Government mulls 20,000 crore boost for road projects

NEW DELHI: With award of highway projects slowing down due to bad market sentiment, the government is banking on rolling out about 3,000-4,000 km highway projects with 100% financial support.

The National Highways Authority of India ( NHAI), which has identified these stretches, is likely to spend about Rs 15,000-Rs 20,000 crore (including land acquisition expenses) in the next two years.

Industry insiders said that this could save the day for the government and also help rescue the highways sector from financial doldrums. In the first year (2012-13), NHAI will release around Rs 7,000 crore to private contractors for these projects. Roads that are financially unviable on toll mode would be taken up under this scheme.

"Contractors would get the payment on regular intervals, based on the progress of work. So, they will have no risk and won't need to tie up finances from banks or other institutions. This will result in pumping of much needed funds for developers which they can use as equity for public private partnership (PPP) road projects," said an NHAI official.

He added that the authority was well placed to give Rs 7,000 crore in the first year as the government has allowed it to raise Rs 10,000 crore by issuing tax free bonds during this fiscal year.

Last year, NHAI had raised Rs 10,000 crore. "These will be taken up as turnkey projects so that there is no scope of price escalation or time overrun. As soon as we get Cabinet nod for engineer procure and construction (EPC) document, which would be the basis of awarding such projects, we will start immediate awarding," highways minister CP Joshi said.

On Wednesday, Planning Commission deputy chairman Montek Singh Ahluwalia suggested that the EPC document should be uploaded on the ministry website so that contractors can give their feedback before the document is finalized.

Industry insiders said that this could save the day for the government and also help rescue the highways sector from financial doldrums. In the first year (2012-13), NHAI will release around Rs 7,000 crore to private contractors for these projects. Roads that are financially unviable on toll mode would be taken up under this scheme.