No funds to award projects, NHAI says

June 5, 2013

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Dipak Kumar Dash, TNN |

NEW DELHI: The National Highways Authority of India (NHAI) has told the highway ministry that it won’t be able to award any project on toll mode during 2013-14 if the prevailing conditions don’t improve. In addition, it wants government to start awarding projects only when all conditions are fulfilled, and work can begin without delay.

Currently, private investment in highway sector comes for two types of projects – BOT (toll) and BOT (annuity). In the first instance, a private player recovers its investment from collecting toll, while for the latter government pays back the entire investment with interest in installments.

NHAI has informed the ministry that 33 projects — covering around 3,500km — awarded during the past two fiscals are yet to take off due to several reasons, including dearth of finance, equity, clearances and land availability. Moreover, 17 BOT (toll) and 3 BOT (annuity) projects did not get any response last year.

The Authority has submitted two targets. In the first case, unless things improve and government takes necessary steps, NHAI would end up awarding only 2,000 km of NH on engineering, procurement and construction (EPC) mode, where government pays the entire amount to private contractors.

In the second scenario, if the situation improves and finance is available for private players to take up work, NHAI can award around 4,000km – half of it on EPC, and the rest (50%) on BOT mode.

Planning Commission had asked NHAI and the ministry to submit two targets for the current fiscal after the Authority had pointed out how high target does not serve any purpose when government fails to resolve issues that impact execution of projects.

Source-http://timesofindia.indiatimes.com