Four-laning of national highways is lagging far behind the targets. THE DBFOT (design, build, finance, operate, transfer) model is no longer the choice either of the Ministry of Road Transport and Highways or of the industry. For EPC (engineering, procurement and construction) contracts, the government does not have requisite money, so what happens to the National Highway programme?
- Ramachandra V Sakhadeo
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Manish Agarwal, partner and Leader capital project & infrastructure, PwC India: National Highways Authority of India can fund 2,000-3,000 km through EPC contracts. Projects with a two year construction schedule are taking close to six years in EPC mode. Addressing the hurdles of land acquisition and clearances etc for existing projects is required. This will free up capital, and enable contractors to take on new EPC projects. Some progress has been made on this, but things are not improving fast enough. Many clearances are state and local government issues. Besides, land acquisition is still a challenge.
Bringing back PPP will require (a) resolving the current financial stress in the banking system due to existing road projects, and (b) designing low-risk concession structures and enabling longer term financing. While there is ongoing work on the second, progress on addressing financial stress is still not visible.