Bumps in road funding to be eased

NEW DELHI: The government is exploring ways to improve flow of funds to developers executing road projects by making funding of such projects
attractive for financial institutions, including insurance companies.

The panel on highway development, headed by the Planning Commission member BK Chaturvedi, is now working on the second part of its report on expediting work on the ambitious National Highways Development Project (NHDP).

“We have sorted out funding issues of the NHAI through cess and government guarantees, at least for one year. Now we have to look at the issue of financing of people who are building the roads,” Mr Chaturvedi said in an exclusive chat with ET.

The government has already accepted Chaturvedi panel’s recommendations on relaxing the norms for public-private projects (PPPs) in the road sector, continued funding of National Highways Authority of India through road cess collection and government guarantee for its borrowings.

The government has set a target of constructing 7,000 km of road annually, which translates into building 20 km of roads a day. It is planning to hand out contracts for nearly 12,000 km of highways to private developers in the next one year.

“We are examining what kind of safeguards are required to make insurance companies lend to road projects,” he said, adding that they would want the government to share risk and also give guarantees that the debts would be repaid.
The panel is still in the process of collecting information from the industry and other parties concerned and hopes to finish its report by January-end.

The government has decided to guarantee NHAI’s borrowing for the current year. The financing of NHAI in the years to come is yet to be decided. “ The empowered group of ministers set up on road financing will look at how the funding requirements of NHAI will be handled in the following years,” Mr Chaturvedi said.

Although NHAI does involve the private sector to fund projects through the build operate and transfer (BOT) mode of finance, it has its own financing needs as well.

NHAI has to invest in all projects carried on EPC or cash contract basis, which is the standard financing format in the North East and J&K where private players are not too keen to take risks because they are commercial unviable in these areas.

NHAI has to make some investments even in projects that are handed out to private road developers through the build operate transfer (BOT) basis to the extent of making them commercially viable, through what is called viability gap funding.

It has to pay an annual annuity to developers under the BOT annuity option and provide capital grant to increase viability of projects under the BOT toll option where private developers are allowed to collect toll for recovering costs and earning profits.
Source: economictimes.indiatimes.com

Overhaul policy to remove roadblocks: Nath

Taking over as the new surface transport minister today, Kamal Nath said regulations around India’s road network will be overhauled. The minister also promised to change the physical landscape of the country’s transport infrastructure in due time. “I have been given a challenging task,” Nath said, adding that, “We need to look at the old regulatory framework in an entirely new way and that will call for a complete change of mindset.”

“Policies cannot be measured…there can be a number of policies. But roads and highways can be physically measured. This is a major infrastructure area. Results will be seen,” said the minister who had the commerce and industry portfolio in the previous government.

Nath said he would bring in structural changes in the system and procedures of awarding contracts to private players. The public private partnership (PPP) models worked out by the ministry, the National Highways Authority of India (NHAI) and the Planning Commission, have failed to attract interest among the bidders. Most of the projects, together worth Rs 70,000 crore, could not be awarded.

“If you have a model of PPP which nobody responds to, you have a model which is not workable. If you want progress, you would have workable models. This is the most important thing,” the minister said.

Nath, who was minister for commerce and industry in the previous government, said he will work towards meeting the challenge of providing stimulus to the economy through developing roads and highways.

“With the current global recession and the (slowdown) in the country, it is important that this (development of roads and highways) provides economic stimulus, this provides jobs and this is going to the biggest challenge,” he said. His ministry will also look at the impediments in implementing plans for infrastructure development in the country, Nath said.

Source: indianexpress.com

Jharkhand hoping PPPs will attract investors

Jharkhand is yet to see the concept of public-private partnership (PPP) take off in any form, especially on its 7,000-odd km network of roads and bridges. The state has not itself tried out the concept; it has seen the National Highways Authority of India (NHAI) thrice floating tenders for the Ranchi-Barhi road on a build-operate-transfer (BOT) basis without evoking any response from the private sector. And the Barhi-Ranchi stretch is said to be the state’s highest traffic corridor!

“Let’s see what happens here (at the PWD level), as we are going to launch the concept in the state soon,” said an apprehensive senior road construction department bureaucrat. Says DK Tiwari, secretary of the department: “We are now seeking to get some roads on that (PPP) basis.”

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First edition of e-Magzine – Editorial

Dear Reader,

We are glad to bring out the first edition of this e news magazine bringing you the latest news on the developments of BOT projects in India.

As you are all already aware that the future of road construction in India is going the BOT way . Not only the NHAI , but even the state governments such as the Government of Punjab through PIDB and Madhya Pradesh Government through MPSRD has come out with no. of BOT projects .

Apart from Road Projects even Check Post Management has gone the BOT way with state governments such as the NEW DELHI already having implemented and KERELA and RAJASTHAN in the planning stage to go for BOT projects for CHECK POST MANAGEMENT.

With this magazine we hope to bring together companies and professionals in BOT road projects to share news ,views ,problems and solutions through a platform which will bring together best of the industry through a forum for sharing thier knowledge .

Also we hope to use this a medium for recruitment of High skill professionals having experience in managing different aspects of BOT projects by the leading BOT concession companies.

Last but not the least we want to constantly educate the concessionaires about the latest in Tolling and Traffic Management Technologies offered by Metro Road Systems and its global partners –Kapsch Trafficom , Austria.

We would really appreciate constructive and critical feedback on this maiden venture in the Industry.

In the next issues you can look forward to :

1. Articles from renowned people in Industry
2. Web Chat with experts on Hot topics concerning industry
3. Lot of illustrations and pictures

Thanks and Regards,
Sachin Bhatia
Chief Editor ,
METRO ROAD TIMES ;
sachin@metroroadsystems.com

NHAI's First ETC(Electronic Toll Collection) PLAZA

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