Highway projects to hit the fast lane

Highway projects to hit the fast lane
Hindustan Times, HT Business, November 18,, 2009, Page 23

The government is formulating a new set of guidelines and rules to put the country’s highway development on the speedway.

The cabinet committee on infrastructure, headed by Prime Minister Manmohan Singh, has given ‘in-principle’ approval to a host of measures, including empowering the National Highways Authority of India (NHAI) to raise funds directly from the public and institutions by floating tax-free bonds.

The government has also assured the body that the cess on diesel and petrol will continue for 20 years.

The government currently imposes a cess of Rs 2 on petrol and Re 1 on diesel to provide finance for development of roads and highways. As much as Rs 3,000-4,000 crore becomes available annually through this means — depending on the average price of petrol and diesel prevailing in the year.

NHAI, which is responsible for developing and maintaining national highways, meets its financial needs through this cess on fuel, borrowings from international lending agencies and the financial market.

“The government has given in-principle approval to NHAI for providing letter of comfort, confirming availability of cess at least till 2030-31,” said a senior official, who did not wish to be identified, as he was not authorised to speak to the media.

NHAI chairman Brajeshwar Singh did not respond an emailed questionnaire sent by HT.

The National Highway Development Programme (NHDP), first conceived in 2000, is being carried out in five simultaneous “phases” covering a distance of 33,097 kms. About half of these projects (15,731 kms) are, however, yet to be awarded.

These are among a number of recommendations of the BK Chaturvedi committee set up to suggest ways to implement road projects faster and more efficient.

Under the proposed norms, the length of the project for a single contractor has been doubled to 500 km, making them more attractive through higher economies of scale.

This would also increase the quantum of viability gap funding that a bidder can raise from designated government agencies to bridge the shortfall in financing the project.