The Hindu Business Line : Ministry lays the road for global players with mega projects

These will involve contracts running to Rs 4,000-5,000 crore and building highways of over 500 km. The concession period of the projects will be in the 30-50-year range.

“The idea is to bring international best practices, contractors and investors into the Indian highways sector,” the Minister of Road Transport and Highways, Mr Kamal Nath, told Business Line.

The Ministry would like to initially take up six-laning of the 558-km Kishangarh-Udaipur-Ahmedabad section on a design-build-finance-operate-transfer basis. The estimated cost of the project — proposed on a pilot basis — is Rs 4,284 crore. It will need large initial investment, but will also have a longer concession period of 30-50 years.

Foreign contractors

“The experience requirement for such a large project will obviously be higher. But when a foreign contractor comes in, he brings in the best practices — innovative materials and new technology. There will be key learnings for the Indian players involved in the project,” Mr Nath said, pointing out that the foreign players will have to engage Indian firms for the work.

The Minister has been trying to woo international players — both contractors and financers — into the highways sector in the country. He has set an ambitious target to build 20 km of highways a day.

The project might also have relatively relaxed exit clauses for the concessionaire.

“Each highway project has to be treated differently. You can’t have the ‘one size fits all’ concept. A project in Bihar will have to be treated differently from a project with high traffic,” Mr Nath said.

The mega project will require Cabinet approval. Earlier, the NHAI was planning to take up six-laning of the Kishangarh-Udaipur stretch (315 km at an estimated cost of Rs 2,534 crore ) as one project and the Udaipur-Ahmedabad segment (235 km at Rs 1,750 crore) as another.

Both the projects had received approval from the inter-ministerial public private partnership appraisal committee.

But the bids for both the projects were cancelled as the bidders had sought higher levels of government subsidy (viability gap funding) than what is permitted for four-to-six-laning of highway projects.

To meet the target of building 20 km of highways a day, the Ministry has decided to step up the quantum of contracts. A work plan has been formulated to award 12,000 km this fiscal and 11,000 km in the next. About Rs 98,173 crore will be required to implement developing 12,000 km of highways.

Related Stories:
PM sets up committee to fast-track road projects
Target of 7,000 km of road will not be met: Kamal Nath

More Stories on : Roadways | Infrastructure | Outlook

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Ministry lays the road for global players with mega projects