Bring in pension, insurance funds for roads: Nitin Gadkari

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New Delhi | Published: April 8, 2015 1:32:25 AM

Says more ports will be built at an estimated investment of R16,000 crore

With highway projects continuing to face problems under public-private partnerships and the old EPC model having been revisited, the government will try and address a big equity constraint with foreign pension and insurance funds. Stating this at a CII event, transport and highways minister Nitin Gadkari said the pace of road construction has already risen from 2 km a day when the NDA government took over 10 months ago to 12 km, adding that in another year the country would be adding 30 km of new roads to its transport network daily.

The minister added that more major (government-sector) ports will be built, including two already announced in West Bengal and Andhra Pradesh, at an estimated investment of R16,000 crore. This will take the number of major ports to 17.

The roads sector will get the bulk of the R70,000 crore additional budgetary boost to infrastructure, with an allocation of R40,000 crore, he said.

While banks are still to show an active interest in giving fresh advances to highway projects that had slowed down since early 2013, revival of the PPP model, which the government says would remain its first option, hinges also on foreign funds.

The Insurance Act passed by Parliament recently that inter alia hiked the foreign investment limit in insurance to 49% is expected to give a fillip to the under-capitalised sector, and catalyse translating savings into investments, including in the infrastructure sector.

Gadkari said the Inland Waterways Bill to convert 101 rivers across the country into transport channels would be introduced in Parliament on April 20. He said the existing five inland waterways would be developed on PPP mode next year. “One is Ganga, which flows from Gangotri to the Bay of Bengal via Haldia. The other is Mahanadi of Odisha, which is in a coal mining area. The third is Brahmaputra. The fourth is Buckingham Canal which links Tamil Nadu with Andhra Pradesh and the fifth one is in Kerala,” he said, adding that waterways would cut transport cost by 30%.

With PPP projects in highways struggling, the UPA government had, during the last leg of its tenure, tried many incentives to revive the interest of promoters and lenders in the sector. These included easier exit option for developers from projects that faced huge slippages in toll collections, classifying lending to toll road projects as secure and a rescheduling of the premium payments to the National Highways Authority of India for the benefit of some troubled projects. However, the PPP segment continued to languish, forcing it to award EPC contracts aggressively.

Stating that inland waterway ports would be built on the pattern of airports, Gadkari said the first such port would come up at Varanasi.

According to the minister, the PPP model is more viable in the waterways sector than in the road sector. The proposal has been conceived to reduce dependence on land transport, which leads to huge emissions of carbon dioxide and carbon monoxide and inflates India’s oil and gas imports bill, around Rs 8 lakh crore annually. Waterways would also save logistic costs, a critical input to industry and manufacturing, the minister said. “While in China around 47% of goods and services are moved via water, the corresponding percentage in India is a dismal 3.3%,” he said.

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