Parekh seeks independent regulator for road sector

Parekh seeks independent regulator for road sector
The Economic Times, December 03, 2009, Page 7

Our Bureau MUMBAI

DEEPAK Parekh, chairman, HDFC has called for extensive reforms in the road sector including setting up of an independent regulator and removal of ceiling on returns for private sector investment in highway projects.

Speaking at an IDFC Investor Conference on Monday, Mr Parekh , who is also the chairman of IDFC, said “Institutional reform of National Highway Authority of India is essential to make it more effective and enhance its capacity to undertake public private partnership projects. Some of the measures that may be considered are appointment of independent directors, decentralisation of operations by devolving more powers to regional offices, and strengthening its internal cadre”. Describing the present pace of road-building in India as `anaemic’, Mr Parekhsaid that significant time delays occur in the bidding process.

India has one of the world’s largest highway development programs to be implemented on a PPP basis. Under the National Highway Development Project the government has taken up the target of constructing more than 54,000 km of highways. At present around 20% of the target has been completed at the rate of 3 km a day. The other four-fifth is targeted for completion in the next five years at the rate of 20 km per day or about 7000 kms a year.

“Achieving such ambitious targets against the anaemic pace of highway development over the last 2-3 years will entail eliminating major constraints to PPP in roads. One of the primary reasons for the slowdown was the premature attempt to control private sector returns on road investment by capping the upside revenue potential due to higher-than-projected actual traffic. “ he said.

“Going forward, this program would rely heavily on private sector funding. Combine this with the fact that there is a proven track record of public-private partnership in the roads sector through the toll and the annuity model, and it becomes very clear that the roads sector provides tremendous opportunities that no can afford to miss - may he be a contractor, a banker, or an investor” said Mr Parekh.