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The government has decided to fund the Rs 4,500-crore Eastern Peripheral Expressway project, after it received no bids from private players due to various delays.
The bids for six-laning of the 135-km-long expressway would now be called through the EPC route after required approvals, a senior ministry official told Business Standard.
The bidding for the project remained open for almost two months but had to be closed, as no private player put in bid, despite showing interest earlier. At the time of request for qualification (RFQ), Reliance Infrastructure, IRB, Srei-OHL consortium and IL&FS showed interest in the project but nobody turned up with price bids.
Thanks to delays, the private developers got cold feet and their calculations on revenues and margins went haywire, another official added. "But, we feel the bad patch is over now and financial markets will rise. This will allow public private partnership projects to bounce back after a low period of two years, where we did not get any bidders."
The approval for the mode change would be sought from an inter-ministerial group (IMG) and not the Cabinet, as it has already been approved by the Cabinet earlier, the official said.
Unlike the BOT (build, operate and transfer) model, the government funds the entire project under EPC (engineering, procurement and construction) and a developer undertakes the necessary construction work. BOT requires a private sector developer to raise and invest money for the construction of roads at its own risk, while National Highway Authority of India (NHAI) acquires land for the project.
The Eastern Peripheral Expressway is one of the two semicircular expressways, which will form a third ring road around Delhi. The other semicircular is the Western Peripheral Expressway. The eastern expressway would link Sonipat, Ghaziabad and Palwal and connect through national highways of Haryana and Uttar Pradesh. It was one of the major projects in private partnership mode that was cleared by the Cabinet in July last year. NHAI's expressway project have controlled access with many facilities such as ramps and lane dividers. These are built on highways with four lanes or more.
Besides, the ministry of roads, transport and highways also plans to restructure projects, which have been stuck for long via three options -- the projects might be rebid at an updated cost, it might be bid in phases and thirdly, even the mode EPC or BOT mode could be changed after prior government approvals. The process for restructuring of as many as 25-30 projects has already started in NHAI.
Due to many projects being stuck, the government recently allowed them to reschedule the payment of premiums. NHAI allowed nine projects to seek rescheduling of premium under the new policy. Premiums are rescheduled when developers cannot service their debt, operating expenditure or pay NHAI.
In 2010-12, developers had bid aggressively when the government awarded a record 147 road projects worth Rs 1.47 lakh crore. At that time, India's economic growth was much higher but it slowed down subsequently and even the input and inflationary costs have gone up since then.
Currently, road projects worth Rs 83,000 crore are pending completion. Since 2009, the United Progressive Alliance government recorded the completion of only three projects, adding just 315 km to the existing highways' network.
