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Roads ministry in talks with World Bank for $3 bn loan

Roads ministry in talks with World Bank for $3 bn loan

New Delhi: The ministry of road transport and highways is in talks with the World Bank on a $3 billion loan to convert some 6,000 kilometers of single-lane national highways into two lanes, transport minister Kamal Nath said on Thursday.

He said the concessional loans, which would cover 80% of the cost of the projects, would be needed to improve highways connecting some of India’s backward regions.

Nath, who is flying to New York on Friday, will also meet pension funds as well as the United States India Business Council (USIBC), among others.

The projects would be awarded as so-called EPC, or engineering-procurement-construction contracts. This is a departure from the governments preferred build-operate-transfer, or BOT, model where the developer finances and builds the project. In EPC contracts, the government awards the contract for a specified fee.

Nearly 19,702 kilometers out of India’s 66,000-kilometer road network are currently single-lane.

“I don’t think it’s ever been a question of money. It’s always been a question of implementation," said Siddhartha Das, an infrastructure expert with consulting firm Ernst and Young. “I think at one level, we now know what is slowing down the highways. What is slowing down is termination, conflict of interest etc. I think now the priority should be assets on the ground."

Talking about the need to improve the roads, which connect some of India’s most backward regions, Nath said: “Roads create wealth. Wealth does not create roads."

The National Highway Authority of India, which oversees India’s highway network has in recent times been criticised for its inability to award highway projects on schedule. This coupled with a global slowdown, also reduced the number of bidders for highway projects.

Nath said the report prepared by the committee headed by Planning Commission member B. K. Chaturvedi had already been presented to Prime Minister Manmohan Singh and its reccomendations would address many of the industry’s concerns.

The highway authority has also finalised a work plan for the year 2009-2010, which would see it initiate work on some 11,900 kilometers of highways worth an estimated Rs99,728 crore.

The National Highways Authority of India has over the last three months awarded nine projects worth an estimated Rs12,154 crore, the minister said, with another six worth Rs8,700 crore expected to be awarded in the three weeks.

The authority will also start an expressway division within the highway authority, ahead of introducing an Expressway Act in the monsoon session of parliament.

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