Home / Politics / Policy /  Govt eyes 75% surge in PPP investments in highways

India is aiming at a 75% surge in investment in the year to next March in building highways in partnership with private firms, the roads ministry said in a presentation made to Prime Minister Narendra Modi.

During a review meeting on Friday, the ministry set a target of 3,000km to be awarded under the so-called public-private partnership (PPP) model, a ministry official said, requesting anonymity. The ministry was able to award just 750km in 2014-15.

The target for road awards was raised by 1,500km to 10,000km for the new fiscal. The ministry awarded nearly 8,000km in the previous fiscal against a target of 8,500km, mostly under the government-funded model called engineering, procurement and construction (EPC).

As much as 3,000km is expected to be awarded under the new hybrid annuity model, said another road ministry official, who also declined to be named. This new model, which the government introduced in February to de-risk the project developers, is yet to be notified.

“Work on fine-tuning the model is on. We have prepared a draft with inputs from stakeholders and sent it to the department of economic affairs," said the second official.

Additionally, to encourage private investment, the ministry is pushing for cabinet clearance of two of its plans. The first entails permitting developers of projects awarded before 2009 to exit two years after completion of the project to free up capital for reinvesting.

The second provides for fund infusion into stalled road projects, where half the construction work has been completed and are stuck for lack of equity. Both proposals have been pending with the cabinet for quite some time.

A third proposal to provide relief on penalty due for terminating a project has been withdrawn and is being reworked.

The ministry has met with little success thus far in bringing back private investment into the roads sector, which has remained dismally low over the past three years. “We think the measures taken to attract private sector and to resolve issues discouraging them will bear fruit this year," said the first official.

The ministry also said in the presentation that it constructed 12km roads per day in the year to 31 March, marginally up from the 11.7km of roads constructed every day in the preceding fiscal. These fall below the total target of 6,300km it set for road construction for each of the fiscals.

The roads ministry had sanctioned 1,427 projects in the past three years, of which 437 were delayed, 101 were under dispute and 57 were terminated, junior roads minister Pon Radhakrishnan said in a written reply to a question in the Rajya Sabha on Monday. The remaining 1,022 projects have been completed.

“The 3,000km target for PPP is achievable in this fiscal, provided the new hybrid model is notified latest by June or July," said Parvesh Minocha, group managing director at infrastructure consultancy Feedback Infra Pvt. Ltd. “Also, this other proposals of funding stuck projects and providing early exit to projects awarded pre-2009 will free up finances and create the fiscal space for private developers who were stuck in these projects to come back and invest under the PPP route."

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