With no takers to the changed policy of the National Highway Authority of India (NHAI) for development of national highways, the State Government has agreed to adopt public-private partnership model enunciated by the Centre.
As per the recommendation of the Planning Commission, the NHAI has been insisting that all the states should take up the highways development projects under the public-private partnership (PPP) mode.
Majority of the states are still reluctant to accept the PPP proposal in view of the lukewarm response from private builders to the new concept.
The Ministry of Surface Transport and Highways has been insisting that all the states sign a memoranda of understanding with the Centre as a token of acceptance to the PPP model.
If the NHAI’s new policy is acceptable, each state has to sign a state support agreement (SSA) with the agency executing the highway development project, official sources said.
Under the SSA, signatory state will have the responsibility to ensure that the private agency got back its investment on the road project through toll collection. If the builder failed to recover his investment within the stipulated time, the state concerned will compensate.
Private builders are not keen to take up road projects which are not economically viable under PPP mode. Four-laning of Bhubaneswar-Puri national highway is a case in point, the sources said.
Under the existing policy, NHAI is awarding national highway development project either under build-operate-transfer (BoT) toll model or B o T a n n u i t y mode. While in BoT (toll), an operator is entitled to earn its investment from toll revenue during the concession period, in BoT (annuity) the operator gets return from semiannual payments from the NHAI.
While the tollbased projects have a provision of viability gap funding (VGF) up to 40 per cent of the project cost, the annuity-based projects do not have such a provision.
During his recent visit to Delhi, Chief Minister Naveen Patnaik held detailed talks on the highway development projects of the State with Union Minister Kamal Nath. The Chief Minister had reportedly given his consent to the new policy adopted by the NHAI.
As per the recommendation of the Planning Commission, the NHAI has been insisting that all the states should take up the highways development projects under the public-private partnership (PPP) mode.
Majority of the states are still reluctant to accept the PPP proposal in view of the lukewarm response from private builders to the new concept.
The Ministry of Surface Transport and Highways has been insisting that all the states sign a memoranda of understanding with the Centre as a token of acceptance to the PPP model.
If the NHAI’s new policy is acceptable, each state has to sign a state support agreement (SSA) with the agency executing the highway development project, official sources said.
Under the SSA, signatory state will have the responsibility to ensure that the private agency got back its investment on the road project through toll collection. If the builder failed to recover his investment within the stipulated time, the state concerned will compensate.
Private builders are not keen to take up road projects which are not economically viable under PPP mode. Four-laning of Bhubaneswar-Puri national highway is a case in point, the sources said.
Under the existing policy, NHAI is awarding national highway development project either under build-operate-transfer (BoT) toll model or B o T a n n u i t y mode. While in BoT (toll), an operator is entitled to earn its investment from toll revenue during the concession period, in BoT (annuity) the operator gets return from semiannual payments from the NHAI.
While the tollbased projects have a provision of viability gap funding (VGF) up to 40 per cent of the project cost, the annuity-based projects do not have such a provision.
During his recent visit to Delhi, Chief Minister Naveen Patnaik held detailed talks on the highway development projects of the State with Union Minister Kamal Nath. The Chief Minister had reportedly given his consent to the new policy adopted by the NHAI.
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