Roads regulator likely to be set before Budget FY15

The Ministry of Road Transport and Highways is planning to set up a roads regulator before the Union Budget 2014-15. In this regard, the Ministry has already prepared a draft legislation to establish an industry regulator with both enforcement and advisory functions. It is also planning to review the target of awarding projects of about 8,000 km this year.

The Union finance ministry had earlier announced that a roads regulator will be set up this year since a number of projects had been facing legal issues.

Regulator to assist developers

Another important need for setting up a regulator is to bring in transparency on the entry and exit of developers in the case of public-private partnership projects. The regulator will eye on the pre-construction as well as post-construction works, and also the concerns associated with those.

Even though the National Highways Authority of India (NHAI) had agreed to allow road developers to exit projects and sell their equity, the policy has found no taker so far.

Increase in land acquisition issues

Issues related to land acquisition have been rising in the last few years. This has resulted in reduced private participation in the sector and increased number of disputes. Private developers are not showing interest in taking up road projects, as financial institutions are not showing interest to fund them.

Delay in projects to cut down

It is commonly seen that many road projects in the past have often got delayed for years. Some of the projects are spread over two decades too. Once the regulator is in place, such project delays would likely come down.

Roles of the regulator

The Regulatory Authority for Highways in India Bill, 2013, proposes to give adjudicatory powers to the proposed regulator. The regulator will be an authority that can make judicious and arbitrary decisions. It will have to check various issues such as debt management, users’ concerns, market uncertainties, renegotiation of future contracts and resolution of contractual disputes. Its decision will be legally enforceable.

The regulator will have jurisdiction on all the national highways and all other roads under the administrative control of the road ministry. As per the draft document,the regulator will also have an advisory role in areas such as renegotiation of existing contracts, project entry and exit options, tariff structuring and toll mechanisms, knowledge management, setting service standards and specific policy issues.

The roads regulator will be managed by a board of three to nine members, along with a chair person. It will have both enforcement and advisory functions.

Mandatory registration of contracts

As per the draft Bill, it is mandatory to register all contracts, including public projects as well as public-private partnership ones, with the regulator. The registration process will involve paying a fee too.

Users can also appeal the regulator

In case, if the users (commuters) who pay toll charges for using the national highways or expressways, have any grievances related to the roads, even they can approach the regulator. According to the draft document, the regulator will be authorised to impose fines on a defaulting party for not complying with contractual provisions.

Draft Bill awaits approvals

The draft document has already been sent to the road minister. Further, the ministry will get the views of all concerned ministries, following which, the draft Bill will be tabled in the cabinet for approval, said officials. However, the central government has the right to choose speedier execution of the Bill in the Parliament, they added.