The Ministry of Road Transport, Highways and Shipping is, henceforth, planning to undertake national highway projects on EPC (engineering-procurement-construction) model instead of PPP (public-private partnership) mode. The EPC vs. PPP issue has been widely debated among road builders and in public forums. The efficacy of PPP projects has been questioned owing to frequent delays in implementation and commissioning, and other challenges on the ground. This has brought EPC back in favour among project developers.
New Minister for Road Transport, Highways and Shipping Nitin Gadkari admitted that over 260 PPP projects involving around Rs. 60,000 crore were currently stalled because of various reasons. A large percentage of this amount is deemed as non-performing asset for the banks. Gadkari has been reviewing the stalled projects, across the construction and infrastructure sectors, in various states, and has been discussing possible solutions to projects valued at over Rs. 40,000 crore. He is also exploring the possibility of financing these projects at low interest rates under the EPC model.
The minister announced said that henceforth all problems in the infrastructure sector would be resolved at monthly meetings that would be attended by the Cabinet Secretary, the Principal Secretary to the Prime Minister and representatives of various ministries and departments including those of railways, defence, and environment and forests. He said that “a strategy of cooperation, coordination and communication” would be adopted within the government to resolve problems that hinder infrastructure development even as utmost importance would be given to ethics and environment.
However, there are mixed views about both the EPC and PPP models. As J.P. Chalasani, Managing Director and Group CEO, Punj Lloyd, observed in the wake of the union budget: “With the government’s proactive policies and announcements made in the budget, to support the private sector’s involvement in Indian infrastructure, the future looks promising for EPC companies in the domestic market. Government’s plans to invest significantly in the oil and gas, roads and highways, airports, and harbour and port sector, will offer sufficient opportunities to players in this industry. PPP model in awarding several projects in the infrastructure space has taken on a very forward looking approach, encouraging the private players. We are very optimistic about reviving growth in the infrastructure and manufacturing sector.”
Meanwhile, the Ministry of Road Transport, Highways and Shipping will undertake road building works amounting to Rs. 20,000 crore in Ladakh, in Leh region of Jammu & Kashmir, to build infrastructure and promote tourism. A proposed tunnel alone is set to cost Rs. 10,000 crore.
A special corporation is proposed to be set up to undertake road projects in the seven northeast states of Arunachal Pradesh, Meghalaya, Assam, Tripura, Mizoram, Nagaland and Manipur.
In Uttarakhand, works costing of over Rs. 5,000 crore will be undertaken. This will include projects that will connect important religious places.
In Himachal Pradesh, separate roads are proposed to be built as it is difficult to widen the existing roads.
As a special case, road contracts will be given for small road stretches, of 5 km each, in the Maoist-affected areas of Chhattisgarh.
In other developments, two years from now the ministry plans to set a target of 30 km per day as opposed to 20 km per day at present. Currently, the government is finding it difficult even to build roads at a rate of 3 km per day.
The key bottlenecks in the way of speedy completion of national highway projects mostly relate to land acquisition, railway lines, environment and forest clearances, and cash crunch facing the contractors. In reply to a question on the problem of land acquisition in West Bengal, Nitin Gadkari said that some of the land meant for road construction had been encroached upon and that he would write to the various chief ministers to resolve these issues and request them to review all infrastructure projects in their respective states.
Last month, the minister had voiced serious concern over the tardy progress in completion of national highway projects in different parts of the country and called for urgent measures to overcome prolonged delays which were causing immense hardships to the people.