Govt to award 100 highway projects in PPP mode next year

According to new norms, land acquisition and environment clearances would be handed over to the private contractor prior to commencement of project

The government expects the recent amendments in regulations to help revive investor sentiments in public-private partnership (PPP) projects in the infrastructure sector. It is planning to announce 100 highway projects under the PPP mode next year. This year, it will award 15 to 16 projects.

Earlier, PPP was not seen as a feasible proposition but with the amendments in regulations, it has emerged a viable model. But there was a need for capacity building in the government and increase the number of contractors and investors in the sector to fast-track projects in the PPP mode, said Nitin Gadkari, Union minister for road transport, highways and shipping, at the fourth edition of Federation of Indian Chambers of Commerce and Industry (Ficci)'s 'India PPP Summit' here on Tuesday.

Gadkari said the government had taken decisive action to promote the hybrid model of PPP for encouraging investments by the private sector. According to the new norms, 40 per cent of project cost would be funded by the government and the necessary land acquisition and environment clearances would be handed over to the private contractor prior to the commencement of the project. The private player would need to invest 60 per cent in the project, of which 30 per cent would come from banks and financial institutions. Also, the toll on the infrastructure project would be collected by the government and a fixed annuity with a profit margin would be given to the private partner.

Speaking about the issues related to infrastructure sector, Gadkari said the government was trying to resolve the litigation issues with mutual consent to save time, money and move the projects ahead rapidly. The minister said lack of contractors could be attributed to stringent regulatory framework and assured industry that the government was committed to liberalising regulations without compromising on quality to allow more private investors to enter the sector. He urged Ficci to play an active role and encourage investors to look at infrastructure as a profitable sector.

Gadkari said besides creating a network of national highways, the government was revamping the entire transport sector by giving a facelift to rail linkages, inland waterways, and ports. The government was working towards developing dry and satellite ports as well to provide better connectivity for moving cargo efficiently.

According to the Ficci-EY knowledge paper titled Restoring the momentum and reviving PPPs in India, Indian PPP markets and regulatory practices are going through evolution and moving towards the next level of maturity. This phenomenon is evinced by noteworthy events such as development of new PPP modalities in the highway sector, liberal exit policies for highway assets, one-time fund infusion for languishing projects, modernisation of stations, among others.