Rangarajan Committee to conduct survey on 47 highway projects
Developers of highway projects under the PPP model had recently claimed that they were under immense financial stress due to the fall in toll revenues generated. To verify the genuity of these claims, the Cabinet has appointed an expert panel to conduct a study on the bailout demands of developers, which has proposed a survey on 47 highway projects to gauge the traffic volumes currently existing.
Panel to be assisted by NHAI in comparing traffic volumes:
The panel which is headed by C Rangarajan, the chairman of the Prime Minister’s Economic Advisory Council, has requested the National Highways Authority of India (NHAI) to look into variations in traffic volumes compared to the estimated volumes forecast at the time of bidding for these highway projects. This will act as a pointer to the panel in its quest to consider bailout demands of developers. The NHAI is expected to complete its study within a week’s time, after which the panel will determine the variations in traffic trends. The findings of the study will be send to the highways ministry for consideration regarding bailout demands of developers.
Expert panel to study premium rescheduling policy:
The expert panel was set up by the government in early November, 2013, with the objective of deciding on a structure for the premium rescheduling policy for developers. It was based on the suggestion of the government that Mr. Rangarajan was appointed as the head of the panel. It was proposed that based on the findings of the panel, a final decision would be taken. This decision would be implemented by the highways ministry following the approval of the finance minister.
Developers claim decrease in traffic volumes:
The concessionaires were put under considerable stress due to the decline in traffic along highways, as revealed by NHAI authorities. As a result, construction activity had proved to be sluggish and debt servicing had become cumbersome. The Rangarajan committee as well as the highways ministry are now exploring the veracity of the claim made by the developers regarding decline in traffic volumes leading to stress.
Committee to decide on parameters to determine stress:
The NHAI is currently surveying the traffic volumes across 47 highways roads. Based on the data collected during the survey, a consultant in the panel will make a comparative study regarding the past and present traffic volumes along these stretches. An analysis will be done regarding the traffic trends, the findings of which will be send to the highways ministry. Based on the findings, the committee will be able to take a decision regarding the parameters that can be employed to determine stress faced by developers.
Bidders shying away from PPP projects:
The request for conducting a survey was conveyed to the committee in early November. However, there was a delay in carrying it out due to the uncertainty regarding the highway stretches that needed to be included in the study. Since the 2012-13 fiscal, it has been seen that very few bidders have come forward to take up PPP projects inspite of the gruelling efforts of the highway ministry and the NHAI. Contracts for highway development could be awarded only for 1,116 km during the last fiscal as against the targetted outlay of 9,500 km, with just one PPP project being awarded this year.
Highways ministry to resume work on stalled projects:
With the market scenario proving to be glum, the highways ministry has put on hold its plans for awarding PPP projects this year. However, it is planning to resume work on several stalled projects employing its premium restructuring proposal, that it is working on.
