Highway projects may run on longer toll period

NEW DELHI: Private infrastructure companies involved in projects that come under the build, operate and transfer (BOT) model may get to charge toll on their respective constructions for three to five years more than originally agreed upon, a government official told ET.

The ministry for road transport and highways has mooted a proposal to this effect in view of the falling traffic at showpiece projects such as the Golden Quadrilateral (GQ) and the North-South & East-West (NS-EW) corridor, the ministry official, who asked not to be named, said.

���The government���s projection of 5% growth in traffic (in these projects) will not materialise over the next two years. Besides, the cost of key inputs like bitumen, cement, steel and diesel has gone up considerably. Hence the move to compensate developers across the board for the loss they have to incur,��� he said.

The move would benefit 57 highway projects, worth Rs 75,000 crore, awarded on the BOT basis to various companies including L&T, Reliance Infrastructure, GMR and Hindustan Construction Co.

In the BOT model, the developer is allowed to own and operate the project for a specific period, and recover the investment by charging a toll before handing it over to the government. According to the new proposal, projects with an existing concession period up to 20 years would get three more years while those beyond 20 years would get another five years. The overall concession period is likely to be capped at 30 years. While the move may come as an unexpected relief for operators who are grappling with a rise in construction and debt cost, experts that ET spoke to had a word of caution.

���The increase in the concession period will certainly improve the feasibility of many projects but the solution needs to be specific rather than general,��� Simplex Infrastructures director Amitabh Das Mundhra said.

Added project consultant Feedback Ventures head (engineering) Parvesh Minocha, ���Why this ad hocism? Projects need to be appraised and updated on an individual basis. The project consultants can review all the projects and come out with comprehensive and scientific solutions.���