BOT News: UP highways on public-private-partnership model
May 10, 2013
Pankaj Shah, TNN
LUCKNOW: The Uttar Pradesh state government is in talks with potential bidders to develop 11 state highways, in what could be a big push to its mandate to develop road connectivity across the state.
It has been proposed that the highways will be developed by Uttar Pradesh State Highways Authority (UPSHA) on the public-private-partnership (PPP) model.
The prominent projects included the Shahjahanpur-Hardoi-Lucknow State Highway, Basti-Mehendawal-Tamkuhi road, Akbarpur to Jaunpur, Mirzapur and Dudhi Road, Gorakhpur to Maharajganj Road and Muzaffarnagar to Saharanpur via Deoband Road.
The state government has also clarified doubts of prospective bidders for the Agra to Lucknow green-field expressway. The ambitious access-controlled Agra to Lucknow six-lane, eco-friendly green-field expressway is to be constructed on a minimum distance and minimal agricultural land formula through the PPP mode.
Earlier on 24 April, the government held a pre-application conference for the Agra to Lucknow project in New Delhi where 15 prominent developers including GVK, GMR, ESSEL Infra and IL&FS Transportation, among others participated. The project will be developed at an estimated project cost of Rs 9,600 crore on Build-Operate-Transfer (BOT) model, for a 30-year concession period.
The Agra-Lucknow expressway expects to offer a smooth link between Greater Noida and Lucknow via Agra covering a distance of about 270 kms.
http://timesofindia.indiatimes.com
Govt’s pre-fixation with PPP not good for infrastructure: Parliamentary Panel
May 10, 2013
PTI : New Delhi, Sun May 05 2013,
Urging the government to come out of “pathological prefixation” with public-private-partnership (PPP) model, a Parliamentary panel has asked it to build through budgetary support all highways where bidders have failed to respond.
“PPP as a model for the development of road project needs to be reviewed seriously in the light of our experience so far in this regard. That private capital is mainly for profit is borne out by the fact that the profitable projects are being bid out fast,” Standing Committee on Transport, Tourism and Culture has said in its latest report.
Committee Chairman and CPI-M MP Sitaram Yechury said: “Unfortunately the government has pathological pre-fixation with PPP which is hindering infrastructure development in the country as driven by the objective of profit, private sector is not coming forward to bid for unprofitable projects.”
Stressing upon the need for government’s thrust on infrastructure Yechury said: “No other country whether USA or China depended on private sector for building its infrastructure unlike India. Unfortunately the allocation has been reduced drastically for infrastructure as Planning Commission is encouraging private partnership.”
He said only such projects were bid out in the PPP mode where profit is envisaged, asking as to how there was no response for 13 bids invited by the NHAI last year. The report said that a vast country like India needed faster connectivity to its length and breadth and should “adopt an alternative model of project development which is development driven and not profit driven”.
It added: “Since profitable projects are sold out first, the government is facing problems in getting bidders for such non-profitable road projects as those in Left Wing Extremist and North-East Areas.”
Emphasising that India needs faster construction of roads, the Committee recommended that “all such projects without bidders should be developed with the budgetary support from the government and the Planning Commission needs to be more practical and careful about its role and function”. National Highways Authority of India (NHAI) had set a target to award projects for 7,464 km of roads during the last financial year, of which only projects worth 879 km could be awarded.
Source – http://www.indianexpress.com
Bansal woos private players for rail projects
April 29, 2013
(Railway Minister Pawan Kumar Bansal today invited private companies to participate in ventures including the Dedicated Freight Corridor (DFC).)
NEW DELHI: Highlighting tremendous scope for private investments in rail projects, Railway Minister Pawan Kumar Bansal today invited private companies to participate in such ventures including the Dedicated Freight Corridor (DFC).
Govt for independent regulators to promote PPP projects
April 29, 2013
By PTI | 29 Apr, 2013,
NEW DELHI: The government today made a case for strong independent regulatory authorities to promote Public-Private Partnership (PPP) projects in sectors like coal, road and rail. “We do not have enough independent regulators… Their terms of reference are not properly defined to meet all the challenges that the sectors are facing. “The regulatory authorities have to be empowered and they have to be given enough authority to be able them to deal with the issues which are arising on the regulatory side,” Economic Affairs Secretary Arvind Mayaram said at a Ficci event here. Budget 2013-14 has proposed formation of a new regulator for road sector and in Rail budget there has been a announcement for tariff regulator. “The coal regulator which was earlier announced is also likely to come up this year. We are gng to see some more regulators coming in,” he said. Mayaram said there was a need for re look at the existing regulatory authority and ways to further empower them. “We need to look deeper to create more regulatory authorities independently. The independent entities to be able to look at problems — independent of the government and other party,” he said. Referring to the problems being faced by PPP projects, Mayaram said the government cannot bailout projects which fail due to commercial reasons. However, he added that the government should step in if the failures are on account of regulatory hurdles. “We need to make ours distinctions between these two. Wherever it is commercial failure, the private sector must take the hit, wherever there is a regulatory failure government must step in,” he said. The distinction between the two kinds of failures is necessary, Mayaram said, adding otherwise the PPP “will run into another kind of problem… the government (being) accused of crony capitalism. Effort should be to salvage the projects and not allow anybody to fail”
Source-http://economictimes.indiatimes.com
Operators cock a snook at toll rules
December 24, 2012
The Ministry of Road Transport and Highways (MoRTH) has finally woken up to the gross violation of the toll agreements with concessionaires, who are collecting road tax on 17 major “under-construction” highways in violation of rules.
The amended notification of 2009 bars toll collection on incomplete highways. The flouting of rules came to notice from projects like Gurgaon-Kotputli-Jaipur, Delhi-Agra, Varanasi-Aurangabad and the Pune-Satara national highways.
Ironically, the violation of the Central Government’s notification is taking place under the garb of “technicality”. While the Government rules specifically mention that no toll can be imposed on the under-construction road projects, developers have started collecting toll. At present, there are 212 toll collection centres across the country under the National Highways Authority of India’s (NHAI) various projects based on PPP, BOT or OMT model. “The collection of fee levied shall commence within 45 days from the date of completion of the section of national highway, permanent bridge, bypass or tunnel, as the case may be, constructed through a public-funded project,” says the Review (Report) of the Toll Policy of National Highways in May 2009.
The Government has notified the National Highways Fee according to the National Highways Fee (determination of Rates and Collection) Rules 2008, and the rules are amended periodically. In 2009, it was amended keeping in mind widespread protest by road users and misuse by the concessionaries of BOT or PPP. A well-placed source said that the Ministry has asked the road making agency to review the contract agreement between the NHAI and concessionaries on the 17 stretches where toll is being charged.
However, a Ministry official justified the road tax on six-lane under-construction projects with the argument that toll was collected when these roads were just four-lane ones. However, citing the 2009 amendment, another official contested the argument citing the amended notification.
There are 111 public-funded road projects which collect toll. There are 102 State-wise stretches on which tax is levied. These include the 312-km Durg Bypass on NH-6 where toll is being collected by M/s Shakti Kumar M Sancheti Limited since December 2000. On some roads like the 72-km Badarpur-Kosi on NH-2, toll is being collected since June 2002. The Ministry also received complaints of overcharging by toll operators on NH-5 in Andhra Pradesh at Laxmipuram and Sunnambatti Toll Plaza. The concessionaire was penalised to the tune of `3.6 crore in total and contracts terminated. A penalty of `1.48 crore was levied o Vantada Toll Plaza in Gujarat. The matter is sub-judice.
source: http://www.dailypioneer.com
India calls for Malaysia cos in road projects
December 3, 2012
India on Thursday sought investment from Malaysian companies in road-development projects in the country, stating that it had embarked on a massive national highway building programme. Visiting minister of state for road transport and highways, S Sathyanarayana, said India envisaged investment of upto USD 70 billion in the next five years in this field.
“About 50-to-60 percent of this programme is envisaged to be built through public-private partnership (PPP) in different types of concession agreements such as the build, operate and transfer (BoT) on toll basis and design, build, finance, operate and transfer (DBFOT) concept,” he said.
“A balanced programme is envisaged to be taken up on BoT (annuity) and engineering, procurement and construction (EPC) mode with public funding,” the minister said. “We intend to take up mega projects of longer length of about 400 to 500 km estimated to cost about USD 1 billion each and would welcome international participation and foreign direct investment (FDI),” he told reporters at the sidelines of the Asean-India Connectivity Summit.
source: http://www.moneycontrol.com
New Highway Projects boost Indian construction industry.
November 26, 2012
National Highway Authority of India (NHAI) awarded about 4,375 km of roads in first 9 months of 2012, which can be compared against 4,553 km during 2011, 3,338 km during 2010, and 643 km in 2009. Q3 of 2012 saw ~1,898 km of projects awarded. Projects for road construction sector were awarded under public-private partnership programs, and Indian construction industry is surging via flow of funds and EPC (engineering, procurement, and construction) contracts in 2012.
source: http://news.thomasnet.com
Bumps in road funding to be eased
December 3, 2009
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
May 30, 2009
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
July 28, 2006
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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