Delay in approvals by the public-private partnership appraisal committee (PPPAC) has hampered the National Highways Authority of India (NHAI)’s plan to award 7,800 km of road projects this financial year.
“PPPAC, at its meeting last month, did not clear around 1,600 km of road projects and left a note saying the appraisal note was awaited from the Planning Commission. Why do we need an appraisal note from the commission to clear projects?” asked a senior NHAI official, who did not want to be identified.
PPPAC, headed by economic affairs secretary, is an inter-ministerial committee that approves infrastructure project involving viability gap funding.
Till January-end, NHAI awarded 4,200 km of road projects. “We would have easily awarded 7,800 km this year, if the PPPAC had cleared the projects. Now, we will have to close the year by awarding 6,200 km of projects,” the official added.
NHAI, however, has picked up pace in awarding projects under new road transport minister C P Joshi. The highways authority that awarded 4,500 km of road projects last financial year will be able to award 6,200 km of projects by the end of this financial year.
The authority awarded over 3,100 km of road projects in the first four months of 2011-12. It was also expecting to cross the 9,000-km mark by the end of this year.
Under Joshi, NHAI had decided to make the bidding process less complex by making a request for qualification document valid sfor a year. When the procedure comes into force, road developers will be able to save the six months that goes into preparing the document every time they place a bid.
The authority has awarded 21 of 33 projects on a premium. The premium income from these 21 projects would be around Rs 3,000 crore a year and would increase by five per cent every year till the concession period ends — usually 25 to 30 years.
With the increase in premium income, the highways authority has said its borrowing needs will come to around Rs 100,000 crore and it will have to borrow Rs 83,000 crore by 2030-31, much less than the earlier borrowing estimate of Rs 191,000 crore.
If a company offers a premium, it means it is committing to an annual payment to the government over a period of time, instead of seeking a grant for building a road. Companies bid a premium if they are confident the toll revenue accruing would more than offset their costs.
