'EPC mode of road building to enable faster execution'

NEW DELHI: The government today said the EPC mode of highways building would enable faster roll-out of projects with least cost and greater efficiency.

Engineering, Procurement and Construction (EPC) mode in road building "will minimise, if not eliminate, the time and cost over-runs ... enable a faster roll-out of projects with least costs and greater efficiency," Road Transport and Highways Minister C P Joshi told a Parliamentary panel.

Chairing a meeting of Consultative Committee of Parliament, Joshi said EPC mode will also ensure implementation of the road project to specified standards with a fair degree of certainty relating to costs and time while transferring the construction risks to the contractor.

The Transport Ministry is set to bid out at least 3,000 kilometres of projects this fiscal and 20,000 kilometres by 2017 under EPC mode that minimises risk to developers.

Joshi, as per an official statement, informed the members that the EPC agreement document provides performance-based standards for the maintenance of the project highways.

"It also specifies the dates on which different sections of the land will be handed over to the Contractor. It defines the scope of the project highway with precision and predictability to enable the contractor to determine its costs and obligations," the statement said.

In EPC projects, the government pays the developer for constructing the highway while the toll revenues accrue to the government.

The other two modes through which the highways projects are bid are build operate transfer (BOT-toll) and BOT-annuity. and EPC. In the BOT mode, the developer has to operate the highway for several years.

The model draft for EPC finalised by the government mentions, "Experience also suggests that annuity-based projects are comparatively expensive, while conventional contracts (BOT) are prone to time and cost overruns. It has therefore been decided to adopt the EPC mode of construction".

The draft has also quoted a sample analysis of 20 NH projects executed on item-rate contracts that took, on an average, 61 months to complete as against 29 months taken by projects executed through PPP which generally adopted the EPC mode for project execution.