Revival in investor confidence: Expressway expansion draws private firms' interest

NHAI receives 15-16 bids from private players for the Rs 2,000-cr Delhi-Panipat project

In what could be a signal of the private sector’s interest in the roads sector returning, the National Highways Authority of India (NHAI) has received 15-16 bids from private companies for expansion of the Delhi-Panipat expressway at a cost of around Rs 2,000 crore.

The request for proposal (RFP) would be invited soon and the award of project would follow, a senior NHAI official said. The expressway is to be widened further to have 12 lanes, including the service roads, under the build-operate-transfer (BOT) model. Though there have been award of a few projects under the BOT model in the current financial year, this is the first big project where NHAI has received bids from a number of private parties.

According to a senior ministry official, private players have again started showing interest in the roads sector, after a lull of two or three years. For a revival in the sector, the road transport and highways ministry recently formulated a new strategy under which bids for the same project would be floated under both EPC (engineering, procurement, construction) and PPP (public-private partnership) models. In the current financial year, NHAI has awarded 1,138 km of road projects, of which 511 km (three projects) has been awarded under the BOT model in public-private partnership, according to another NHAI official. The target is to award 3,700 km of projects through PPP and 2,300 km through the EPC mode this year.

A month ago, NHAI had invited rebids for four projects under the BOT model, even as bidding under the EPC model, where the government funds a project, was simultaneously on. The strategy was to save on costs and time, as well as avoid delays while awarding projects.   

A few foreign investors, including IJM Corporation Berhad, a leading construction group in Malaysia, have shown interest in projects like Eastern Peripheral Expressway (worth Rs 4,489 crore for a stretch of 135 km), Bathinda-Amritsar (worth Rs 1,899 crore for 175 km) and Ambala-Kaithal (worth Rs 878 crore for about 95 km). Therefore, the projects were bid under both models.

During the 2010-2012 period, developers bid aggressively when the government awarded a record 147 road projects, worth Rs 1.47 lakh crore. India’s economic growth, much higher at that time, slowed subsequently. Input and inflationary costs have gone up since, due to which the award of contracts for national highways has slowed down