To get roads built at a faster pace, the government will continue to depend on the engineering, procurement and construction (EPC) route at least for the next one year, even as efforts would be made to attract private investment through the public-private partnership (PPP) model.
“Last year, about 8,000 km of road projects were awarded and of that, about 7,300 km was on EPC model. Similarly, of the 10,000 km to be awarded this year, 7,000 Km would be on the EPC model. And I suspect this broad ratio would continue in the next year also,” said road secretary Vijay Chhibber at an event in New Delhi on Monday. He expects 12,000 km of road projects might be awarded next year. Projects for about 7,500 km of roads would be undertaken in FY17.
Building highways through the EPC model has an inherent advantage for early and smooth completion, since the government bears the entire financial burden unlike in the PPP projects, where money, partly or entirely, has to be brought in by the concessionaire.
After the initial hoopla, PPP projects in India lost its sheen in the last few years facing host of issues that include delay in land acquisition and other clearances. However, sensing that the PPP model was a must to revitalise the pace of road building, the government has, in recent times, taken a slew of measures to lure the interest of the private parties. It also acknowledged the add-on that private parties bring in terms of technology and innovative design.
Apart from coming in with new ideas in the form of the hybrid annuity model, in which it would contribute 40% of the project cost in phases, the government has also eased the exit policy, rescheduled the premium payable to the government and come out with a provision of one-time fund infusion to bail out the stalled projects. It has also brought in several amendments to the model concession agreement.
Chhibber said tenders for three road projects to be built on the hybrid annuity mode have already been out and an additional 17 would be brought out within the current fiscal to build around 2,000 km of roads in the current fiscal.
Though the road ministry has identified around 6,000 km of highway projects for monetisation, it would not put more than three-four projects stretching around 300-400 km in the current fiscal as it “does not need more money”.