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Gujarat Seeks Bids for Road Projects

  • The state has sought bids for eight road projects adding up to some 350km under the annuity modelBangalore: Ayear after Gujarat cancelled the 46 bids received for five state highways, it has sought bids for eight road projects adding up to some 350km under the annuity model, where the government pays the developer a fixed sum every six months in lieu of tolls.
  • Gujarat has contracted India Infrastructure Initiative, which had been hired by the state government for its roads programme. The United Progressive Alliance government at the Centre has made it a policy to first offer national highway packages to private developers. The government will build the highway itself only when there is no interest from the private sector. Punjab, Madhya Pradesh and Karnataka are other states that have plans to offer roads to the private sector.The Gujarat project involves widening the existing single-lane highway to two lanes and then maintaining it for a period of 12 years. Out of 19,761km of existing state highways, 18,972km is black topped.
  • Concession agreements outlining the terms of the deal were signed with six companies—Backbone Enterprises Ltd, Dilip Buildcon Ltd, Vishwa Infrastructure and Services Pvt. Ltd, Kalthia Engineering and Construction Ltd, Relcon Infraprojects Ltd and RK Constructions. The bidding took place over 2011 and as many as 72 bids were received for eight projects, according to Suresh Kumar, chief operating officer of India Infrastructure Initiative.According to Kumar, the annual annuity payouts of the road projects only come to about 15% of the project cost.
  • “NHAI (National Highways Authority of India) had bid out annuity projects and they are between 18% and 22%,” said Kumar. “Our mandate is 2,000km.”In the annuity model, the developer is paid a specified sum every year in exchange for financing and building the highway.Fifteen per cent “certainly looks attractive from a government perspective”, said Amrit Pandurangi, senior director at Deloitte Touche Tohmatsu India Pvt. Ltd. However, that also depends on the cost of the project and other details, he said.

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