Nhai To Take Over Ahmedabad Project

The surface transport ministry has asked the National Highways Authority of India (NHAI) to take over the Ahmedabad-Vadodara expressway project.

Sources said the project would now be implemented by NHAI and the methods of funding it would be worked out.

Both Reliance Industries and Renong of Malaysia had bid for the project. However, the bidders sought some changes in the tender conditions that were unacceptable to the government. The project was originally supposed to have been completed by the government through budgetary allocations and cost recovery through toll, and no private sector participation was envisaged.

Around 40 per cent of the work had already been completed and the cost for the remaining 60 per cent of the work is estimated at Rs 450 crore. Reliance and Renong had pitched for the project without any traffic guarantees. Since 40 per cent of the civil work was completed by the government, Reliance had offered to share the revenues raised from the project with the government. The delay in finalising the project is expected increase the cost by about 15 per cent.

Reliance executives, however, said they were aware that the project had been handed over to NHAI but the ministry had not officially communicated its decision to them. In case the project is offered on a build-operate-transfer basis, Reliance would make a fresh bid, they added.

NHAI is considering using the Moradabad model for funding the project, which is a modified design-build-finance-operate model. This entails setting up a special purpose vehicle in which the engineering procurement and construction contractor holds 15 per cent equity. The remaining is to be held by NHAI during the construction phase, with a right to divest during the operation phase. The entire debt component for this project is raised by leveraging the special purpose vehicle.

However, NHAI has not ruled out other methods of funding like the BOT method with a 30-year concession period.