per estimates, 15,000 commuters will be using this metro line daily.

PTI

New Delhi: Delhi Metro and Delhi Tourism Wednesday signed a pact to jointly promote tourism in the capital. 

Delhi Metro will identify five metro stations where Delhi Tourism will open information counters. The first of them will be at Dwarka.

IANS