NHAI to seek bids for 4,000 km highways in the next fiscal year

NHAI to seek bids for 4,000 km highways in the next fiscal year

New Delhi: The National Highways Authority of India (NHAI) will seek bids for 3,000-4,000 km of highways for operations, maintenance and tolling (OMT) contracts in the next fiscal year, said J.N. Singh, member (finance), NHAI.

This will be in addition to the 2,900 km the authority has already put on the block since August this year. Under OMT contracts, private contractors are allowed to collect tolls on the highways they maintain. These contracts are typically for a concession period of four to nine years. Contractors share a part of the revenue with NHAI as concession fee, which grows 10% annually.

At least 80 companies have participated in bids this year, according to Ernst and Young. These include Relcon Infraprojects Ltd, IRB Infrastructure Developers Ltd, Oriental Structural Engineers Pvt. Ltd, Gayatri Projects Ltd and HDPL Infrastructure Ltd, according to the consultancy’s data.

“The highways in question are those that were laid in the 1990s on a build-operate-transfer (BOT) basis, and whose concession periods have ended," said M. Murali, director general, National Highways Builders Federation (NHBF), an industry lobby. Under BOT financing, a private developer finances, builds the road and maintains it for a specified period in exchange for rights to levy tolls.

Murali, however, said NHAI is unlikely to seek bids for 3,000-4,000 km to private contractors. “The figure should be in the range of 2,000 km, as that is the road length that is going off concession next year." NHAI simplified the bidding process this year by allowing companies to submit documents just once in a calender year, instead of asking them to submit these separately for each project.

Mint reported on 2 February 2009 that private developers could be allowed to maintain NHAI’s highways.

When B.C. Khanduri was highways minister (from 2000-2003), the authority had engaged ex-servicemen as toll collection agents on stretches maintained by the agency.

NHAI’s Singh said discrepancies in revenue collection had occurred over time.

By offering contracts for bids, the government will get a fixed income from private contractors, said Murali of NHBF.

“The profit or loss, as the case may be, would be borne by the contractor," he said.

Abhaya Agarwal, executive director, Ernst and Young, said awarding maintenance contracts to private contractors is beneficial for NHAI as it typically leads to timely execution of projects.

Agarwal said the process enhances private participation in the sector, thereby increasing competitiveness as bidders either seek a lower grant or offer a higher concession fee.