India needs to invest Rs 200 crore everyday for the next 20 years for road projects under NHDP and requires an efficient financing plan to meet this objective, says a Parliamentary panel.
Going by this, the government would have to raise a whopping Rs 73,000 crore every year for the next two decades.
"...Quantum of financial resources required for implementation of highway projects is significantly high.
"An estimated investment of Rs 200 crore is required everyday for a period of 15-20 years," the Committee on Estimates said in its report on National Highways Development Project (NHDP).
NHDP is the country's largest road project to develop and improve the network of over 70,000 kms of national highways.
Since the government resources are not enough for such capital intensive activity, "an efficient financing plan mobilising all resources needs to be worked out to ensure steady flow of funds", the panel said.
The need for such a plan assumes significance in the wake of public-private-partnership (PPP) mode being preferred for highway construction. Under PPP, "highways concessions have tenures extending up to 30 years and they need loan facilities for up to 75-80% of such tenure," it added.
"Since both the capital market and institutional mechanisms appear to have constraints in providing long-term structured sources of funds, private investors pick the project selectively as they find it difficult of access of capital," it said.
The committee said it is of "firm opinion that the government intervention is not only desired but also indispensable to enable faster capital inflows and resource mobilisation".
For availability of long-term debt, the committee in its report said that the Ministry of Finance is already pursuing the matter.
"In this regard, the committee are of the firm opinion that the government intervention is not only desired but also indispensable to enable faster capital inflows and resource mobilisation in this infrastructure sector," it said.
Agreeing with the suggestions in the World Bank report on Financing Infrastructure, it said there is a need for specialised infrastructure institutions such as Infrastructure Leasing and Financial Services (ILFS) and Infrastructure Development Finance Corporation (IDFC) to participate at the design stage/DPR stage of a project.
Incidentally, Prime Minister Manmohan Singh will be inaugurating a conference on "Public Private Partnership [PPP] in National Highways" here tomorrow with a view to encourage private sector investments in the highways sector via PPP mode.
