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Govt approves recommendations

Projects

With the aim of resolving the procedural impediments faced by various stakeholders in the highway sector, the Government has accepted the recommendations made by the Shri BK Chaturvedi Committee.

The recommendations of the Shri BK Chaturvedi Committee have been accepted with the proviso that the financing plan for 2010-11 onward would be considered by the Empowered Group of Ministers for further action, including such changes to the work plan as may be necessary.

The main recommendations of the Committee are submitted in the report on – “Revised strategy for implementation of the NHDP – Framework and Financing”.

Some of the key recommendations mentioned in this report (and approved by the government include carrying out implementation of road projects on all the three modes of delivery viz. BOT (Toll), BOT (Annuity) and EPC (Item Rate Contract) concurrently rather than sequentially. The report says that roads below a certain threshold in terms of traffic do not merit testing on BOT (Toll) as the process only leads to delays in implementation and award. Hence, a road not found prima facie suitable for BOT (Toll) can be implemented directly on BOT (Annuity) subject to the overall cap as envisaged in the Work Plan, it recommends. The decision of shifting a project from BOT (Toll) to BOT (Annuity) would be taken by the Inter-Ministerial Group (IMG) chaired by Secretary, MoRTH and approved by the Ministry, the report adds.

The report also emphasises that before implementing a project on EPC basis, it will be compulsorily tested for BOT (Annuity) and only if unacceptable bids are received then only the project will be awarded on EPC basis. Normally, an Annuity bid working out to an Equity IRR of up to 18% will be acceptable as per these norms. However, in the event of bids exceeding the Equity IRR of 18%, the same will be bid out on EPC, it says. In case of difficult areas having law & order problems, security, inhospitable terrain etc, a bid working out to an Equity IRR of up to 21% will be acceptable considering the risk premium of 3%, on case to case basis. PPPAC will be empowered to give approval for projects to be moved from Annuity to EPC where acceptable bids have not been received.

The report has also recommended raising of the overall VGF cap of 5% to 10% for the entire six-laning programme, and consideration of individual projects in low traffic GQ stretches with VGF up to 20% within an overall cap of 500 Km out of the 5080 Km of the Phase-V programme yet to be awarded.

‘In Principle’ support to NHAI

Mr Kamal Nath, Hon’ble Minister of Road Transport & Highways has said that the government has agreed to an ‘In Principle’ support to the National Highway Authority of India. This includes the following:
• Issuance of Tax exempted bonds
• Guarantee cover to the Borrowing Plan of NHAI.
• Out of the borrowing approval of Rs30,000 crore earlier provided to IIFCL, Rs10,000 crore under the fiscal stimulus package will be transferred to NHAI, as per the its borrowing requirement. Assistance in negotiating non-sovereign multilateral loans from World Bank, ADB, JBIC etc. by providing back to back support, if necessary.
• Providing a Letter of Comfort from Ministry of Finance confirming the availability of Cess at least till 2030-31.
 

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