Building 20 km of roads per day is proving to be a lot more difficult than envisaged by the government. The monitoring agency of the pace of construction, the National Highways Authority of India (NHAI), and the road ministry have developed such major differences with the Planning Commission that over a dozen chief engineers working resigned on December 7.
While a day later the resignations submitted to road secretary AK Upadhyay were withdrawn, the development has left all concerned rattled. According to sources, the engineers were irritated over ?growing interference? of those outside the road ministry and NHAI.
At stake is how to award contracts for the numerous road projects. While the government has already placed a draft procurement Bill on the finance ministry website to bring uniformity in the process, the road ministry feels a one-size-fits-all framework is not possible to implement.
Incidentally, the resignations had come on the day when Gajendra Haldea, adviser to Planning Commission deputy chairman Montek Singh Ahluwalia, had a meeting with senior road ministry officials in the presence of road minister CP Joshi on the framework of a new model agreement on engineering, procurement and construction (EPC) projects of building national highways.
Haldea is preparing the new agreement on EPC projects as the government wants to bring these contracts back in focus as it goes about expanding stretches that are not commercially suitable for build, operate and toll basis. At least stretches totalling 20,000 km in length are to be identified for development under EPC model on turnkey basis rather than conventional item-rate contracts.
In turnkey contracts, companies bid after considering all the costs involved in developing a stretch. But in the case of item-rate contracts, bids are placed for each item used for constructing a road. The idea behind the shift from item-rate contracts to turnkey contracts is to remove corruption from EPC projects. As per senior government officials, corruption is rampant at the level of officials who are involved in monitoring and approving stretches for quality.
The road ministry, NHAI and Haldea are discussing the changes to be brought in the EPC agreement. ?We have had a series of meeting on the subject and can witness increasing interference from outsiders,? a senior official who attended the meeting said. Some suggestions that have split officials from Planning Commission and NHAI are non-engagement of sub-contractors for more than 40% of the project cost, providing 10% of project cost as performance security to NHAI for two years from the date of completion of the project, and appointing third-party agency for project monitoring.
The debate over restricting the number of qualified bidders for EPC projects is also gaining heat. NHAI had tried restricting qualified bidders to seven when it sought applications from companies for two projects in UP. However, the response was lukewarm and the matter reached the discussion table again. ?It was done to test the acceptability of the proposed change. The same thing was done when we were developing a model concession agreement for BoT (Toll) projects. The response we received was not encouraging and we are thinking of discontinuing the restriction in future projects,?a senior NHAI official said.
The industry feels the nature of ongoing debate between officials from Planning Commission and NHAI is unhealthy and could hamper government?s plan to develop projects on EPC basis. ?There is a clear discontent among officials. The government has to reach a common agreement quickly to take the sector forward,? a senior official in one of the EPC developer said .
