The state should do the initial spadework in PPP in highway projects
In highway projects, the Centre needs to re-analyse public-private partnership (PPP), such that primary spadework and the garnering of statutory approvals is done by the government, before inviting bids. Or else, the absolute uncertainty over environmental, forest and other clearances would not just incredibly delay projects, however also unnecessarily shoot up costs and, indeed, make entire projects unviable.
As per the Rangarajan Committee formula, it appreciates that the Centre has approved premium rescheduling for road projects. As the projected returns to them from tolls and all seems very attractive, the road developers agree to pay the government a premium amount. As per the reports a premiums adding up to Rs 1,51,000 crore are due to the Centre.
But since bidding the economics has completely changed. Due to many reasons this reality is witnessed amongst which delays in getting the requisite project approvals jacking up costs and the slowdown since then has, in any case, made traffic and toll projections go haywire.
As per the facts delays in land acquisition or, say, over shifting of utilities in the states can hold road projects up, for an indefinite period. Now the concerned state and the centre have to go for a joint venture to fast-forward project clearances in the prescribed time .
It would speed up implementation and make the projects thus approved far more bankable. More significantly through this the winning bidders can raise funds at finer rates free of various risk premia. Still there would be umpteen project risks to be purposefully managed, but commercial risks would surely be more agreeable to mitigation than outright uncertainty and roadblocks.
From initial approximation, the revenue streams from tolls or real estate development can be quite diverse and it pays to have built-in mechanism for transparent renegotiations for the greater good. The obligations of all stakeholders should be clearly spelled out by the contracts. An independent regulator for highways is also needed , for supervision on project development and follow-through, as well as maintenance and the vital aspect of road safety.
Source: The Economic Times
bids, Centre, environmental, forest, PPP, Public-private partnership, Rangarajan Committee, Road projects
