The Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, has given its approval to the Ministry of Road Transport and Highways to amend the Model Concession Agreement, as may be required from time to time, and to decide the mode of delivery of national highway projects.
The empowerment of the Ministry of Road Transport and Highways is expected to benefit users of national highways as it will expedite the implementation of road infrastructure projects across the country. It would also result in greater road connectivity to far-flung areas and lead to increased economic activity.
It may be recalled that the B.K. Chaturvedi Committee Report, which was accepted by the government in November 2009, had prescribed a framework to decide the mode of delivery and changes in the Model Concession Agreement through an institutional mechanism of the inter-ministerial group. According to its recommendations, further amendments to the Model Concession Agreement, where necessary, and the mode of delivery of any specific project in case the project is found unviable on BOT-Toll and/or BOT-Annuity, was to be considered, examined and approved by the inter-ministerial group.
In case there was no unanimity in the inter-ministerial group, the same was required to be placed before the empowered group of ministers with the approval of the Minister for Road Transport and Highways. However, since the EGoM was disbanded in 2012, such proposals had to be placed before the Union Cabinet and Cabinet Committee on Economic Affairs for approval. This unnecessarily burdened the CCEA with issues that were not commensurate with its stature and competence, apart from adding to avoidable delays in the implementation of the National Highways Development Project.
Hence, the Cabinet Committee on Economic Affairs felt it necessary to allow the Ministry of Road Transport and Highways to amend the Model Concession Agreement and also decide the mode of delivery of national highway projects.
Background
Against the ambitious target for award of 9500 kms of road length for the financial year 2012-13, only 1116 kms could be awarded during the year by the National Highways Authority of India (NHAI) and only 1436 kms against the target of 4030 kms for the year 2013-14. On analysis after consultations with all the stakeholders in the sector, it has been concluded that this shortfall is primarily attributable to an overall economic slowdown resulting in lack of availability of debt and equity in the market. Further, many policy issues pertaining to environment and forest clearances, provisions regarding loans to concessionaires and procedural complexities have also adversely impacted the award of road projects during 2012-13 and 2013-14. In response, the MoRTH made sustained efforts to remove these impediments pertaining to policy issues/procedural complexities in order to create a conducive atmosphere to boost the road sector.
