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Shilpa Joglekar
Mumbai, April 13: The National Highways Authority of India (NHAI) may have some trouble getting state governments to sign the state support agreement. Their co-operation for these projects is vital as two subjects, land acquisition and the Motor Vehicles Act, fall within the jurisdiction of state governments. According to sources, at a meeting held between the NHAI and state PWD ministers, several states expressed reservations about NHAI projects. Land acquisition for the four-laning of existing national highways network could become a prickly situation for some states where there has been extensive ribbon development along the highways. Some states such as Maharashtra have communicated their commitment to the NHAI project and said that the land acquisition will be done as quickly as possible.
In fact, the state PWD minister has even proposed that the Maharashtra State Road Development Corporation (MSRDC) partners the NHAI in the latter's projects in Maharashtra.
0The NHAI has reportedly received promisesof similar co-operation from Gujarat. According to sources, BJP- ruled states have co-operated while others have proved more difficult to convince.
The state support agreement, which is a three-party agreement between the NHAI, the state and the ministry of surface transport is a major concern with the sponsors. There are two potential dangers if the state support agreement is not structured well and executed. Firstly, delays in land acquisition either due to bureaucratic delays or litigation could seriously affect the viability of the project and scare away lenders. The cost of litigation may also have to be borne by the sponsor, adding to development costs of the project.
The motor vehicles Act, under which the security of the road network is ensured, will also have to be modified by most states, if the sponsors' concerns are to be met fully. Also some states are using the government need to push through the projects to bargain for change in alignments to suit their own needs.
The opposition to thestate support agreement has also hampered negotiation on the model concession agreement. While the agreement, already in its 23rd draft with only last mile issues to cover, is currently being negotiated with sponsors, it was hoped that the state support would come through, giving a fillip to the projects.
Lending institutions have already accepted the existing draft of the concession agreement as bankable. The force majeure clauses have given them a sufficient level of comfort in the event of termination. Sponsors however have made it clear that in its present form, the concession agreement is unacceptable. After nearly six months of negotiations, the four laning v/s six laning issue continues to frustrate both sides. With no solution to this in sight, promoters say they are fast losing interest in coming in as developers and would like to restrict themselves to contractors.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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