Roads to get Rs 1 lakh crore this fiscal

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Mumbai: The government will invest Rs 1 lakh crore in 2009-10 to build 12,000 km of roads. The target set by road transport & highways minister Kamal Nath is almost six times more than what India has achieved in any fiscal year since 2000-01.

Nath also said finance for the projects would be raised through pension funds, sovereign wealth funds, private-equity players and other options. He said the ministry would soon incorporate Indian Road Finance Corporation (IRFC), modelled on the lines of Power Finance Corporation, to raise finance for highways.

The minister made these announcements on Friday at a seminar on the infrastructure sector. "The lack of roads and, in the larger context all infrastructure, is a major challenge to our economic reform programme," Nath said.

The agenda set by the minister means the government expects to build at least 20 km of highways every day. He also announced the setting up of National Highway Authority of India regional hubs to promote investment and simplify the bidding process. In the Union Budget last week the government raised funding for national highways by 23% and provided for India Infrastructure Finance Co Ltd to refinance bank loans for long-term infrastructure projects.

After a rapid phase of expansion in the early part of the decade, road programmes have sputtered almost to a halt, beset by an array of problems, including the process of offering and bidding for projects. In the last two years, only nine projects were awarded of the 56 projects on the block.

ICICI Bank CEO Chanda Kochhar said funds could be raised as long as investors are assured of stable and steady returns. The government, in association with ICICI Bank, plans to conduct roadshows to attract overseas investors. “The roadshows will demonstrate our seriousness and (help) bring in the best technology and best practices," Nath said.

Representatives of banks and financial institutions told FE that land acquisition and implementation of the model concession agreement continue to be contentious issues. They welcomed the government’s recent decision to permit the issue of letters of award to developers only after 80% of the land for a project was acquired (it was previously 50%).