New method for highway project allocations soon

Redesigning the highway projects

The Union government is redesigning the way projects are allocated based on assessment of their viability, in a bid to fast-track award of highway projects, and thereby construction.

Sources have revealed that projects would now be bid out in 3 ways. The build-operate-transfer (BOT) toll model will be used in cases where no viability gap funding (VGF) is required.

Projects that are likely to be viable with the support of VGF of up to 20%, both the BOT (toll) and the EPC models would be formulated and the final decision would be taken by the Road Ministry.

The third category of projects which are not going to work on the BOT (toll) model with VGF in excess of 20% would be developed according to the EPC model.

The National Highways Authority of India (NHAI) has so far this year awarded seven highway projects with total length of 798 kilometer (km), even as a lukewarm response towards PPP projects has caused a shift in focus to the EPC model. It is currently gearing up to invite bids for another 394 km of projects.

Of the 13 projects put up for bidding for 1,115 km of roads, 841 km was bid out based on the EPC mode, while 273 km was to be developed under BOT model.

Additionally, 11 proposals, involving construction of 1,098 km of highways, are being studied by the inter-ministerial PPP-appraisal panel. Of this, 1,010 km is under the EPC mode.