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Road Ministry seeks to draft new Concession Pact for Expressways

<p style="text-align:justify"><span style="color:#696969"><span style="font-size:11px"><span style="font-family:arial">The road ministry is considering drafting a new contractual framework for building expressways that will be more investor-friendly.&nbsp;</span></span></span><span style="color:rgb(105, 105, 105); font-family:arial; font-size:11px; line-height:1.6em">The new model concession agreement (MCA) for expressways will address the issue of revenue collection and overcome the limitations of the existing contractual agreement.</span></p> <p style="text-align:justify"><span style="color:#696969"><span style="font-size:11px"><span style="font-family:arial">&ldquo;Expressways are access-controlled and have closed tolling. There are many features which are different and these are more capital intensive than highways. So these need to be handled differently,&rdquo; said a senior road ministry official who requested anonymity.</span></span></span></p> <p style="text-align:justify"><span style="color:#696969"><span style="font-size:11px"><span style="font-family:arial">The National Highway of Authority of India has created a separate division to handle big expressway projects, including the Eastern-peripheral expressway, Delhi-Meerut expressway and Mumbai-Vadodra expressway. The projects are worth nearly INR 30,000 crore.</span></span></span></p> <p style="text-align:justify"><span style="color:#696969"><span style="font-size:11px"><span style="font-family:arial">&ldquo;In 2011-12, 18,000 Km of expressways were proposed to be taken up and now we are in the process of calling bids for some of the bigger projects. In this market we are not sure if PPP (public-private partnership) will come. So there is a need to customize the revenue model,&rdquo; said another official confirming the development. He also requested anonymity.&nbsp;</span></span></span><span style="color:rgb(105, 105, 105); font-family:arial; font-size:11px; line-height:1.6em">The new framework is likely to propose higher toll rates for expressways, the official added.</span></p> <p style="text-align:justify"><span style="color:#696969"><span style="font-size:11px"><span style="font-family:arial">The road ministry is keen to consult multilateral agencies such as the World Bank, Asian Development Bank or Japan International Cooperation Agency for technical assistance in drafting the new MCA.</span></span></span></p> <p style="text-align:justify"><span style="color:#696969"><span style="font-size:11px"><span style="font-family:arial">&ldquo;The existing MCA is good but it has outlived its utility and needs to be re-engineered. We would call finance ministry, Planning Commission and other stakeholders like Indian Road Congress and concessionaires for consultation too,&rdquo; said the first official. &ldquo;Some sharing of risk between the government and private sector needs to be brought in the concession agreement which is easy to do. For large infrastructure projects where borrowing requirements are high, part of the debt can be subsidized transparently and of course toll rates need to be made dynamic,&rdquo; said Parvesh Minocha, managing director of transportation business at infrastructure consultancy Feedback Infrastructure Services Pvt. Ltd. &ldquo;The proposed expressways are highly capital intensive and such high investments will not come if these issues are not addressed.&rdquo;</span></span></span></p> <p style="text-align:justify"><span style="color:#696969"><span style="font-size:11px"><span style="font-family:arial">The road ministry awarded just 1,322km of road projects in 2012-13 compared with a target of 9,500 Km and has had to lower its internal target for the award of road projects for the second time this fiscal year. It nearly halved its target of awarding highway projects under National Highway Development Programme to 2,128 Km in 2013-14, from 4,028 Km earlier and much lower than its original 7,500 Km target. The ministry is hoping to award these expressway projects to revive the sector</span></span></span></p> <p style="text-align:justify"><span style="color:#696969"><span style="font-size:11px"><span style="font-family:arial">Source-On Request</span></span></span></p>