​​​
  1. A new route map for roads

A new route map for roads

Given how road construction activity has slowed down over the past couple of years...

By: | Updated: February 20, 2015 4:22 AM

Given how road construction activity has slowed down over the past couple of years, the government’s new version of the public-private partnership model is probably what the sector needs, reports fe Bureau in New Delhi. The new “hybrid annuity” model envisages developers contributing 60% of the investment and the government bringing in the remaining 40%. The government will also acquire 90% of the land, estimate traffic and collect the toll, which means developers will be spared the uncertainty over revenues as also the task of collecting the toll.

In return for constructing, operating and maintaining the roads, concessionaires will get from the government a biannual annuity and a fee. If that sounds somewhat similar to an engineering, procurement and construction model, it is.

g3

The model also builds in a bigger penalty for any delay on the part of either the government or the concessionaire in meeting their commitments. There is a time limit of one year for terminating a project if either the government or the builder fails to fulfil its obligation, preventing the project from getting off the ground. Minister for road transport, highways and shipping Nitin Gadkari believes the mechanism would be a transparent and time-bound one and would revive interest from the private sector. The ministry failed to attract bidders for close to two dozen projects entailing an investment of Rs 27,000 crore in FY13 and FY14. The National Highways Authority of India has been bidding out more projects via the EPC route since these do not call for large equity contributions from promoters.

In return for constructing, operating and maintaining the roads, concessionaires will get from the government a biannual annuity and a fee. If that sounds somewhat similar to an engineering, procurement and construction model, it is.

The model also builds in a bigger penalty for any delay on the part of either the government or the concessionaire in meeting their commitments. There is a time limit of one year for terminating a project if either the government or the builder fails to fulfil its obligation, preventing the project from getting off the ground. Minister for road transport, highways and shipping Nitin Gadkari believes the mechanism would be a transparent and time-bound one and would revive interest from the private sector. The ministry failed to attract bidders for close to two dozen projects entailing an investment of Rs 27,000 crore in FY13 and FY14. The National Highways Authority of India has been bidding out more projects via the EPC route since these do not call for large equity contributions from promoters.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Go to Top