Shape of regulator

Limited mandate would make for an effective body

The ministry of road transport and highways has fast tracked the process of setting up a road regulatory authority. The first inter-ministerial meeting on the topic last month highlighted the issues relating to the framework for setting up the independent regulator.

The idea is not to create a parallel body to the National Highways Authority of India (NHAI). The minister of roads transport and highways CP Joshi, while talking to the stakeholders at the meeting, reportedly said that the need of the regulator was to address the growing challenges of liquidity constraints, contract management, contract re-negotiations, and technical and safety aspects.

The minister had lamented ?the lack of a concrete, implementable institutional framework in place to address user complaints?, and insisted on the need for ?uniformity and transparency? in technical and safety aspects.

He felt that ?the regulatory framework for the road sector should blend the best practices from prevalent regulators across the country.?

In the absence of an effective regulator, many disputes have landed in the courts?for example, the Delhi-Gurgaon Expressway, where toll collection was stalled for more than a month. Moreover, several claims have remained unpaid despite arbitrator awards and high court judgments in favour of contractors. This has been affecting the liquidity of contractors and has severely constrained their ability to pursue upcoming EPC projects as well as the ability to invest equity in upcoming BOT projects.

Road ministry secretary Vijay Chhibber felt that an independent regulator would best address the conflicting issues and provide enhanced reliability to private sector entities in the overall framework and reduce the burden on implementation agencies.

NHAI chairman RP Singh argued for a well-structured mechanism that has autonomy, accountability, with well-laid out road map to deal with issues pertaining to state support agreements, disputes on alignment, toll justification, and location of toll plaza.

CII representatives felt that the regulator would bring transparency and clarity in entry criteria, toll setting, defining service quality standards, amending model concession agreements, and introducing new PPP models. The regulator could also define the conditions under which existing concessions would be revisited, the industry representatives argued. They, however, wanted the regulator to go beyond disputes and focus on development and act as a facilitator.

However, there is a view within government that overburdening the regulator would reduce its efficacy, and the regulator cannot be the answer to all problems facing the sector. ?We have already formed a core group comprising of industry and other stake holders to expedite the process?, as hinted to FE by joint secretary handling the issue, Rohit Kumar Singh.

Currently the highway sector is undergoing a financial crisis. There are issues relating to debt and equity funds, environmental clearances and land acquisition, to name a few. Experts feel that if the regulator can be constituted quickly and armed with independent powers, it will revive investor interest in the sector and speed up road development.

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First published on: 01-05-2013 at 01:21 IST