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Investor-friendly contracts likely for expressways

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The government is set to pack new contracts to build expressways with investor-friendly clauses as it seeks to bring private sector interest back to a sector that can set the path for economic recovery. Authorities are working on a model concession agreement under World Bank assistance for eight expressway projects that the government plans to award.
Under this, toll rates are expected to be more dynamic than now and the concession period as many as 30 years. The contractors will likely get more options to explore commercial utilisation of the stretches that they develop. The government hopes these measures will make the design-build-operate-transfer projects attractive to investors. The government plans to build about 1,000km of expressways at an estimated cost of Rs 16,680 crore under the National Highway Development Programme Phase VI.
Expressways require specialised approach. It’s for this reason that a separate MCA (model concession agreement) for expressway is under preparation. The government is willing to give more leeway to concessioners in the form of better toll rates and concession period along with commercial exploration of stretches. All these steps would boost the investor confidence in the embattling sector. The government’s target is to bring in private investment worth Rs 75,000 crore in the roads sector during the 12th plan.

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