Govt dumps PPP for road projects

July 17, 2014

 Citing no interest of private players in highway sector to take 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 2-3 years.

Under this mode, government bears the construction cost and developer exits the project after building the stretches. So, the developers have no risk in executing such projects unlike the PPP ones.

Announcing this on Monday, road transport minister Nitin Gadkari said that 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 imple

mentation 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 and fate of another big project is likely to be decided very soon.

The CEO of a major highway construction company told TOI, “As such we have not take 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 2-3 years, Gadkari said that his ministry is going to set up a corporation that will deal with financing of such projects.

Gadkari on Monday said that he has already written to the Prime Minister and finance minister for getting portions of huge amount PF lying with the labour ministry as loan to the corporation.


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