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Business News/ Politics / Policy/  Govt empowers road ministry to accelerate project implementation
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Govt empowers road ministry to accelerate project implementation

The cabinet has decided to empower the roads ministry to amend the Model Concession Agreement for highway projects

At least 20 road projects worth nearly `27,000 crore for 2,900km have failed to attract bids over the last two fiscal years. Photo: Pradeep Gaur/MintPremium
At least 20 road projects worth nearly `27,000 crore for 2,900km have failed to attract bids over the last two fiscal years. Photo: Pradeep Gaur/Mint

New Delhi: The Narendra Modi-led National Democratic Alliance (NDA) government vested more powers with the ministry of road transport and highways through a cabinet decision on Wednesday in a bid to accelerate the implementation of highway projects.

The Cabinet Committee on Economic Affairs (CCEA) has decided to empower the roads ministry to amend the Model Concession Agreement (MCA) for highway projects and to decide on the mode of delivery of these projects.

A model concession agreement is a legal contract that governs the terms of execution of road projects.

The National Highways Authority of India (NHAI) is the implementing agency of the road ministry for awarding and building national highway projects.

Mint had reported on 4 August that the ministry had moved a cabinet note to seek more decision-making powers with respect to making changes in the MCA and the mode of delivery of projects.

Currently, any changes in the MCA or change of mode of project delivery in case of failure to attract private investment through Build, Operate Transfer (BOT) (Toll) or BOT (Annuity) models have to approved by an inter-ministerial group (IMG) that included representatives of the roads ministry, finance ministry, planning commission and law ministry, followed by a cabinet nod.

“This (seeking cabinet approval) unnecessarily burdens the CCEA with issues that are not commensurate with its stature and competence, apart from adding to avoidable delays in the implementation of the National Highways Development Project (NHDP)," said a press release on the cabinet decision.

With this move, the government hopes to revive private sector participation in the roads sector. At least 20 road projects worth nearly 27,000 crore for 2,900km have failed to attract bids over the last two fiscal years.

“Empowering the line-ministry to modify the MCA was clearly overdue and is a welcome step for improving accountability. Regarding mode of delivery, I guess they will do it within the annual budget. They will obviously also have to set-up a mechanism to coordinate with 3P, the Central PPP (public private partnership) think tank being created, to ensure that learnings across sectors and from other countries are incorporated," said Parvesh Minocha, managing director of transportation business at infrastructure consultancy Feedback Infra Pvt. Ltd.

The proposals in the cabinet note were on the lines of suggestions made in a white paper released by the roads ministry on 2 July. The paper, which was released a month after the Bharatiya Janata Party-led NDA came to power, had advocated delegation of powers to NHAI’s board for making changes in project documentation, such as the model concession agreement, and bidding documents such as requests for qualification and requests for proposal. It also sought more powers for the NHAI board to make changes in the mode of execution of a road project and for renegotiating clauses in agreements to “resurrect the ailing PPP projects".

NHAI awarded 1,436 kms of highway projects against the target of 4,030 kms for the fiscal year ended in March. In the previous fiscal year, it could award only 1,116 km of highway projects against the ambitious target for award of 9,500 km, the release added.

In another decision, the Union cabinet on Wednesday also approved the signing of a preliminary pact in the area of healthcare between Japan’s ministry of health, labour and welfare and India’s ministry of health and family welfare. The cabinet clearance for the pact comes before Prime Minister Modi’s five-day visit to Japan starting 30 August.

“A Working Group will be set up to further elaborate the details of cooperation and to oversee the implementation of this MoC," a government statement said.

The memorandum of cooperation (MoC) envisages collaboration in training programmes for medical practitioners, nurses and public health professionals, financing for universal health coverage, toning up the service delivery systems and improving the quality of health care, health care system governance and management, including sharing of know-how on management of hospitals and community healthcare centres and the sharing of experiences and technology regarding telemedicine and electronic-health information system, the government statement said.

It also envisages cooperation in the area of pharmaceuticals, medical equipment, health research, disease surveillance and traditional medicines, it said.

The government, however, deferred a decision on its stake sale in three public sector undertakings (PSUs)—Oil and Natural gas Corp. Ltd (ONGC), Coal India Ltd and NHPC Ltd —as finance minister Arun Jaitley was out of town.

Disinvestment in the three PSUs could fetch the government more than 40,000 crore, enough to meet the disinvestment target for the current fiscal, according to estimates.

The proposals before the CCEA, headed by Modi, was to sell a 5% stake in ONGC, which could fetch about 18,000 crore at current market price. Besides a 10% stake sale of Coal India Ltd could fetch about 22,000 crore and an 11.36% stake sale in NHPC Ltd could fetch over 2,600 crore.

In the year ending 31 March, the government plans to mop up 43,425 crore from selling stake in PSUs.

PTI contributed to this story.

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Published: 28 Aug 2014, 12:35 AM IST
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