Govt Offers 20% Return On Expressway Investments

The government has offered a 20 per cent rate of return on investment in expressway projects, surface transport minister M Thambidurai said here yesterday.

The minister said that about 13,500 km would be taken up for development early next year on a build, operate and transfer basis. He said the cost of this project would be in the region of about Rs 1,25,000 crore and the entire project would be new alignments.

He said the cost estimate for the projects has been worked out on the basis of Rs 9 crore per km. In addition to toll tax receipts from the expressways, a portion of the revenue realised from ribbon development (real estate projects along the routes) will be apportioned with the project developers as an additional incentive.

The expressways were being set up to provide a network of high-speed corridors, he added. These corridors will provide about 100 per cent more capacity than conventional highways and considerably improve the efficiency of the turn around time for vehicles.

The sections offered on the BOT basis would have a 30-year concession period, though bids would be accepted only on the basis of the lowest user rate or the shortest concession period and the lowest subsidy demand from the government.

The government is prepared to offer a subsidy of 30 per cent for the projects. The ministry was also making efforts to secure the cooperation of the states for developing expressways.

The minister said that the states would be asked to contribute to the equity by providing the land for construction of the alignments.

About one third of the project cost will be met by the Centre either through budgetary support and only the remaining need to be contributed by the private sector.

With a view to providing sufficient mechanisms for leveraging of funds, the government was making efforts to set up a separate National Expressways Authority of India.

He said NHAI had already begun development work on the Durgapur expressway and the Mumbai-Ahmedabad and Ahmedabad-Vadodara projects.

But the foundation stone for the first expressway in the country, being developed by the Karnataka state government and Nandi Infrastructure Corridor Enterprises Ltd, between Bangalore and Mysore would be laid by Prime Minister Atal Behari Vajpayee on December 30.

Referring to the funding mechanics, he said , the ministry had proposed a cess on the tax on automobiles.

This is in addition to levies proposed on diesel, which was expected to be implemented in the next budget. "We have made this proposal and ultimately it depends on the finance ministry," he said.

"We would expect this to generate about Rs 4,000 crore per year to meet our funding requirements."

He said the ministry along with Ficci was organising a three-day international congress on expressways beginning on December 14.

About 1,000 international participants had already registered their participation in the congress.