Road Ministry to continue with public-private partnership mode
October 10, 2013
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By YASHODHARA DASGUPTA, ET Bureau |
NEW DELHI: The highway ministry has rebuffed the National Highway Authority of India’s (NHAI) suggestion to dump the public-private partnership (PPP) model in favour of the engineering, procurement and construction (EPC) mode.The ministry has asked NHAI to proceed according to earlier plan of building 3,000 km through PPP instead of junking the model at the first sign of trouble, an official of road, transport & highways ministry said.It has also asked NHAI to refer matters to its board before pitching any proposal to the government.According to sources, the ministry is unhappy with unilateral proposals sent by NHAI chairman RP Singh, including stopping toll in ongoing projects like the Gurgaon-Jaipur project or wanting deferral of premium to be extended across all premium projects, among others.”Just because PPP projects have not taken off in the recent past doesn’t mean we junk the model and switch over to cash-contracts. We need to innovate and try all options before taking such a step.
We’re considering options like combining annuity and toll, which would make it lucrative to investors and limit our pay-out burden,” said the official.
The highway sector, largely regarded as India’s PPP success story, took a hit in 2012-13 during which the ministry was able to award only 1,116 km of projects. Private investment too came down by 23.5% from the 2011-12 levels.
Overall, private investment has increased from Rs 1,462 crore in 2004-05 to Rs 25,999 crore in 2011-12. In terms of road length awarded, it has gone up from 1,304 km to 6,644 km during the same period.
It is these figures, the ministry says, which prove that a brief period of lull does not negate the success the sector has seen in terms of PPP.
NHAI has also pitching for suspension of toll in the six laning of Gurgaon-Jaipur project where the concessionaire has been missing deadlines repeatedly. The ministry sent a letter to NHAI on Tuesday expressing surprise and concern with ‘the manner in which references were being made to the government’.
“There is no effort at all to estimate the amount of ‘loss’ that would accrue if tolling is suspended. This would be a pre-requisite for any decision since at a later time the concessionaire is bound to raise claims against the decision to suspend toll operations,” said the letter which also suggested that “rather than having a public debate on such policy matter through the Press, your personal suggestions on these issues are placed before the board of NHAI for a considered view as the board has been constituted for this very purpose.”
Earlier this week, NHAI had written to the ministry asking the government to either take over the Delhi-Gurgaon expressway project or hand it over to the Haryana government.
The dispute between NHAI and the concessionaire is pending in Delhi High Court. The ministry has asked the authority to expedite the legal process.
After representations made by highway developers asking to be included in the premium deferral proposal, the NHAI asked the ministry to include 16 additional premium projects, apart from the 23 projects originally shortlisted, in the list.
However, road ministry officials pointed out that it was the NHAI board which had approved these 23 projects with premium amounting to Rs 1 lakh crore in the first place.