You are here: Home » Current Affairs » News » National
Business Standard

Going from Srinagar to Leh will be easier with this tunnel costing Rs 68 bn

The Project aims at the construction of 14.15 km long two-lane bi-directional single tube tunnel

Megha Manchanda  |  New Delhi 

The tunnel would provide all-weather connectivity between Srinagar, Kargil and Leh and bring all-round economic and socio-cultural integration to these regions
The tunnel would provide all-weather connectivity between Srinagar, Kargil and Leh and bring all-round economic and socio-cultural integration to these regions

The Committee on Economic Affairs has approved the construction, operation, and maintenance of the two-lane bi-directional on Srinagar-section in Jammu & on Engineering, Procurement, and Construction (EPC) basis.

The construction of this tunnel will provide all-weather connectivity between Srinagar, Kargil, and and will bring about all-round economic and socio-cultural integration of these regions. The project has strategic and socio-economic importance and shall be an instrument for the development of the economically backward districts in Jammu & Kashmir, the official statement said.

The construction period of the project is seven years which shall be reckoned from the date of commencement of construction. The civil construction cost of the project is Rs 49 billion.

The total capital cost of the project is Rs 68.09 billion, including the cost of land acquisition, Resettlement & Rehabilitation, and other pre-construction activities as well as Maintenance and Operation cost of the tunnel for four years.

Infrastructure major IL&FS Transportation is likely to get the work for this tunnel as it emerged as the lowest bidder for this crucial project.

Other Major Decisions

  • extends mandatory packaging of foodgrain and sugar products in jute bags for year ending June 2018; it is mandatory to pack 90% of grains and 20% of sugar products in jute bags
  • Approval to India’s stand at the recently concluded World Trade Organization ministerial meeting held in Argentina in December last year

Four companies had bid for the project and IL&FS quoted the lowest amount, which is 10.7% less than the bid amount government had mentioned in the tender document. The project will be built on EPC mode in which government bears the entire cost and makes the payment during construction.

The Project aims at the construction of a 14.15-km-long two-lane bi-directional single tube tunnel with a parallel 14.200-km-long egress tunnel excluding approaches between Baltal & Minamarg in The construction of approaches of this tunnel is being undertaken separately.

The project will be implemented by Ministry of Road Transport & Highways (MoRT&H) through Highways & Infrastructure Development Corporation Limited (NHIDCL).

The main objective of the project is to provide all-weather connectivity to region in Jammu & which at the moment is limited to at best 6 months because of snow on the passes and threat of avalanches.

This project along with other ongoing projects like 6.5 km long Z-Morh tunnel at Gagangir would ensure safe, fast and cheap connectivity between the two regions of and Ladakh.

It will further increase the employment potential for the local labourers for the project activities, the official statement added.

In another decision, the Union approved amendments to the Model Concession Agreement (MCA) to make the Port Projects more investor-friendly and make investment climate in the Port Sector more attractive.

The amendments to the MCA envisage constitution of the Society for Affordable Redressal of Disputes - Ports (SAROD-PORTS) as dispute resolution mechanism similar to provision available in Highway Sector.

The other salient features of the revised MCA include -- providing an exit route to developers by way of divesting their equity up to 100% after completion of 2 years from the Commercial Operation Date (COD). This is now similar to the MCA provisions of Highway Sector.

Under the provision of additional land to the Concessionaire, land rent has been reduced from 200% to 120% of the applicable scale of rates for the proposed additional land.

The concessionaire would pay Royalty on "per MT of cargo/TEU handled" (or the ship’s cargo carrying capacity) basis which would be indexed to the variations in the WPI annually. This will replace the present procedure of charging royalty which is equal to the percentage of Gross revenue, quoted during bidding, calculated on the basis of upfront normative tariff ceiling prescribed by Tariff Authority for Major Ports (TAMP).

This will help to resolve the long pending grievances of Public Private Participation (PPP) operators that Revenue share is payable on ceiling tariff and price discounts are ignored. The problems associated with fixing storage charges by TAMP and collection of Revenue share on storage charges which has plagued many projects will also get eliminated.

The concessionaire would be free to deploy higher capacity equipment/facilities/technology and carry out value engineering for higher productivity and improved utilization and/or cost saving on Project assets.

Provision for the commencement of operations before the COD. This will lead to better utilization of assets provided by the Port in many projects before the formal completion certificate.

The provision regarding refinancing is aimed at facilitating the availability of low-cost long-term funds to Concessionaire so as to improve the financial viability of the projects.

First Published: Thu, January 04 2018. 01:06 IST