Road projects covering 10,000 km to be awarded this fiscal: FM Arun Jaitley

NEW DELHI: The government has managed to address the stress in the highways sector and road contracts are now attracting multiple bids, said Finance Minister Arun Jaitley. According to him, by the end of fiscal, the government would award 10,000 km of road projects. "The government has induced a lot of liquidity in the sector and the banks have started supporting the sector. A number of contractors has started repaying old debts. It's additionally contributing to our growth rates," Jaitley said, addressing a meeting of bankers and road developers, organised by road transport and highways ministry to sort out financing issues. In the current financial year, the government has already awarded 6,800 km of road contracts.

"With such large projects being awarded, I think it’s a spiral effect on steel, cement, auto sector," finance minister said.

He said a year-and-a-half ago, roads was a paralysed sector, and today all major contracts attracted multiple bidding.

"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." he said.

On Wednesday, the Union Cabinet had approved the hybrid annuity model of road development, which combines elements of government funding and private development to ensure greater investor interest. FM said revival of the highways sector has also reduced the stress of stalled projects on the banking sector.

STUCK ROAD PROJECTS
The government is going to clear 19 stuck road projects worth Rs 40,000 crore in a week’s time, Road Transport and Highways Minister Nitin Gadkari said at the same event after jointly chairing the meeting with the finance minister.

Gadkari said his ministry was picking up specific projects and resolving all issues between lenders and concessionaires. Gadkari's ministry had invited all major road concessionaires and lenders for a meeting to sort out highway funding issues. The meeting was also attended by financial services secretary Anjuly Chib Duggal.

"When I took over, there were 384 stuck projects. Today, the number stands at 19. These projects will be sorted out on a case-by-case basis," Gadkari said, adding that in case some problems still persist then the PMO and the finance ministry will look for an "out of the box" solution. The government has also terminated 41 projects that could not be resolved."Under no circumstances, any project should be pending before January 31, and I expect the problems to be solved before night," Gadkari said. Stuck projects include those being executed by Larsen & Toubro, HCC, Gammon, Madhucon, Soma and Essel Infra, among others. "There are only 19 projects where no solution could be found out. Secretary, bankers and contractors sat today... Under no circumstances any project should be pending. Out of the box solution will be arrived at by the finance ministry and PMO if any issue remains unresolved today," Gadkari said.

According to officials, some of these projects need special mediation between banks and concessionaires, as cost escalation has been as much as 30 per cent and the traffic projections were shown really high in the Detailed Project Report (DPR).

"In four projects, we have found that developer diverted the fund for other purposes," a senior government official said.