NEW DELHI, July 11: With private investors demanding protection against exchange rate fluctuations in road projects, the Ministry of Surface Transport (MoST) has softened its stand by agreeing to provide an exchange risk cover. It is now seeking the services of a French consultant to workout the modalities of exchange risk cover as per international norms in the implementation of build-own-transfer (BOT) projects in the road sector.Sources said the transport ministry had decided to send a revised proposal to the high-powered inter-ministerial committee on ports as private investors were not satisfied with indexing of tolls to the wholesale price index (WPI). The committee on roads had turned down a suggestion to give exchange risk cover saying that the WPI more or less keeps pace with foreign exchange fluctuation (depreciation of the rupee against the dollar).While the WPI has gone up by nearly 13 per cent in the last three years (from 1994-95 to 1996-97), the rupee has correspondingly depreciated against the dollar by almost 12 per cent. However, private investors wanted a proper risk cover either through hedging or fixing of tolls in dollar terms. In fact, it was only after the issue was raised during the visit of a delegation, headed by the Cabinet Secretary T.S.R. Subramanian, to US that the transport ministry decided to review its stand. Now, the matter will be put before the committee set-up to evolve the concession agreement and finalise standard build-own-transfer (BOT) terms including fair and equitable allocation of risks between the participants. It comprises senior functionaries from the ministries of finance (both Department of Economic Affairs and Expenditure), law, expenditure, surface transport and the National Highways Authority of Indian (NHAI).MoST sources said the government was keen to resolve the issue on priority basis.
