Centre asked to review time frame for highway projects under PPP model

States have urged the Centre to review the time frame for commissioning of national highway projects under the public-private partnership (PPP) model.

The total period for commencement of such projects is 42 months, but it is not uniform. It differs from state to state. At a recent interaction organised by the ministry of road transport and highways, states demanded that the 42-month period be reduced and the ministry issue uniform guidelines for the same.

Maharashtra’s minister for public works, Chhagan Bhujbal, who participated in the meeting, told Business Standard: “The PPP model is proved to be the best alternative to cater to the need of infrastructure development in all sectors and particularly, in the road sector to match increased traffic demands, road safety, industrial development and socio-economic development.

However, the time consumed for various levels of National Highways Development Programme (NHDP) is 42 months (3.5 years). A year is needed for the preparation of the feasibility report, six months each for approval of the request for qualification (RFQ) pre-qualification and receipts and evaluation of financial bids from concessionaire.”

He said Maharashtra, along with other states, made a strong appeal to the ministry to review and reduce the time frame for RFQ and request for proposal and issue uniform guidelines, so that projects could be started as early as possible.

States also brought several impediments in the implementation of PPP projects to the ministry’s notice. Bhujbal said they requested the viability gap funding (VGF) be approved on the basis of bid cost at the time of final approval. This would help reduce the financial burden on state governments due to higher VGF demanded by concessionaires at the time of bid.

A ministry official said minister for road transport and national highways C P Joshi assured states he would look into these problems and find out a solution to expedite project development. Apart from Maharashtra, Gujarat, Madhya Pradesh and Karnataka, among others, raised similar issues. “Incidentally, Joshi held talks with Maharashtra chief minister Prithviraj Chavan and his colleagues recently on these issues and assured the ministry’s intervention.”

Chanda Kochhar, managing director and chief executive of ICICI Bank, said “While there is overall growth in the number of contracts given out, the growth is not as much as all of us thought it would be. Like taking it to 20 km a day has not happened. So, there is growth, there is a positive movement, but the growth has not happened to the extent everybody expected.”

The official said the government awarded 3,360 km of highways for development in 2009-10 and 5,059 km in 2010. However, for achieving a construction rate of 20 km a day, it’s necessary to award 7,300 km a year.

Arun Mokashi, a consultant to the World Bank, said PPP was going to be the future in the road and highways sector. “However, there is a need for accountability. Central and state agencies need to be made accountable for a time-bound implementation of such projects,” he said.