India attracts interest again for road PPP projects

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India attracts interest again for road PPP projects

The National Highways Authority of India (NHAI) has received 15-16 bids for the road PPP project to expand the Delhi-Panipat expressway.

The road PPP project to expand the Delhi-Panipat expressway involves the widening of the road to 12 lanes, it will also include the service road. The project will be developed on build, operate and transfer (BOT) basis.

The total project investment is estimated at RS20 billion (US$323 million).

In 2014, the Delhi-Panipat highway is the first big project where NHAI has received great interest from the private sector.

According to sources, a considerable number of bidders have also shown interest in other three road projects:

  • the 135 km Eastern Peripheral Expressway project, which has a total investment estimated at RS44.9 billion
  • the 175 km Bathinda-Amritsar Expressway project, which has a total investment estimated at RS19 billion
  • the 95 km Ambala-Kaithal Expressway project, which has a total investment estimated at RS8.78 billion

During the 2013-2014 fiscal year NHAI awarded a total 1,138 km of road projects, of which three projects involving a total of 511 km has been awarded under the BOT model. This is under the official target to award 3,700 km of projects through PPPs and 2,300 km through the engineering, procurement, construction (EPC) mode.

Additionally, twenty-one road PPP projects bid out by the NHAI did not get a single bidder during the fiscal year 2013-2014.

In August 2014, NHAI approved plans to float a company that would acquire bad loans from road PPP projects as a part of several measures that the country was considering in order to revive the PPP model. Earlier in July NHAI was looking to improve the existing model concession agreement (MCA) that sets out the terms of the PPP contracts.

Furthermore, the Reserve Bank of India (RBI) had advised all commercial banks to treat road sector debt as secured to enable banks to allocate a larger portion of lending to road sector and also to reduce the cost thereon. Concessionaires/developers have also been allowed for harmonious substitution and the re-schedulement of Premium quoted by them.

After all of these efforts private players could have again started showing interest in the Indian road sector, even though, the situation is far form the 2010-2012 period when developers bid aggressively and the government awarded a record of 147 road projects.

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