For want of bidders, 12 highway projects go unawarded; deadline pushed to Januaryhttps://indianexpress.com/article/business/economy/for-want-of-bidders-12-highway-projects-go-unawarded-deadline-pushed-to-january/

For want of bidders, 12 highway projects go unawarded; deadline pushed to January

NHAI is targeting awarding around 5,500 km worth of projects and constructing around 2,000 km of roads this fiscal.

TWELVE highway projects that the ministry of road transport and highways was hoping to award within the first four months of this fiscal are likely to be delayed until January. The projects add up to almost 1,500 km and were estimated to cost over Rs 20,000 crore.

A ministry spokesperson said that while 8 of the 12 projects (see table) failed to receive any bids, the others were found unavailable after the developers required a grant from the government in excess of 40 per cent in order to execute the construction on Build-Operate-Transfer (Toll) mode.

According to the National Highways Authority of India (NHAI), which is one of the executing agencies for the projects, it will be another four months before the reworked proposals are approved, bid for, and awarded.

NHAI is targeting awarding around 5,500 km worth of projects and constructing around 2,000 km of roads this fiscal. Out of this around 2,000 km were initially slated to be on BOT mode and the rest on Engineering-Procurement-Construction (EPC) mode, according to an official.

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“The proposals for these projects were all designed for BOT modes, but now will be redesigned for bidding on EPC mode. In fact some have already been sent to the ministry and are awaiting approval. Bids will be called for once approval has been obtained,” the NHAI official said.

In BOT mode, which comes under the umbrella of PPP projects, the developer builds and operates a stretch of road for a stipulated time period and earns either through toll revenue or through timely payments from the government. In EPC mode, the government funds the construction and has the rights over the toll revenue.

According to Manish Agarwal, Leader (Capital Projects and Infrastructure) at consulting and advisory firm PwC, PPP projects, especially toll-based, are unlikely to attract financing from banks anytime soon, with pure annuity or a mixed system of annuity with grants or toll revenue more likely to be bankable than pure tolling system even in the future. “Experience has shown that toll-based projects do not necessarily deliver the expectations from PPP,” Agarwal said. “To instill confidence in the banks in the current scenario, existing projects will first need to be cleared. Then the EPC projects in pipeline will have to be cleared.”

NHAI officials also dispelled fears of scarcity of funds in the eventuality of having to fund mostly EPC projects in the near future, saying that the funds allocated to the agency by the ministry per EPC mode based project had doubled to Rs 1,000 crore from the previously sanctioned amount of Rs 500 crore. “The estimated project cost will come down once the projects are reevaluated on EPC mode. We have been allocated a budget of around Rs 20,000 crore this fiscal year. Besides, we are now earning around Rs 6,000 crore per year from toll revenues and can raise 10 times as much money using it as collateral,” the NHAI official said.