Highways: Pacts with road contractors may be relaxed

A high level committee, constituted by Prime Minister Manmohan Singh on road projects, is believed to have recommended relaxing the controversial concessionaire's agreement to make the projects attractive for investors.

The committee headed by Planning Commission Member B K Chaturvedi would be submitting its report to the Prime Minister by Thursday.

Sources said the committee proposes to introduce an exit clause for the lead partner in a special purpose vehicle for any project besides relaxing the termination norms.

The existing Model Concession Agreement between the developers and the government has tough clauses for exit of the lead partner in special purpose vehicles for projects, besides the termination clause allows NHAI to take tolling rights from the developer, sources said.

The prime minister had set up the committee, which also comprised Finance Secretary Ashok Chawla and Road Transport and Highways Secretary Brahm Dutt, on August 7 giving it two weeks for submitting detailed report.

The government has set an ambitious target of developing 35,000 km of highway in the next five years linking 300 populous district headquarters with the road network.

The committee had also met bankers and financial institutions to make the roads bankable projects.

"We have had the meetings with bankers and financial institutions besides developers. The basic idea is to make the road projects lucrative and attractive for bidders," Dutt said.

The committee is also suggesting ways and means to make the existing model concession agreement (MCA) more attractive for bidders, besides suggesting ways to ease other technical norms, he added.

The existing MCA was said to be the major hurdle for the road projects.

Planning Commission member B K Chaturvedi said, "We will submit our report to the Prime Minister in a day or two. We are in the process of finalising the report."

The issues considered by the committee, include measures for expediting award of projects, financing road projects, restructuring of 4/6 laning projects based on traffic requirements and those in backward areas, and ensuring inclusive and equitable growth.

Another area in which the committee will give suggestions pertains to making project attractive for banks and private investors especially in the wake of the present global recession.

It will resolve some of the concerns raised by developers relating to the review of termination clause, conflict of interest clause and introduction of exit clause, and making dispute settlement process in NHAI faster and more effective.

The committee will also suggest fast track mechanism for resolution of inter-ministerial issues not requiring CCI's approval and to monitor progress on a regular basis for a mid-course correction.

Road Transport and Highways Minister Kamal Nath has already announced that road projects worth Rs 2 lakh crore (Rs 2 trillion) would be awarded in two years.

He had expressed in the review meeting that current process takes almost 3 years for actual work to start from the conception of a road project and another 3 years to complete it.