New Delhi: India’s highways regulator will be able to bid out stretches of publicly funded highways to developers under the operations, maintenance and tolling (OMT) contracts with regulatory approval for the proposal expected in 10 days.
Under the OMT system, 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 agents collect the tolls and hand them over to the government and the sub-contractors maintain the highways. A model OMT concession agreement is likely to be approved “in the next 8-10 days”, said a finance ministry official, who didn’t want to be identified.
Delays in approving the proposed system had stalled the offer of OMT contracts. The draft concession agreement, prepared by the National Highways Authority of India (NHAI) has been ready for several months now, said an NHAI official who also didn’t want to be identified.
On track: Vehicles lined up at the toll plaza on the Delhi-Gurgaon highway. Currently, with most government-funded highways, private operators collect toll and sub-contractors are paid for maintenance. Ramesh Pathania / Mint
NHAI until now has been offering highway stretches under the build-operate-transfer (BOT) financing method where the private developer finances, builds the road and maintains it for a specified period of time, in exchange for rights to levy tolls. The regulator is targeting Rs1,600 crore in revenue from tolling publicly funded highways this year. The OMT contracts were seen as a way to drive private sector efficiencies in maintaining highways, the NHAI official said.
Using agents, the government now collects tolls on a number of four-lane highways constructed under the so-called north-south-east-west corridors. Last year, the highways regulator had proposed bidding out highways funded by it under the OMT system.
“I have the dates (for the next stages of bidding) ready,” said the NHAI official. “The concessions would range from five to nine years with the stretches being between 100 and 250km long. Concessionaires would also have to provide for facilities such as ambulances and cranes,” he said.
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.
“Once the assets have been created, they have to be taken care of. OMT contracts have the same advantages that BOT contracts have. It will bring in international players, if the sizes are large enough. It will drive private sector efficiencies,” said Parvesh Minocha, managing director, engineering and project management, Feedback Ventures Pvt. Ltd, a project management consultant. NHAI last month received at least 18 bids for two highway packages that were opened for bidding recently. Shortlisting of bidders for these stretches is currently under way.