In a landmark decision intended to keep project costs to the minimum, the government has dropped the demand for concession fee from build-operate-transfer (BOT) operators of road projects.
This decision was taken at a meeting of the high-powered committee for highways here yesterday. The meeting was chaired by surface transport secretary R Vasudevan and was attended by National Highways Authority of India (NHAI) chairman Deepak Dasgupta and representatives from Price Waterhouse Coopers.
Official sources said that the decision was taken to drop the concession fee element on the basis of requests made by the prequalified bidders. These prequalified bidders currently are engineering major Larsen & Toubro and Reliance Industries Limited. Under the original concession agreement, private operators of highway projects were expected to pay a concession fee from the sixth year onwards equivalent to 5000 passenger car units (pcus), which would increase at the rate of one thousand pcus per year.
With the dropping of this concession fee element, this would mean a slight drop in the overall project cost of Rs 633 crore on a six laning basis. This would however not imply that the NHAI will not accept any concession fees, and project operators would still be open to payment of a concession fee.
The sources also said that the construction period for the project has been raised from 24 months to 30 months. This increase in the construction period has been done in view of the changes in the project scope from a four lane project to a six lane tollway. This will also be a standardised for all the remaining three projects, which include, the Tumkur Neelmangala corridor in Karnataka, the Hosur-Krishnagiri and the Chingelput- Villivakam corridors in Tamil Nadu.
The sources said that the meeting has also incorporated the tripartite agreement with the state governments into the concession documents, which will now become the standard bid document for the final round. This tripartite agreement entered into with the State government of Rajasthan allows for compensation to be paid by the state government directly to the project operators. The quantum of compensation would be determined by the NHAI instead of an independent consultant under the original format.
The state government has also agreed to provide a dedicated team to support the BOT operators for enforcement of all the clauses under the tripartite state support agreement. The tripartite agreement also provides for appointment of an independent arbitrator between the project operators and the NHAI as a dispute resolution mechanism for settlement of the quantum compensation.
