New Delhi: The National Highways Authority of India (NHAI) is all set to award the first set of contracts where private developers will operate, maintain and toll publicly funded highway stretches that are currently being managed by the highway authority itself.
The authority has received an average of 20 bids for each of the six road stretches for which it had invited bids this year, said an NHAI official who did not want to be named. It has identified nine stretches of highways, spanning 1,687km in Gujarat, Rajasthan, Uttar Pradesh and Madhya Pradesh for bids under the system. It also plans to bid out some 38 other projects, worth an estimated Rs42,331 crore in 2009-10. This is apart from several projects for which the bid processed was started in 2008 but not awarded.
The so-called operations, maintenance and tolling (OMT) contracts are seen as a good way to bring private sector efficiency in running those highways NHAI maintains, even as it looks to bid out other highways on the build-operate-transfer (BOT) model, where the developer upgrades roads and then maintains them for a specified period of time.
In OMT contracts, private operators would be allowed to collect tolls on highway stretches for five to nine years in exchange for maintaining them and providing essential road services, including ambulances. Currently, most government-funded highways are handed to tolling agents and maintenance sub-contractors on a cash basis.
The NHAI official, who did not want to be named, said apart from maintenance and surfacing, developers would also have to build structures such as toll plazas.
“It is the second best thing to BOT or BOOT (build-own-operate-transfer) method,” said Siddhartha Das, national PPP practice leader, transaction advisory services for consulting firm Ernst and Young Pvt. Ltd.
Under the so-called BOT or BOOT financing methods, the government invites the private developer to finance, build and maintain highways for a specified period of time, in exchange for tolling rights.
Public-private partnerships are the United Progressive Alliance government’s preferred method of financing large infrastructure projects as budgetary resources become limited. However, the government still tolls and maintains most of the 66,000km of highways in the country.
Analysts said the highway authority may eventually choose to give as much as 6,000km of roads, that were constructed by the highway authority, through cash contracts.
“It is a good thing. The biggest players will be competing. These two jobs will set the ground rules for the 6,000km to follow. After all if assets have been created, they have to be taken care of,” said Parvesh Minocha, managing director, Feedback Ventures Pvt. Ltd, a project management consulting firm.