With the government following a hands-off approach,and taking a bitter lesson from the way 2-G spectrum sale was handled,the Finance Ministry has suggested a transparent auction system for awarding road projects to private developers. After facing flak on the 2-G spectrum allocation in 2008,the government this year resorted to a transparent and hands-off auction system for the 3-G radio waves allocations resulting in a huge collection of Rs 1.06 lakh crore to the exchequer against the projections of Rs 35,000 crore. In the mid-year analysis of the economy,the Ministry said that during the first half of the current financial year only 691 km of roads have been completed against a target of 2,500 km for the year. Contracts and concessions for only 3,051 km have been awarded against the annual target of 8,724 km,it said. Expressing concern over poor performance of contractors,the review presented in Parliament said some of the problems can be overcome "if projects are awarded on the basis of a transparent and hands-off auction system." It said in order to make the tendering process in road projects more effective,there is a need to put in place a transparent,well-designed system of auction whereby private developers are made to properly compete with one another with no involvement of the government. The document said if the private developers are made to properly compete with one another with no involvement of the government,this would lead to the contractors offering projects on most cost effective terms. "Everything here depends on design of the auction system. If this is well-designed,the implementing agencies should be able to find developers who will take the projects with internal rates of returns as low as 12,13 or 14 per cent," it said. It identified delays in land acquisition and forest clearances as major stumbling blocks in road construction. Road Transport Minister Kamal Nath who had set a target of building 20 kms of highways a day has run into problems with the Environment Ministry and also the Planning Commission. While the Planning Commission had described his targets as over ambitious,the Environment Ministry has put on hold several of the projects including the road near Pench Tiger Reserve in Madhya Pradesh. There have also been differences between the Road Transport Ministry and the Planning Commission over the model concessionaire agreements. Termination of contracts often result in long-drawn litigation and delays.
