Rs 1 lakh cr for 12,000-km road projects: Nath

Rs 1 lakh cr for 12,000-km road projects: Nath
The Economic Times, July 11, 2009, Page 1 & 7

ET Bureau, MUMBAI

The government plans to invest around Rs 1,00,000 crore to build about 12,000 kilometres of roads this year mainly through the toll-based
model, with options to bring in foreign investors, Union minister for roads Kamal Nath said on Friday.

In the move to bring in foreign investors, the ministry of road transport and highways, along with ICICI Bank, is planning to conduct international road shows in Asia, Europe and the US.

Speaking at a conference in Mumbai, Mr Nath said: “Road projects in the country require around Rs 2,00,000 crore over the next three years for which we are considering innovative financing instruments that will fund road projects and attract domestic and foreign investors.”

Efforts are also being made to involve all possible investment channels, including pension funds, sovereign wealth funds, equity funds, besides funds from banks. The minister has already announced measures to boost road and highway connectivity—at the rate of 20 km daily—to India’s existing road network of 34 lakh kilometres.

However, Mr Nath ruled out the possibility of forming Road Financing Corporation on the lines of Power Financing Corporation, unless it provided substantial benefits for solving investment-related problems of the road sector.

The priority of the government is to have 60% of the projects on the toll-based revenue model, while the remaining would be on annuity and engineering-procurement-construction contract models.

Mr Nath said the prime focus will be on toll-based model for these road projects and would build specialised tolling companies, similar to that in developed countries.

Referring to the issue of land acquisition—a sticky area in various states—Mr Nath said the land acquisition process has not been efficient and has been one of the biggest challenges for completion and cost overruns.

Mr Nath said the National Highway Authority of India will invite bids only for those projects for which 80% land has been acquired. The minister also warned that projects stuck on continued land acquisition front could be abolished and asked state chief ministers to support road development projects.