Under this mode, government bears the construction cost and developer exits the project after building the stretches. So, the developers have no risk in executing such projects unlike the PPP ones.

Announcing this on Monday, road transport minister Nitin Gadkari said that his ministry is trying to arrange finances to take up projects on government funding or EPC mode. “Taking up more projects on public-private-partnership (PPP) is not feasible.

We have to go ahead with EPC projects for at least next two years,” he added while blaming the issues “created by the previous government”.

At present, while 160 highway projects are under imple

mentation on PPP mode entailing an investment of Rs 1.6 lakh crore, there is no progress in case of 65 projects.Out of these 65 projects, 28 have been terminated and fate of another big project is likely to be decided very soon.

The CEO of a major highway construction company told TOI, “As such we have not take any project on PPP mode in the past three years. At present, none is interested considering the risk and prevailing market condition. We are struggling to complete the already bagged projects.” Sensing that government has to create a huge corpus to pay for projects on cash contracts spanning over 2-3 years, Gadkari said that his ministry is going to set up a corporation that will deal with financing of such projects.

Gadkari on Monday said that he has already written to the Prime Minister and finance minister for getting portions of huge amount PF lying with the labour ministry as loan to the corporation.

Source-http://epaperbeta.timesofindia.com/

This also includes the Rs9,654-crore Agra to Lucknow eight-lane expressway project, which will be implemented by the Uttar Pradesh Expressways Industrial Development Authority (UPEIDA).

“This can be a good barometer to judge the market sentiment. There are people who are hungry, but only financially viable projects which have land and requisite clearances in place will find takers,” said Abhaya Agarwal, Partner and Leader, PPP, at EY.

The pace of award of highway projects has been slow because of issues like poor market sentiment, shortage of equity, lenders’ demand for 100% possession of land, delays in getting clearances, banks reaching their exposure limit towards the infrastructure sector and a ban on quarrying of stones and minig of ordinary earth used in road construction.

This year the National Highways Authority of India (NHAI) has awarded only 479 km against its target of 3,000 km by September. In the previous financial year, projects for only 1,116 km were awarded against the target of 9,500 km.

However, Shravan Shah, senior research analyst at The Market Financial Intelligence, is optimistic. “The projects being opened for awarding could bring a ray of hope.

Most of these projects including those in Assam, J&K as well as the Agra-Lucknow expressway are largely ready and there is a high chance that developers would pick them up,” said Shah.

The drastic slump in market sentiments prompted Prime Minister Manmohan Singh to address things personally. The PM promised to kickstart several stalled infrastructure projects worth Rs 1.5

lakh crore including two new ports, eight new airports, new industrial corridors and rail projects. “We have recently taken many steps to speed up the process of government clearances for industry, build an environment more conducive to trade and industry and increase investment in the economy.

A special cell has been set up to help big projects with clearances. The Cabinet Committee on Investment is working to remove hindrances in the way of stalled projects,” said the Singh in his Independence Day speech, adding that investments would increase because of these efforts in the coming months.

Several of the issues have been addressed with the government allowing de-linking of environment and forest clearances, relaxations on mining of ordinary earth and so on. It has also approved policy changes allowing stressed developers to fully exit highway projects.

“At this point, developers are looking for a balanced portfolio with a mix of toll-based and annuity-based projects. Toll-based projects have risks involved including traffic projections not matching the actual.

Annuity on the other hand, means assured payments,” said a senior official from an infrastructure major, adding that private players have lost their appetite and would only take up projects after doing a proper assessment on the viability.

The projects for widening of four laning of Solapur- Yedeshi section of NH 211 and 6/8 laning of JNPT Port road project of Mumbai JNPT Port Road Company were approved by the Cabinet Committee on Economic Affairs (CCEA).

“The CCEA has given its approval for four laning of the Solapur-Yedeshi section of National Highway-211 under the National Highways Development Project (NHDP) Phase IV on Build, Operate and Transfer (BOT-Annuity) in Design, Build, Finance, Operate and Transfer (DBFOT) pattern,” an official statement said.

The cost of the 99 km project is estimated to be Rs 1,057.82 crore including the cost of land acquisition, resettlement and rehabilitation and other pre-construction activities.

The project will expedite improvement of infrastructure in the state and also reduce the time and cost of travel for traffic, particularly heavy traffic, plying between Solapur and Yedeshi.

Development of this stretch will also help in uplifting the socio-economic condition of this region and increase employment potential for local labourers for project activities, it said.

About the Jawahar Lal Nehru Port Trust (JNPT) Port Road Project of the Mumbai JNPT Port Road Company (MJPRCL), the statement said it will be build on BOT-Annuity mode in Design, Build, Finance, Operate and Transfer (DBFOT) pattern.

“The cost is estimated to be Rs 1943.37 crore including the cost of land acquisition, resettlement and rehabilitation and other pre-construction activities,” it said.

The total length of the road will be approximately 43.912 kms of which 20.95 km will be of 6-laning and 22.962 kms will be of 8-laning, it added.

The project will expedite improvement of infrastructure in the state and also reduce the time and cost of travel for traffic, particularly heavy traffic, going towards JNPT.

The project corridor highway consists of NH-4B and NH-348. This network connects the JNPT, including its proposed Navi Mumbai International Airport in Maharashtra.

Development of this stretch will also help in uplifting the socio-economic condition of this region of Maharashtra, the statement said, adding, it will also increase employment potential for local labourers for project activities.

Govt officials cannot deal with such projects: Mayaram

Arvind Mayaram, Secretary, Department of Economic Affairs, stressed the need to have a regulator for the road sector to handle disputes in public-private-partnership (PPP) projects.

He said Government officials do not have the capacity to deal with PPP projects where contracts between the Government and private sector span 20-30 years, thus requiring constant interaction and adjustment between the two parties based on the changing circumstances.

“Traditionally, we were used to paying the private sector to do a job in two-three years, after which the relationship ended. How to manage relationships in post award framework is an area where there is scope for improvement,” Mayaram said speaking at a FICCI conference here on Monday.

The regulator can help manage when the Government’s relationship with the private sector gets rocky, said Mayaram.

Omnibus Bill

Incidentally, the Planning Commission has taken a stance against the idea of having a road sector regulator to deal with such issues. It has rather supported the idea of an omnibus Bill, which will spell out ways for dealing with disputes in PPP projects.

Infrastructure

The Government has been increasingly wooing the private sector to build infrastructure through public private partnership basis.

In 2005, it decided to bid out all road projects on BOT-toll mode first, where the private developer designs, finances and builds a road, maintains it, collects toll from users for a long-term period. Vijay Chhibber, Secretary, Road Transport and Highways, said the Ministry is working on a proposal to have a regulator, as was announced in the Finance Minister P. Chidambaram’s Budget speech this year.

Advisory role

The regulator would have an advisory role on renegotiation of existing contracts, setting of service standards, project entry and exit options, tariff structuring and toll mechanism and knowledge management, according to the proposal under the consideration of the Road Ministry.

It would also have an adjudicatory role on contract dispute resolution, renegotiation of future contracts and enforcement of contractual provisions.

This is for the first time that the Highways Ministry has officially spelled out its detailed proposal for the regulator.

Source- http://www.thehindubusinessline.com