New highway panel to meet this week for tweaks to model concession agreement

Written by Timsy Jaipuria | New Delhi | Updated: Sep 8 2014, 07:41am hrs
Review of norms on exit and substitution, change of mode from Build-operate-transfer (BoT) to Engineering, procurement and construction (EPC) and dispute resolution mechanism in the model concession agreement (MCA), among others, will come up for discussion at the first meeting of the newly constituted committee under roads secretary Vijay Chibber on September 13.

The committee was formed recently, as per the directions of the Cabinet Committee on Economic Affairs (CCEA), to empower the roads ministry to make suitable changes in the MCA from time to time, reducing delays. The changes to the MCA will be made after the committees approval, and the matter neednt go to the CCEA. The committee has representatives from the Planning Commission and the finance ministry.

It is likely that the new concession agreement will have provisions to accommodate road minister Nitin Gadkaris view to stop toll collection after project costs are recovered.

Experts say there is a need to revise the document as it is old and needs to be reworked to cater to the current economic challenges.

Since last year, the roads ministry has been revamping the MCA to make it more flexible, in line with changing market conditions.

"Currently, the MCA norms do not provide the flexibility for changes or additions. In the absence of such provisions, the government had to come up with a policy for rescheduling premium as well as an exit policy for developers," Vishwas Udgirkar, senior director, Deloitte India said.

Due to the economic slowdown of the past few years, awarding of contracts for national highways has slowed down. Besides, issues related to environmental and forest clearances and land acquisition have come in the way of projects.