Finmin rules out autonomy to NHAI for PPP projects
September, 25th 2006
The finance ministry is set to oppose the National Highway Authority of India (NHAI) demand for autonomy in appraising road projects via public private partnership (PPP) route. The ministry has questioned the NHAIs contention that slowing down of national highway construction is partly due to project proposals getting stuck with the PPP advisory committee (PPP-AC) with the ministry.
Shifting the onus of project appraisal and final clearance to NHAI is part of the proposed recast of authority.
Explaining the rationale behind the ministrys stand, a senior official said, even through PPP projects use public money substantially, the assets are being created in the public sector. It is incumbent on the finance ministry to ensure that the assets are built at the right price. He added, The whole discipline of PPP has to evolve in keeping with certain basic norms mechanism for pre-fixation of tariff, transparent competitive bidding for selection of bidders (from the private sector) and appropriate allocation of risk.
Refuting the NHAIs allegation that PPP-AC mechanism had led to delays, the official said the authority had sought nod for just one PPP project under the new model concession agreement for the four/six-laning of Haryana boarder to Rohtak NH stretch. The proposal was made on September 15 and the committee will have to clear it only by October 15, he said.
Road sector projects and especially the construction of national highways are turning into a big embarrassment for the government. In the first quarter of this fiscal, roads were the only segment in infrastructure which recorded a negative growth and that too by a striking 37%. NHAI was the largest defaulter, falling short of its construction target by 55.8%. Considering that NHAI has not awarded any highway projects so far this year, it seems likely that it will fall short of its targets for this fiscal as well.
While NHAI officials cite problems in land acquisitions and forest and environmental clearance as bottlenecks, the finance ministry is clearly of another view and holds the authority responsible for delay in works.
Private contractors too allege that NHAIs lackadaisical approach has resulted in delay in completion of work. The common refrain among them is that NHAI does not provide them the required land at time. A contracting company said, We usually get unconnected stretches of land and NHAI wants us to work on the, It becomes extremely difficult to keep shifting our equipment and workers and so leads to delay. It also does not provide them with the environment and forest clearances on time, they allege. So, the new model concession agreement is turning into a problem for NHAI.
According to official sources, the ministry would rather ensure that the general principles that underlie the PPP-mode projects for all infrastructure projects including roads are adhered to, by keeping them under the ambit of its PPP appraisal committee.