Road contracts simplified, 10,000-km target by March: Government
The union government said on Thursday it plans to award a total of 10,000 km of road projects by the end of the current fiscal, while 19 stalled highway projects involving blocked investment of around Rs.40,000 crore are to be resolved by this month end.
New Delhi: The union government said on Thursday it plans to award a total of 10,000 km of road projects by the end of the current fiscal, while 19 stalled highway projects involving blocked investment of around Rs.40,000 crore are to be resolved by this month end.
"All procedures have been simplified. There is an exit policy, there is a hybrid model and so on. Various options of flexibility are there in the sector," Finance Minister Arun Jaitley said after a meeting here with bankers and contractors along with Road Transport Minister Nitin Gadkari.
He said 6,800 km of highway projects have already been awarded and by March, this figure would go up to 10,000 km.
"With such large projects being awarded, I think it has a spiral effect on steel, cement, auto sector, and all is going to take place," Jaitley said.
The success of highway programmes has taken the stress out of the banking sector and a large number of contractors are wanting to execute projects, he said.
"You didn't have a single contractor responding to the tender. And today all major contracts attract multiple contractors' bidding," he said.
Jaitley said the government, the financial sector, financial services and the contractors who execute projects were currently meeting on how to expedite the national highways programme.
Gadkari told reporters that the meeting with the ministers is to be followed by a separate one of the stakeholders of 19 stalled road projects involving blocked investment of Rs.40,000 crore.
"My department says 5-6 of these problematic projects can be solved. In this meeting we hope to do it," he said.
"In case we need to do some out-of-the box thinking on some difficult cases, I have suggested setting up a committee under the finance minister and with the secretaries of finance and road transport to decide on these," he said.
"There are only 19 projects where no solution could be found out. Secretary, bankers and contractors sat today (Thursday)...under no circumstances should any project be pending before January 31," he added.
Gadkari said that if issues remained unresolved, an "out of the box solution" would be found by the finance ministry in consultation with the Prime Minister's Office.
The minister said that as many as 384 projects had been stuck for the last 10 years due to issues like land acquisition, forest and environment clearances, railway over-bridge problems, litigations, delayed decisions and financial problems.
"The government has terminated 41 projects and solved problems related to all these projects barring 19," Gadkari said.
These projects include national highways in Andhra Pradesh, Bihar, Haryana, Rajasthan, Jharkhand, Karnataka, Madhya Pradesh, Maharashtra, Odisha, Tamil Nadu, Uttarakhand and West Bengal, involve contractors like like Larsen & Toubro, HCC, Gammon and Essel Infra, while the loans are from major state-run banks like State Bank of India, Punjab National Bank and Bank of India.
Gadkari also said his ministry will launch a website for "cooperation, coordination and communication" where bankers and contractors could post their complaints and suggestions that would be scrutinised by the road transport secretary.
He referred to the Hybrid Annuity Model for implementing highway development projects in the country, approved by the union cabinet on Wednesday.
The new model will increase the financial comfort for all the major stakeholders in the public-private partnership (PPP) arrangement, namely the authority, the lender and the developer. The projects will be financed only to a certain extent by the private investor, which will be recovered through annuity payments by the government over a specified period.
Gadkari said 40 percent of the project cost would be financed through a government grant, while the balance 60 percent would be equally apportioned between the contractor and the bank loan.