NHAI to award projects under EPC model
The National Highways Authority of India (NHAI) is planning to grant road projects of around 1,600 km under the Engineering, Procurement and Contract (EPC) route in the next few months. It is a part of the 2,500 km of projects which the authority has designated to award this year.
Bids for road projects
NHAI officials have said that bids for five projects covering around 502 km have already been received. The number of bids received for these projects are only around 4 to 12. However, the officials said that good response is observed under the EPC model and they are satisfied with it.
The Authority has also welcomed bids for another 225 km of projects. It is currently in the process of preparing bids for projects covering 800 km.
Sector exhibits positive signs
The increasing number of activities is a positive indication for the sector as it has been under pressure from the past few quarters. The proposed projects would give a boost to the slowdown-hit infrastructure companies, which were hesitating to take up projects under public-private-partnership (PPP) model.
NHAI chooses EPC to PPP
The Authority first tried to award projects under PPP mode. But when this method failed to attract private developers to take up 20 viable projects that were put up for bids for the ongoing fiscal, it decided to shift to EPC route.
Since the government provides funds for construction under EPC model, the contractors are not likely to face the risks associated with it. The contractor has to quote the cost of constructing or upgrading any road project under this model, and if the bid is accepted, then the government will provide the required funds.
The officials said that arranging funds is not a problem now as the authority has sufficient funds and also that these projects would merely require about 15 percent of the total project cost during this fiscal.
No land acquisition hurdle
Another plus point is that not much land need to be acquired for the projects as most of the part has to be developed on the existing alignment. So the land required will already be in place.
During 2012-2013 fiscal, the NHAI could only award 800 km of projects. And in the current fiscal, it has already managed to award 859 km of projects. If it grants 2,500 km under EPC, the number would go up. Besides this, the road transport ministry has awarded projects covering 463 km.
