14 highway projects get nod for EPC bids
2 min read . Updated: 28 Nov 2013, 01:57 PM IST
PremiumThe road ministry grants approval as it seeks to attract private investments
New Delhi: The road ministry has approved 14 highway projects to be bid under the engineering, procurement and construction (EPC) model as it fails to attract private investments.
An inter-ministerial group, headed by road secretary Vijay Chhibber, approved the awarding of these projects under the EPC model as they failed to draw bids under the public-private partnership (PPP) model.
Under the EPC model, the government pays a contractor a sum to build a project awarded through competitive bidding.
In a 11 November review of the infrastructure sector, Prime Minister Manmohan Singh had allowed the road ministry to pursue the EPC model after private firms shunned PPP projects.
“The Prime Minister gave us a mandate to go for the EPC model and we have approved 14 highway projects that NHAI (National Highways Authority of India) brought to us in the last meeting of the inter-ministerial group," said a senior official who did not want to be named.
Twenty road projects worth ₹ 27,000 crore totalling 2,900km failed to receive any bids between March last year and October. The ministry awarded just 1,322km of road projects in the year ended 31 March against a target of 9,500km. The sector has seen a slowdown because of the economic downturn, cautious lending by banks and the highly leveraged balance sheets of developers.
The ministry has also scaled down its target for bidding out road projects both by the ministry and NHAI.
NHAI has awarded only 123km of highway project under PPP mode. According to the revised target, the ministry expects NHAI to seek bids for around 2,000km of projects under the EPC model.
“Under EPC, all the risks are borne by the government so projects will get a response but the question is whether government has the funds to construct all these projects under EPC," said M. Murali, director general of National Highways Builders Federation. “The PPP model was conceived in the first place as the government does not have enough money for building infrastructure. In the long run, this approach is not sustainable and the government should address the lacuna in the PPP model."
Confirming the development, another government official said “funding for these projects by the government will not be a problem. We have enough funds for commencing projects, even if all PPP projects were to be bid under the EPC mode, next year we may need more funds". He also requested anonymity.
