Centre plans to leverage MCC period to prepare over 10,000 km highway contract

The model code of conduct kicks in as soon as elections are announced and runs until the elections are completed. (Photo: Mint)
The model code of conduct kicks in as soon as elections are announced and runs until the elections are completed. (Photo: Mint)

Summary

  • Slow progress on DPRs has been one of the reasons projects worth trillions of rupees have failed to move ahead and get awarded

New Delhi: The union government plans to use the Model Code of Conduct (MCC) period that comes into effect in the run-up to general elections to complete the detailed project reports (DPRs) of about 10,000 km of highways. This is aimed at speeding up contract awards and construction as soon as the new government takes charge.

The model code of conduct kicks in as soon as elections are announced and runs until the elections are completed. During this period government leaders are barred from announcing any new projects—a step aimed at ensuring a level playing field between government and opposition candidates.

The code, however, does not cover the work of completing project feasibility reports, two persons aware of the development said, and once ready the move can save time in rolling out new highways.

These DPRs are expected to be completed over the next three months using the PM Gati Shakti platform so that the awards of over 2 trillion worth of sanctioned projects are fast-tracked.

Slow progress on DPRs has been one of the reasons projects worth trillions of rupees have failed to move ahead and get awarded. The situation has become particularly alarming in the current financial year, with highway awards falling way below the targeted 12,000 km -- indicating a thinning of the pipeline for projects that would impact construction over a longer period.

In FY24, by January-end, only 3,481 km of highway projects had been awarded against 8,400 km in the same period of the previous year. Though the ministry of road transport and highways (MoRTH) secretary Anurag Jain said he's confident awards may end at 10,000 km in FY24, experts put the number a lot below that.

“PM Gati Shakti platform has sharply reduced the time for MoRTH to complete DPRs for highway projects from over six months to just about 15 days in several cases. This would be extensively used during the period of the model code of conduct to complete DPRs of road projects so that awards could be given pace," said one of the two persons quoted above.

Queries sent to MoRTH remained unanswered at press time.

Deepak Chowdhury, partner, IndusLaw, said the measure to complete DPRs in advance before the new government takes office would help projects take off and also attract private sector interest.

“But the issue of concern is poor quality of DPRs in the country which lack proper research, real-time data analysis and identification of construction risks. Faulty DPRs have led to challenges at project execution stage resulting in cost overruns, delays, at times even faulty designs. Hence, measures such as finalizing DPRs, improving their quality and also obtaining or easing the process of clearances required for project construction would instil confidence in the private sector participants in submitting bids and the sector may see increased participation as well as time bound delivery of projects," he said.

“The impact on future construction due to the low number of project awards in FY24 can only be better understood after analyzing the steps which the government will take after the conclusion of the general elections," said Ashish Suman, partner, JSA Advocates & Solicitors.

“This strategy is timely. As awards will freeze over the next four months with model code of conduct in operation, departments complete internal formalities to be ready with request for proposals post-election. The National Highway Authority of India has also stepped up its activity in Q4 of 2023-24. These actions will certainly help in recovering 'lost' time during model code of conduct," said Davinder Sandhu, co-founder and chairman at Primus Partners.

“The awards have remained muted this year as the government has been cautious in awarding projects where the land acquisition and associated permits are not in place. Also, delay in Cabinet approval for revised cost estimate for Bharatmala Phase I, lack of clarity on model of project development (with government keen to revive the BOT-Toll model) and the impending general elections have delayed construction and awards of highways. Typically, the trend in previous financial years has been that the pace of construction of highways picks up in H2 of the relevant financial year," Suman said.

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