Govt aims to award contract for 12,000km highways by June ’10

Govt aims to award contract for 12,000km highways by June ’10
The Economic Times, November 5, 2009, Page 10

Our Bureau NEW DELHI

WITH the government ready to make the bidding process for infrastructure projects more investorfriendly, the road transport and highway ministry is hopeful of awarding contract for 12,000 km of highways by June 2010. The ministry, however, will miss the target date of March 2010 for completing the awards as the “irritants” in the bid documents had kept away serious investors.

“There has been a delay in awarding the contracts. Now that big irritants (in the bidding process) have been removed, we will be able to award contracts for 11,700 km of highways by June next year,” road transport and highways minister Kamal Nath said here at the Economic Editors’ Conference.

The proposed highway development would require an investment of close to Rs 1,00,000 crore.

The minister pointed out that the cabinet committee on infrastructure (CCI) had accepted the recommendations of BK Chaturvedi committee, which addressed problem issues like exit clause and conflict of interest clause that prevented a special purpose vehicle (an entity created by two or more companies) for bidding for a project if it had more than 5% stake in any other SPV also bidding for the same project. The Chaturvedi panel recommended increasing the cap to 25% in a bid to allow more developers to participate in the country’s over $80-billion highway sector. “We have now decided to correct the conflict of interest clause which will attract more private firms. The matter has been referred to law ministry,” he added.

The minister also said that an empowered group of ministers (EGoM) would meet later this month to explore financing options for highways projects. The panel would see how external commercial borrowings (ECBs) can be accessed for the road and highways sector at easier terms.

The minister said that government had set a target of building 7,000 km of highways annually or 20 km a day. Following consultation with state chief ministers, the Centre has proposed to set up committees under the chairmanship of state chief secretaries to expedite the process of land acquisition for highway construction.

“We have decided to reduce land acquisition time to eight months from 18 months now. In the May-September period, we built 6.5 km a day. In July, 10 km of highways were constructed, but the process slowed down due to the monsoons. Slowly, we are heading towards 20 km a day,” Mr Nath said.

The ministry has also created an expressway division within National Highways Authority of India (NHAI) to spruce up high-speed highway corridors in the country. It has proposed to set up expressway authority on the lines of the existing apex highway development body.