PPP In Highways

The revised model concession agreement introduces harmonious substitution for stuck HAM projects and clarifies compensation for delays attributable to the authority

The Ministry of Road Transport and Highways (MoRTH) has allowed big funds and large investors to bid for build-operate-transfer (BOT) projects after some projects failed to attract private investments due to concerns over contract terms. Earlier, big funds were allowed to bid only for toll, operate and transfer (TOT) projects. The ministry has allowed sovereign wealth funds, infrastructure funds and pension funds, and private equity to bid for BOT projects under the public-private-partnership (PPP) model. In a modified request for proposal (RFP) document, MoRTH has relaxed norms for investments in such projects. The ministry came out with the modified framework after four highway projects worth Rs 22,000 crore failed to attract bids from private companies under the BOT model due to concerns over contract terms. National Highways are developed under different modes of execution, including BOT or toll, BOT (annuity), Engineering, Procurement and Construction (EPC), InvIT and Hybrid

The private sector traditionally finds its competitive advantage in operations, not in development or high-risk projects constrained by state capacity and politics

Experts warn India's infra push risks delays without better planning, funding models, and PPP reforms to match rapid growth

Experts at the Business Standard Infra Summit said India must rely more on public-private partnerships (PPP) to fund new projects, as government resources alone cannot meet growing needs

The Finance Ministry on Friday organised a two-day workshop to sensitise project sponsoring authorities (PSAs) of the roads and highways sector on how to structure PPP projects using a web-based toolkit. The workshop organised by the Infrastructure Finance Secretariat (IFS) in the Department of Economic Affairs (DEA) was attended by more than 70 representatives of Centre and state/UT governments, the finance ministry said in a statement. Recognising the challenges inherent in PPP projects, IFS has developed the PPP Structuring Toolkits, offering web-based tools to assist project sponsoring authorities in evaluating project viability for PPP mode. The workshop, which is the first in a series of workshops for dissemination of the toolkits, was inaugurated by Economic Affairs Secretary Ajay Seth. He highlighted the importance of infrastructure and the need to create a shelf of viable infrastructure projects to take India on a higher growth trajectory. Seth further emphasised that PSA

According to officials, the state government will provide at least 10 acres on a 30-year lease at a concessional rate of 50 per cent

The minister recently announced that the NHAI InvIT will soon be open to retail investors, and will assure them a minimum return of 7-8 per cent.

The minister says as many as 80% projects can be done on PPP mode. Currently, half the national highway projects awarded by his ministry are on this basis

Introduction of hybrid annuity model in 2016, as a variation of PPPs, does the trick, rebalancing certain project risks between public and private sectors