No special route, govt tells China to bid for highways

Written by Timsy Jaipuria | New Delhi | Updated: Sep 23 2014, 09:45am hrs
HighwayChina wants to invest in Indian infrastructure on an unprecedented scale, but would like to get the projects on a platter.
China wants to invest in Indian infrastructure on an unprecedented scale, but would like to get the projects on a platter rather than through the competitive route.

Despite the hopes created about FDI inflows from China growing exponentially from the very low levels right now, following Chinas president Xi Jinpings recent visit to the country, the government has rejected Chinas proposal to build and fund a host of highway projects.

The reason: The projects that Beijing asked for are in the engineering, construction and procurement (EPC) category, which are funded by the government through the National Highways Authority of India (NHAI) and where the role of the private sector is restricted to that of job contractors.

China had specifically asked for award of nine projects with a combined contract value of over R9,000 crore in Punjab, Haryana, Odisha and Andhra Pradesh.

According to a senior government official privy to the development, The investment proposals by China under the model suggested by them would not be feasible. We have told the China government that they can participate in the tenders to be floated for PPP projects being awarded on the buildoperatetransfer (BOT) mode.

China proposed to take up construction of 890 kms of highways (nine stretches) worth R9,125 crore that the government was planning to award on the EPC basis during Chinese presidents visit to the country. It proposed that Chinese firms would pick up these projects, finance them completely and also bring their own contractors for construction. China also wants to take up the projects on a turnkey basis. The Chinese proposal was to bring Chinese labour, plant and machinery to construct the highway, said the source, adding that India was concerned about this.

It is practically impossible for the government to agree with such a proposal from China. Award of road projects in the country follow a process and everyone has to adhere to it, said M Murali, director-general, National Highway Builders Federation.

Sources said that the detailed proposal made by China had many gaps.

While rejecting the Chinese model for award of these (EPC) projects, the road transport and highways ministry has written to the Chinese government, seeking more details of their plans for PPP projects to be awarded through the BOT mode.

In recent months, the award of new PPP projects in the highway sector has seen a big decline and the government is banking on the EPC projects for the time being to regain some momentum in the road construction, although its medium-term objective is to re-kindle investor interest in the PPP projects.