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20-30 road projects to be chopped and bid out as premium recast a non-starter

Feb 13 2014, 05:03 IST
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SummaryWith not many developers keen on the premium rescheduling package recommended by the Rangarajan panel...

With not many developers keen on the premium rescheduling package recommended by the Rangarajan panel, the road ministry and the National Highways Authority of India (NHAI) have decided to go with the alternative plan of bidding out these projects afresh as smaller stretches.

Sources say as many as 20-30 projects will be bid out afresh, including six-laning projects like Kishangarh-Udaipur-Ahmedabad and Shivpuri-Dewas.

"An exercise has already begun to assess the feasibility of cutting out these projects into small stretches. Officials are preparing various proposals so as to decide whether the projects can be taken up on BoT or EPC," said a senior NHAI official. For example, the government is looking at breaking Kishangarh- Udaipur-Ahmedabad (from which GMR walked out citing regulatory delays) into three small stretches and the Shivpuri-Devas project into two.

The finance ministry needs to vet the final recommendations of the Rangarajan panel and send it back to the road ministry, which has to notify the norms. Once it receives the finance ministry's nod, NHAI will start writing to all the developers, asking for their consent on premium recast for stuck projects. The developers will be asked if they are agreeable to the recast model. If a developer is not interested, NHAI will initiate termination of the project.

The road ministry and NHAI’s stance, analysts say, is justified as many major developers have been voicing their concerns on the proposal, which, according to them, fails to lure them into staying with projects. The cumulative premium to be rescheduled is over R1.5 lakh crore.

On being asked which mode would the authority prefer to bid these projects again, the official said: "Over 60% of these projects would likely be bid out on the EPC mode given poor investor interest and slipping toll projections. The government does not want to take risks by opting for BOT alone. NHAI is quite comfortable with the funds available with it and can build these projects much earlier on the EPC mode," the official added.

The dearth of new PPPs on the BOT mode is not unknown, and it has hit highway construction badly even as NHAI tries to revive the engineering, procurement and construction model.

Till now in the current fiscal, NHAI has managed to award only 856km of highways, of which 600 km were on EPC. Even banks are not forthcoming to release more funds to the sector.

One reason for taking the backup route is also to

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