With slowdown taking its toll on infrastructure projects, the ministry of roads, highways and transport is looking to award more projects on engineering, procurement and construction (EPC) basis.
According to a senior government official, the current cap of awarding 4,000 km of roads on EPC basis, will be extended, if needed. The move comes in wake of constant fall in the number of bidders on the build-operate-transfer (BOT) toll or BOT annuity basis.
Currently, NHAI has set a target of awarding 9,500 km of road projects in FY13, out of which about 4,000 km are supposed to be awarded on EPC basis and around 5,000-6,000 km (50-55 projects) on BOT toll or BOT annuity basis. The official said since the target of achieving the EPC target now looks difficult, the government is planning to take measures in advance to tackle the shortfall.
Last year, NHAI had awarded various projects. Two of those projects were cancelled because they couldn?t achieve financial closure and, thus, were put up for fresh bids.
However, BOT projects have been widely criticised after three such projects witnessed very aggressive bidding last year, including the Ahmedabad-Udaipur-Kishangarh project, which had fetched a premium of R636 crore and had also managed to achieve financial closure with in the deadline.
Even the Ahmedabad Vadodara project, which had a R309-crore premium, achieved financial closure.
The Pali-Beawar-Pindwara which had R251 crore premium, achieved financial closure for L&T.
Though the ministry had admitted that slowdown is making BOT projects less attractive for bidders and EPC projects are more viable for the contractors, the official said the ministry is aware of the fact that financial closure is a major issue which contractors are facing coupled with poor lending mechanism that is hurting investments in the sector equally.