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Wednesday, 27 Jan 2016
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Highways to be the torch bearer of investment in 2016


Recently, the Kelkar Committee on Revisiting & Revitalising the PPP model of Infrastructure Development suggested ways to revive Public-Private-Partnership (PPP) in infra projects.




The key recommendations of the committee on Road projects include:


  • Increase concession period for BOT projects
  • Introduce hybrid models, viability gap funding, part annuity, operation and maintenance grants, etc. for non-BOT projects
  • Relax exit norms
  • Dispose pending cases between developers and NHAI
  • Shift to electronic tolling in time-bound manner

The Union Ministry of Road Transport & Highways on its own, took several initiatives to attract private developers into highway building in 2015. Those measures include:




  1. Exit Policy framework which permits concessionaires / developers to divest 100 percent equity and exit all operational BOT projects two years after completion of construction.
  2. NHAI has been authorized to provide funds to languishing projects that are in the advanced stage of completion but are stuck due to lack of funds from within its overall budget / corpus on a loan basis at a pre-determined rate of return. This loan is to be recovered along with interest as the first charge from the toll receipts immediately after completion of construction.
  3. The Cabinet has approved rationalized compensation to concessionaires for languishing NH projects in BOT mode for delays not attributable to concessionaires.
  4. A committee under the Chairmanship of Cabinet Secretary has been authorized to make amendments to the Model Concession Agreement. Certain changes have been approved by the Committee.
  5. The Government has approved segregation of construction cost from cost for land acquisition and pre-construction activities for the purpose of appraisal and approval of National Highways projects.
  6. A new mode of delivery under Public-Private Partnership (PPP) mode, namely Hybrid Annuity Model (HAM), is being promoted for awarding road projects for implementation under which 40 per cent of project cost is being provided by the Government to the concessionaire; the remaining 60 per cent is to be arranged in the form of debt and equity to be compensated over 15 years as bi-annual annuities. There is separate provision for O&M payments by the Government to the concessionaire and the private party does not have to bear the traffic risk.



As on December 2015, around 1195 projects in the roadways sector have been commissioned across states. The government aims to increase the length of highways to 1.5 lakh km from the existing 1 lakh km in the next four years. The road transport and highways ministry has lined up projects worth Rs 50,000 crore to be awarded under the PPP mode in 2016-17. The ministry plans to award close to 5,000 km to private companies during the next fiscal. Projects will be awarded mostly under the hybrid annuity model. Some of them will also be given out on the build-operate-transfer (BOT) mode.


At state level, Bangalore Development Authority has invited pre-qualification bids for construction of 8-lane peripheral ring road connecting Bengaluru City. The approximate cost of the project is Rs 11,950 crore. IRB Infrastructure Developers has bagged an order for construction, operation & maintenance of the Rs 9,090 crore Zozila tunnel project including approaches on NH No-1 (Srinagar-Sonmarg-Gumri Road) (14.083 km) in Jammu & Kashmir.


PPP projects launched recently


On 31st December 2015, PM Narendra Modi laid the foundation stone for the 74 km Delhi-Meerut Expressway (DME). The Rs 7,566 crore project will include construction of the 28 km, 14 lane Delhi-Dasna section on Hybrid Annuity Mode.


Essel Infraprojects announced achievement of financial closure of its Mukarba Chowk-Panipat Road Upgradation project. Work on the project is expected to commence soon.


NHAI invited RfPs from contractors to execute the Chikli-Fagne Road Upgradation project. The project envisages four / six-laning of Chikli-Fagne section of NH-6 (Package-II) in Maharashtra on BOT (Toll) basis.


National Highways Authority of India (NHAI) also invited bids for the development and operation / maintenance of the construction of new bypasses in Jharkhand and Bihar.

Quote of the week:

"The government will award 100 projects on PPP mode in 2016. Under the hybrid model, we will give you on platter projects with land acquisition and environment clearances”  

- Nitin Gadkari, Union Minister for Road Transport and Highways


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