Road Ministry plans new framework for building expressways
The Road ministry is planning to draft a new contractual framework for building more investor-friendly expressways. In this regard, the new Model Concession Agreement (MCA) will address the crucial issue of revenue collection on expressways, thereby enabling to overcome the limitations of the current contractual agreement.
NHAI creates new division to handle large expressways:
Expressways are generally access-controlled with closed tolling, having many features that are more capital intensive than highways. Hence they need to be handled differently as well. Infact, the National Highway Authority of India (NHAI) has created a separate division to look after large expressway projects. These include the Eastern-peripheral expressway, the Mumbai-Vadodra expressway as well as the Delhi-Meerut expressway project, which are totally worth about Rs.30,000 crore.
PPP model unlikely to be employed:
Incidentally, work on about 18,000 km of expressways was proposed to be taken up during 2011-12, with bids being currently invited for some of the larger projects. It is yet to be seen whether the Public-Private Partnership (PPP) model will be employed for any of these projects. In such a situation, customisation of the revenue model will be required. Besides, the new model is also likely to propose higher toll rates for expressways.
Road ministry to consult multilateral agencies:
For the development of expressways, the Road ministry is planning to consult multilateral agencies like the World Bank, the Asian Development Bank and the Japan International Cooperation Agency (JICA). These agencies are expected to provide technical assistance in drafting the new MCA. Even though the existing MCA is good, it needs to be re-engineered considering that its utility is no more significant. Moreover, officials in the Finance ministry, Planning commission as well as stakeholders like the Indian Road Congress and other concessionaires would be invited for consultations with regards to drafting the new MCA.
Sharing of risk and subsidisation of debts suggested:
It has also been proposed that sharing of risk between the government and the private sector needs to be included in the concession agreement. In the case of large infrastructure projects for which the borrowing requirements are high, subsidisation of part of the debt along with making the toll rates more dynamic was suggested. It was felt that these issues needed to be addressed suitably considering the huge investments that were required for these capital intensive expressway projects.
Road ministry revises target twice this fiscal:
Due to private developers shying away from road projects, the Road minsitry could award only 1,322 km of road projects in 2012-13. This was in stark comparison to the target of 9,500 km that it had set. Incidentally, the Road ministry had to revise its target for awarding road projects for the second time this fiscal year. Moreover, the target for awarding highway projects under the National Highway Development Programme was halved to 2,128 km in 2013-14, from the target of 4,028 km that was set earlier. This was considerably lower than the original target of 7,500 km. In a bid to revive the Roads sector, the ministry is optimistic that these projects would ultimately be awarded.
