Road annuity payouts to cost Centre R98K cr

Nagpur and Betul is the country’s most expensive annuity road project awarded till date.

New Delhi | Published:February 19, 2014 4:09 am

The four-lane highway project between Nagpur and Betul is the country’s most expensive annuity road project awarded till date, according to the Interim Budget document. The 174-km-long road project is worth Rs 2,498.76 crore and passes through the states of Madhya Pradesh and Maharashtra. 

The project, which was cleared by the government in May 2010, was awarded to Oriental Nagpur Betul Highway Private Ltd, a special purpose vehicle owned by Delhi-based Oriental Structural Engineers Ltd.

This road project passes through Chhindwara, which is the Lok Sabha constituency of urban development minister Kamal Nath, who was also the road transport minister between May 2009 and January 2011.

On account of 51 projects awarded on Build, Operate Transfer (annuity) till date, the government’s liability in terms of annuity payments for highway construction has touched a whopping Rs 98,228 crore.

The average annual annuity outgo of the government on this account is Rs 6,322 crore. The liabilities till last year was around Rs 83,794 crore.

The liability is more than three times the value of all 51 projects awarded under the annuity mode, which is in the range of Rs 30,286 crore, and involves fixed periodic payments by the government.

Build Operate and Transfer (annuity) is one among the two Public-Private Partnership (PPP) modes on which the National

Highways Authority of India awards projects. The other is BOT (toll), which is preferred most by the government.

Unlike the BOT toll model, where the private operator takes on the risk of toll collection, the government mitigates the risk of toll income in the annuity model by guaranteeing payments over the concession period, which normally goes up to 20 years.

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