To reduce time and cost overrun in highway projects, the government on Friday approved a model document for construction of highways. It is expected the move would also enable faster roll-out of projects.
The Cabinet Committee on Infrastructure approved the model engineering, procurement and construction (EPC) agreement document for constructing two-lane national highways, read an official statement. All such construction, excluding those undertaken through the public-private partnership mode, would be primarily through the EPC mode, the statement added. An EPC contract is one in which the government funds the entire project, and developers are responsible for construction alone.
Current EPC contracts were more of traditional item-rate contracts. “Experience shows item-rate contracts are generally prone to time and cost overrun. These drawbacks can be addressed by adopting the EPC (lumpsum) approach, which relies on assigning the responsibility for investigation, design and construction to the contractor for a lumpsum price under a fixed timeframe determined through competitive bidding,” the statement read.
While item-rate contracts rely on specific designs provided by the government, EPC contracts only specify the required design and performance standards, allowing contractors to bring in innovation and optimise efficiency.
In February, an empowered group of ministers had mandated after inter-ministerial consultations, the EPC document could be placed before the Cabinet Committee on Infrastructure. Several rounds of discussion with stakeholders were undertaken to finalise the draft EPC agreement document. These included talks with the Planning Commission, the Ministry of Road Transport and Highways, National Highways Authority of India, state governments, contractors and international agencies.
The Cabinet also cleared reduction in the number of items in the sensitive list for SAARC countries, with an aim to expand goods trade in the region. Shifting of items from sensitive list to general category would do away with duty impediments and boost trade, according to officials.
The Cabinet also gave nod to the Indian Institute of Informatoin Technology (IIIT) Bill, 2012, which seeks to give IIITs administrative autonomy and enables setting up of 20 more such institutes.
However, the Cabinet once again deferred a Bill to amend Forward Contract Regulation Act (Amendment) Bill, which is aimed at giving more power to the commodity markets regulator, Forward Markets Commission. The UPA-ally Trinamool Congress objected to the provisions in the Bill.