EPC mode for road projects to aid PPP comeback: Nitin Gadkari

Written by Timsy Jaipuria | New Delhi | Updated: Sep 22 2014, 06:36am hrs
Road transport minister Nitin Gadkari has said awarding contracts to build roads through the engineering, procurement and construction (EPC) route would revive the confidence of private developers. Following this, he feels, the public-private partnership mode would gain currency automatically.

Gadkari said this during an interview with FE, when asked whether the road ministrys recent preference for EPC meant it has abandoned the PPP route.

The road sector is distressed and has seen loss of confidence by concessionaires, bankers and people at large. My topmost priority is to bring the sector back on the path of recovery by building confidence among stakeholders, the minister said.

As the sector regains momentum, PPP investments would pick up automatically, he added.

Under EPC, the government funds the construction the developer only has to develop the project in a stipulated time. In the Build-Operate-Transfer (BoT) mode, the developer invests in the project and recoups it through either tolling rights or annuity.

Highway projects of 3,055 km were awarded through EPC in 2005-06, but it rapidly lost its sheen. The following year, only 345 km were awarded, and it further slipped to 89 km a year later when BoT projects were on ascent, peaking at 6,491 km in 2011-12. Not even a single EPC project was awarded in the sector between 2008-09 and 2011-12.

However, of late, EPC has once again made a comeback due to the lukewarm response shown by private developers. For instance, this fiscal so far NHAI has awarded seven projects of 798 km, all under EPC In the last two years, of the 13 projects for 1,115 km, bids for which were invited, a larger share of 841 km was awarded under EPC. Additionally, 11 proposals are currently being evaluated by the inter-ministerial PPP-appraisal panel involving construction of 1,098 km of roads, of which 1,010 km will be awarded under EPC.

Gadkari, who has set a target of building 30 km of roads every day, said his ministry has created a shelf of over 500 projects that would be commissioned soon. He blamed the UPA government for the stalemate in the road sector stating, We inherited from the UPA government 189 stalled and disputed projects. Highway construction remained less than 2 km a day.

However, Gadkari added that his endeavour was to identify and resolve bottlenecks through consultations with stakeholders, which would enable him to achieve the target of 30 km of road per day.

He felt that to achieve the target, state governments have to be taken on board. For instance, the chief secretaries of all states have been asked to do monthly meetings to review the progress of road projects.

On his recent idea of cement roads, Gadkari said the ministry had floated a global tender for cement rate contracts to bring down costs.

For thrust on creation of productive assets linked to the farm sector under MGNREGA, Gadkari said the government would henceforth allocate at least 60% of works toward rejuvenating the sector through land development, water conservation and tree plantation. Besides, with a view to improving the productivity and quality of assets created under MGNREGA, the government has proposed that quantification of expected outcomes and actual outcomes be made mandatory.