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We have made PPP attractive: Nitin Gadkari

Interview with Union minister of roads and highways

Nitin Gadkari
Sanjay Jog Mumbai
Last Updated : Apr 30 2015 | 1:55 AM IST

The road sector faces constraints owing to subdued private sector funding and the National Highways Authority of India’s inability to cover the shortfall. Union minister of roads and highways Nitin Gadkari tells Sanjay Jog about the government’s strategy to boost development of roads and highways. Excerpts:

How many road projects will be awarded by NHAI during the current financial year?

We are looking at a combined target of 9,000 km for award through all our implementation agencies which include the NHAI, National Highways & Infrastructure Development Corporation and state public work departments. We are looking at a large portion of the award in public-private partnership (PPP) mode, including the hybrid model in which we have come out with a new risk-sharing framework.

Is NHAI also inviting fresh bids for 9,000-km road projects, which were cancelled earlier?

Fresh bids would be invited for all viable lengths, which were cancelled earlier. Most of the projects cancelled were in the National Highways Development Project programme and they would be re-bid.

Don’t you see that with subdued private sector funding, NHAI's inability to cover the shortfall will be a key risk to the roads growth story?

Road would remain the largest mode for the logistics sector in the near future and we are confident of attracting investments into the sector. With the new risk-sharing framework, in which the private sector has to take only the risk that it can influence, we have made PPP attractive.

Why has there been limited number of private developers? What efforts are being made by your ministry to change this picture?

Many insurance, pension and sovereign wealth funds have shown interest in India’s renewed economic growth. These funds have a long-term horizon in terms of their return expectations. We would devise instruments, which would attract their investments, too.

How will the hybrid funding model increase developers’ participation in road projects?

Hybrid model incentivises contractors to build high-quality roads in the fastest possible pace. Their returns are commensurate with increased construction completion efficiency and reduced maintenance cost. Hence, this will attract developers who are able to bring in the above-mentioned efficiencies.

Some lenders have decided to put 27 projects on the block and substitute the existing concessionaires. Most of these projects are 20-70 per cent complete. What is your take?

It is the right of the lender to substitute the existing concessionaire, if the performance is non-satisfactory. We are hopeful that these projects would also come to completion at the earliest possible time frame.

Is government contemplating a new toll policy?

Yes, the government is working on a new toll policy. I would be able to share the details only after the Cabinet approves the same.

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First Published: Apr 30 2015 | 12:44 AM IST

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