The decision of the Ministry of Road Transport and Highways to adopt the Engineering Procurement and Construction mode for building 20,000 km. two-lane national highways during the 12th Five Year Plan may fail to yield the desired results in the current state of the economy.

India, at present, faces a grave economic crisis due to low growth, high inflation, high fiscal deficit and highest ever trade and current account deficit. No doubt the slowing down of the global economy has had a significant impact on the country but the present economic adversity is largely attributable to domestic factors such as excessive monetary tightening, delays and uncertainty over key economic legislations, project delays on account of stalled environmental clearances and land acquisition hurdles, pause in reforms and lack of willingness to take decisions in the government.

“The decision of the MoRTH to adopt the EPC mode raises the question as to where the funds are going to come from in the prevailing economic scenario,” a source associated with the road sector told Projectmonitor.

“On one hand, the government is trying to cut costs by imposing various restrictive measures, and on the other, it adopts the EPC mode for construction of national highways. In case of PPP projects, even when viability gap funding is sought, the concessionaire meets minimum 60 percent of the cost. At present, the MoRTH is relying heavily on just EPC mode for meeting its targets but this may not be feasible in the long run because of various constraints. The focus, instead, should be on both modes, PPP as well as EPC, for boosting the highway sector,” he added.

The EPC mode is different from the conventional item rate contract. Unlike in item rate contract, which is prone to excessive time and cost over runs, the EPC mode assigns the responsibility of investigation, design and construction to contractors for a lump sum price awarded through competitive bidding with provision for index-based price variation.

In a bid to ensure smooth implementation of national highway projects under the EPC mode, the MoRTH, of late, has initiated a number of measures. Included among them is the decision to conduct review meetings for national highway works in respective states. Earlier, the review meetings with officials of state Public Works Departments were held in New Delhi. Under the new initiative, a month-wise schedule for holding the review meetings, starting from June 12th, 2013, has been worked out for the current year. The concerned Chief Engineers are required to convene review meetings for national highways and Central Road Fund works in states under their jurisdiction in accordance with the schedule.

Plans have also been drawn to organize training programmes covering the EPC mode of construction for state PWD officials, concerned officials in National Highways Authority of India and the MoRTH, consultants and contractors.

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