New highway bidding scheme to save time

Pre-selection likely to save 18 months.

Under a new policy, all road highway projects are to be earmarked from the beginning to one of three processes of bidding, on the basis of its financial viability. This pre-selection is estimated to save up to 18 months of time.

Earlier, every project was first put under the build operate and transfer (BOT) toll bidding process. If there was no positive response, it was put under the BOT annuity bidding process, where the contractor is paid every six months and the toll is collected by the government. A third option was an engineering procurement and construction (EPC) contract.

However, the process of trying different bidding processes would take about six months at every phase, and so, an escalation in project cost. And, the government failed to meet the target date of completion.

Under the new plan, all projects are divided into three categories — BOT-toll, BOT-annuity or EPC — even before the bidding process starts. “Preparing the project up for bid on a new scheme consumes six months every time. And if it is pre-decided, we will save those 18 months,” said a senior official of the National Highways Authority of India (NHAI).

“This scheme will obviously save a lot of time, but a time limit should also be set for projects on annuity and EPC. The concessionaires make sure that the projects on BOT (toll) are completed in time, but the same is not the case with projects on annuity and EPC,” said M Murali, director-general, National Highways Builders Federation.

NHAI is aiming at putting 126 projects out for bids, worth Rs 1 lakh crore, this financial year. It has, under the new policy, identified 6,831 km to be bid on toll, 1,143 km on annuity and 3,954 km on EPC.

The road transport and highways ministry also proposes to build a huge network of expressways by 2022, also the final year of the Thirteenth Five-Year Plan. The ministry plans to build expressways in three phases — by 2012, 2017 and 2022 — and, accordingly, it has prepared a draft report for a network of the proposed 17,661 km of stretches.

The World Bank has agreed to provide a $3-billion loan for developing national highways. The assistance will be utilised for converting 6,372 km of one-lane highways into two lanes, of the 19,702-km of single-lane highways. The total project cost for 2009-10 has been estimated at $20 billion.