Longer-tenure deals for highway maintenance to woo foreign players

Govt identifies 70,000 km of roads that will be offered to private companies

The government will soon come out with uniform contract terms for maintenance of highway streches. The Ministry of Road Transport and Highways has identified 60,000-70,000 km of roads, which would be offered to private players, including foreign entities, for operation and maintenance.

It is learnt that these contracts would be for three years, and would be offered by the National Highways Authority of India (NHAI), National Highways & Infrastructure Development Corporation, and state governments.

Of these, contracts of around 21,000 km would be offered in the first tranche. “Highways totalling 8,000 km will be offered for maintenance, and 13,000 km for strengthening and development,” a senior road ministry official said.

Longer tenure contracts was one of the suggestions from the industry and is expected to attract international players.

A source said international highway players, including Cube Highways, made a presentation to the highways ministry, indicating their interest in bidding for such contracts.

The strengthening and development contracts would be for the roads that require more than repairs. “Road maintenance is an integral part of the infrastructure sector, and will get a facelift with this exercise as longer upkeep contracts would ensure a better quality of highways by bringing in international participation,” the road ministry official said.

Currently, maintenance contracts differ, depending on modes of project. BOT or build-operate-transfer contracts have an in-built repairs agreement. In the case of TOT or toll-operate-transfer contracts, the company that bags the project does the maintenance work.

HAM or hybrid-annuity model contracts are also maintained by the road developer.

The government-funded EPC or engineering-procurement-construction contracts are related to the upkeep of these projects and are done by construction companies for a shorter duration, typically 18-24 months.

Besides these maintenance contracts, the Centre has come out with a fresh set of norms for HAM contracts to keep private developers invested in the sector. The proposal to make HAM projects attractive was approved by an inter-ministerial panel comprising the departments of expenditure, economic services, financial services, NITI Aayog, Ministry of Law and Justice, and Ministry of Road Transport and Highways. In February, the NHAI also came out with the new BOT guidelines to encourage participation from the private sector.