PM Modi's infra push: Government may raise Rs 55,000 crore through auction of 111 EPC projects

In what could attract billions of dollars to India's fund-starved infra sector, the Road Ministry is finalising a proposal that will allow global pension funds to buy directly into existing Govt-owned EPC projects. Sources say, the proposal- which is likely to be finalised soon since discussions between Road Ministry and Finance Ministry are in final stages- will be executed through an auction. A top source in the ministry said that the Government is hoping to raise close to Rs 55,000 crore through auction of 111 EPC projects by the end of the current financial year.

Global pension funds from Canada, British and Japan have evinced interest in bidding for EPC toll projects. Sources say, the Government will guarantee 8 percent return for 30 years and toll rights to ensure investor interests are guarded.

"Through this model, investors will be insulated from construction risk and will only have to take operations risk of running a project," said a top Govt source.

The Roads Ministry is working to kickstart a global road conference where Prime Minister Narendra Modi will make a pitch to global investors to participate in the auction. The proposed conference is likely to be held in the new few months.

NHAI- the nodal body under the Roads and Highways Ministry- will identify the 111 projects that will be auctioned to private companies by August.

The proposed model- which is likely to be freezed in the next few weeks- will put an end to hectic parleys between Finance Ministry and Road Ministry over the financial instrument for global investors to invest in India. Ever since the Modi Government came to power, it has been trying to finalise a mechanism to raise funds from global pension funds to fund the ambitious road sector program. Roads and Highways Minister Nitin Gadkari has said that the Government will look to award projects worth Rs 3.5 lakh crore in the next six months. The projects will be awarded through a combination of Engineering-Procurement-Construction model, Build-Operate-Transfer model and the Public-Private-Partnership model.