PM panel OKs multi-cr package for highways

The Committee on Infrastructure headed by Prime Minister Manmohan Singh today gave an in-principle approval to a Rs 22,750 crore package for...

The Committee on Infrastructure headed by Prime Minister Manmohan Singh today gave an in-principle approval to a Rs 22,750 crore package for converting 6,500 km of four-laning of highways into six-laning. Most of this six-laning around 98 per cent would be done on the 5,846 km of the Golden Quadrilateral.

The Committee however did not clear the new model concession agreement as there were still a couple of outstanding issues pertaining to the treatment on change of tax rates and creation of universal road safety8212;which would now be ironed out by the Committee of Secretaries CoS.

Speaking to the media after the meeting with PM Singh, Union Minister for Road Transport, Highways and Shipping, T R Baalu said that of the 6,500 km, six-laning would be undertaken on 5,700 km of the GQ, while 800 km would be on select highways.

This six-laning project, called the National Highway Development Project NHDP V, would be executed under the new model concession agreement under public-private partnership, which should be cleared in 10 days.

Sources said that at the meeting, Finance Minister P Chidambaram raised some 8216;8216;important observations8217;8217; on the change in tax issue, which needed further discussion.

Incidentally, it was at the meeting8212;headed by Planning Commission deputy chairman Montek Singh Ahluwalia8212;of the Empowered Group on Infrastructure a few weeks back, where the issue of change in tax laws was first raised.

Under the draft agreement, it was provided that the NHAI would compensate the developer for any change in law that affects the tax rates primarily an increase during the period of concession. This matter was thereafter discussed between the Finance Ministry and the NHAI where it was decided that there would be cut-off point for this compensation Rs 50 lakh.

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However, it appears that this issue needs further discussion, which is why the matter was referred to the CoS.

Similarly, the CoS would also discuss how the safety fund would be financed as there was a view that 1 per cent of the cess on petrol and diesel would be used for creating this cess.

On the six-laning project that was cleared by the PM, the guideline that has been adopted is that there there should be a traffic potential of 25,000 passenger car units PCUs. Earlier the guideline for six-laning was 40,000 PCUs. Sources said assuming a 5 per cent growth in traffic every year, this level would be reached by the time the six-laning was completed.

According to the plans, around 2,000 km of the six-laning would be achieved by the end of the 10th Plan while the balance would be taken up in the 11th Plan period. It was also decided that this time round, the minimum length of any six-laning project under NHDP V would be 100 km.

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Of the Rs 22,750 crore needed for the project, Rs 19,335 crore would come from private investments, while the government support would be Rs 3,415 crore.