After its failure in awarding 60 highway projects worth Rs 70,000 crore by the end of fiscal 2009, the National Highways Authority of India (NHAI) is now restructuring 20 projects worth Rs 23,805 crore, spanning over 2,248 kms. It will also reinvite bids for them.

The process of restructuring, which will take a month and a half, essentially means that the investment model, as well as physical specifications of the projects, will be tweaked in order to facilitate infrastructure building, even in the prevailing adverse economic scenario, according to a top NHAI official.

Speaking on the rationale behind the move, the official said, ?The bids have been invited twice in case of these 20 projects from January this year. However, since no bidders came forward to take up the projects on the BoT model, it is necessary to tap other models for infrastructure development.?

As far as the funding is concerned, NHAI is shifting from a build-operate and transfer (BoT) model to annuity. ?We have identified seven highway stretches in Bihar to be converted from BoT to the annuity model. Fresh bids will be invited in these cases,? said the official. In the case of BoT projects, private participant collects toll over the concession period and returns the project to the government after expiry of the period. In case of annuity, the private participant is not entitled to collect toll. NHAI pays a fixed semi-annual sum to the participant, as compensation for capital investments, operation and maintenance.

?Another 13 projects are undergoing the process of restructuring. The projects might see a reduction in the number of lanes and the removal of additional structures like bridges to lower the cost of projects. This done, the authority will call for fresh bids for the projects,? the official added.

Infrastructure developers, in the fray for these projects, acknowledge the move as a positive one in the current scenario. ?Converting the unviable projects into annuity would help the national cause. Projects become unviable due to their location and traffic. Annuity is considered safer for concessionaires and lenders because of its fixed income,? said a Reliance Infrastructure spokesperson. ?NHAI is trying to reduce the cost of projects by reducing certain luxury and wayside facilities on unimportant routes like service roads and flyovers, since they add up to the cost and make the projects unviable. No cut-down is possible as far as strength and riding quality are considered,? he added.

?Converting the projects to annuity is definitely going to help infrastructure building. In the present scenario, while tying up funds for projects is a difficult proposition for a private player, it is easier for the government. The move is beneficial for private players, owing to assured returns and low exposure to risk,? said M Murali, director general, National Highways Builders Federation, a representative body of highway construction companies.

The 60 projects were kept on the block by NHAI in September last year and were to be bid out by March this year. The authority managed to award only six projects by January this year, while three are in the pipeline. With fresh bids to be invited for 20 projects, the fate of 31 highways projects hangs in the balance. The 60 projects are a part of the National Highways Development Programme, (NHDP), phase III and phase V.

A different path

• The investment model, as well as physical specifications of the projects, will be tweaked in order to facilitate infrastructure building

• In case of annuity, the private participant is not entitled to collect toll. NHAI pays a fixed semi-annual sum to the participant

• NHAI is trying to reduce the cost of projects by reducing certain luxury and wayside facilities on unimportant routes

• In the present scenario, while tying up funds for projects is a difficult proposition for a private player, it is easier for the govt