Govt decides to fund highway projects

July 17, 2014

Dipak Kumar Dash, TNN

NEW DELHI: Citing no interest of private players in highway sector to pick up projects under public-private partnership (PPP) mode, the NDA government will now roll out projects on cash contract or engineering, procurement and construction (EPC) mode at least for two-to-three years.

Under this mode, government bears the construction cost where the developer gets paid for the work. The developer exits the project after building the stretches.

Announcing this on Tuesday, road transport minister Nitin Gadkari said his ministry is trying to arrange finances to take up projects on government funding or EPC mode. “Taking up more projects on public-private-partnership (PPP) is not feasible. We have to go ahead with EPC projects for at least next two years,” he added, while blaming the issues “created by the previous government”.

At present, while 160 highway projects are under implementation on PPP mode, entailing an investment of Rs 1.6 lakh crore, there is no progress in case of 65 projects. Out of these 65 projects, 28 have been terminated. CEO of a major highway construction company told TOI, “As such we have not taken any project on PPP mode in the past three years. At present, none is interested, considering the risk and prevailing market condition. We are struggling to complete the already bagged projects.”

Sensing that government has to create a huge corpus to pay for projects on cash contracts spanning over two-to-three years, Gadkari said his ministry is going to set up a corporation that will deal with financing of such projects. Gadkari added that he has already written to the Prime Minister and finance minister for getting portions of PF amount lying with the labour ministry as loan to the corporation.

Source-http://timesofindia.indiatimes.com/