New deal for highways

Added to that, the agreement also allows the developer and NHAI the right to upgrade the four-laning highway to a six-laning one but with a caveat that the concession period for the developer would then be reduced from 20 to 12 years. The onus of providing additional land for the six-laning highway is on the NHAI.

As tolls, the main source of revenues, are based on projections of traffic flow, the concession agreement now gives both the developer and the NHAI adequate flexibility to modify contracts if the actual traffic flow is over or below by 2.5 per cent of the target flow.

After today’s meeting, chaired by the Deputy Chairman of the Planning Commission M. S. Ahluwalia, sources said the detailed agreement which clearly demarcates the responsibilities of the developer and the NHAI has only one outstanding issue — the treatment of change in tax laws, which should be sorted out by September 21 with the finance ministry. Thereafter, this agreement would to be put up to the committee on infrastructure that is chaired by the Prime Minister.

In another improvement from the existing projects, the new agreement allows the developer to recover damages from NHAI in case the latter fails to provide necessary clearances in terms of land acquisition, approval from the railways and so on. In fact, for the first time, the agreement also goes into the safety aspect of drivers on these highways. A new condition that bans any commercial advertisements that could distract drivers has now been introduced.

From NHAI’s view, it empowers the Authority to terminate contracts if the developer does not abide by the stringent and detailed norms outlined for maintaining the highway and other facilities. Even the rest areas that need to be cleaned every four hours.

Based on the experience from delays in executing the Golden Quadrilateral, the NHAI now requires the developer to outline the steps taken to expedite construction in case there are delays in meeting the project milestones.

This model pact, which is applicable for all new national highway projects (NHDP III (B) to NHDP VII) under public-private partnerships, stipulates that government support in the form of equity would be given only after the developer has “expended” his share in the project. The balance grant (if any) would be given only during the project’s operation and maintenance phase. Over Rs 1,00,000 crore is to be spent on various highway projects that are awaiting a nod from the Cabinet.

Zooming ahead
• Risks/benefits’ sharing on traffic flow
• NHAI must get clearances in fixed period
• Developer to follow maintenance norms
• Termination if developer fails in this regard
• Bans ads on highways for safety reasons
• Highway upgrade from four to six laning