The Hindu Business Line : Highways and ports fall victim to turf wars

Over the last five years, Mr T. R. Baalu, the Union Minister of Shipping, Road Transport and Highways and his team could have done much more. But they will probably say that they spent most of their time to sort out several issues with the Planning Commission. They were, after all, getting their approvals from the Committee on Infrastructure (CoI) for the contract documents which alone could be used for bidding out projects — in both ports and highways.

The CoI, which was set up in 2004 under the Chairmanship of the Prime Minister, had its secretariat in the Planning Commission. So on issues where the Ministry and Planning Commission disagreed, the Ministry faced opposition from the Planning Commission even in the CoI. This, says the Ministry, slowed things down hugely.

In the UPA regime, the National Highways Authority of India (NHAI) awarded contracts for upgrading less than 10,000 km of National Highways.

However, the target for just one year, 2007-08, had been 7,000 km. For 2008-09, it was about 10,600 km. This shows the massive shortfall. Indeed, in 2008-09, they managed only 638 km.

Frequent interferences

So what really plagued the ambitious National Highways Development Programme (NHDP)? Quite simply, as a judgment of the Delhi High Court put it, frequent interference in NHAI’s affairs by the Ministry, and interference by the CoI in the Ministry. In short, the UPA regime weakened the NHAI as an institution.

Nothing illustrates this better than the fact that in just about two-and-a-half years, the NHAI saw five chairmen. Moreover, for a large part of the five-year period, the top three technical posts of the NHAI did not have full-time members.

The scene on the policy front was worse, if anything. The critical elements for highway projects are the request for qualification (technical qualification bids); the model concession agreement comprising request for proposal (financial bids), toll rules; and standards and specifications for roads.

During the last five years, at any given point, the Government spent majority of its time building consensus on either one of the documents.

And even if one document was ready after much tussle between the Ministry and the Planning Commission, the subsequent months were spent changing some part of the document because one of the stakeholders including the industry had issues with the provisions.

‘New MCA’

For example, consider the new model concession agreement (MCA) for build-operate-transfer (BOT)-toll projects. In early 2005, the Planning Commission, with inputs from across Ministries, including the Highways Ministry and the NHAI, embarked on a project to prepare a new MCA. It was only towards the end of 2006 that the NHAI got some semblance of the ‘new MCA’.

But, by mid-2007, a new model request for qualification (RFQ) document had come into place, which was not acceptable to the road developers. So, in late 2007, when the NHAI tried to implement the new RFQ, the developers moved court.

By end-2008, the tables had turned and the road developers just did not come forward to submit bids in most of the highway projects.

When this Government started off in 2004, the NHAI did have an MCA earlier to award BOT projects. About 33 contracts to develop 2,000 km of highways had been awarded using the old MCA. But the MCA was being revised to bring in better practices and the NHAI was asked not to bid out projects using the old MCA in the interim period.

In a nutshell, turf wars cost the country dear.

Same fate for ports

Where ports are concerned, there was more-or-less a similar story. The Government’s attempt to finalise a ‘revised’ MCA took about two-and-a-half years — primarily due to tussle between the Shipping Ministry and the Planning Commission. It was finally approved in January 2008.

During that period, the Ministry was asked not to proceed on inviting bids for new projects till the new MCA was ready.

Subsequently, when the ports started bidding process for various expansion projects, the same model RFQ (which had plagued the highways sector) was taken to court.

As for mega projects in the shipping sector, the Government had announced plans to set up large shipyards (one each in the East and West cost) and a mega dredging alliance. As Mr T. R. Baalu signs off, they will stay just that — plans.

On the UPA Government’s mega efforts to finalise the new MCA while not letting the work to go on as usual, a former, top bureaucrat, who has been at the receiving end, had said, “Suppose you are hungry (for additional infrastructure). What you currently have for meal is a chapatti (old MCA) and you are trying to get a better, tastier meal — a cake (new MCA). Now, what will you do till you get the cake? Eat the chapatti or die of hunger?”

This is seventh in the series of articles assessing the UPA Government.