Govt to revive PPP projects in highways sector

Ministry of Road Transport and Highways has set up a sub-group to rejuvenate public private partnership (PPP) projects in the highways sector. Highway construction by the private sector on PPP model has come to a halt in the last couple of years and the government is in the process of reviving them.  

The ministry is looking at further ironing out provisions in the model concession agreement for award of PPP projects on build, operate and transfer (BoT) toll model.  

The model, which was used widely almost a decade ago has now taken a backseat as the transport ministry and the National Highways Authority of India (NHAI) are funding the highway projects via sovereign resources and borrowings.  

The sub-group has held one meeting. A government official told BusinessToday.In, "The group is examining the policy interventions needed to de-risk the PPP highway projects for the highway sector." The group comprises top officials from the ministry, NHAI as well as representatives from the highway builders.   

Maintaining that deliberation on various policy measures is currently ongoing, the official said the government wants to ensure that risk sharing is not skewed against the PPP players.  

These measures will be in addition to the policy changes that have already been brought about in the model concession agreement last year. As per the revised provisions, the revenue potential of a BoT (toll) project will be revised every five years during the concession period against ten years earlier. Post the reassessment of the revenue potential, the concession period of the project will be reworked to ensure adequate cash flow to the concessionaire.  

Yet another change that has already been introduced in the concession agreement is that the BoT toll projects will be awarded only after 90 percent of the land needed for the project has been acquired for the project.  

In fact, after implementing the changes, the NHAI invited bids for two BoT (Toll) projects in West Bengal. The bids of both projects were opened last week. The projects are six laning of Panagarh-Palsit (67.75 km) and Palsit to Dankuni (63.83 km) in West Bengal. Sources indicate that private sector has evinced interest in the project and acknowledge that the interest from the industry is owing to the investor-friendly policy changes being implemented in the sector.

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