Highway ministry shifts gears

The road transport and highways ministry has set an ambitious target of building over 40 km of roads daily in 2016-17, more than double the current pace of construction at nearly 16.5 km per day.
While the construction target is 15,000 km, the highways agencies have been asked to award 25,000 km, which is two-and-a-half times more than last year's achievement. The bold target signals the growing confidence of the government which is celebrating its achievements in reviving three-fourth of the national highway projects that were languishing when it came to power two years ago.
Sources in the government said the new target would have seemed a tall order two years ago when 73 highway projects, involving Rs 1 lakh crore investment, were stuck. “We decided not to flinch from taking hard options and terminated contracts for 39 projects covering about 4,620 km. Now these projects are being restructured ,“ said a PMO functionary who is closely engaged with the road transport and highways ministry's plans for the sector. Another 16 projects have been revived.“We have re-awarded 16 projects and three projects have been handed over to the state governments. Two projects have been dropped and in another 18 cases, bids have either been invited or are being invited,“ said a government official.
To revive the projects on public-private-partnership (PPP) mode, the government has approved securitisation of future cash flows allowing the concessionaires with surplus revenue to raise subordinate loan up to 30% of the project cost on the strength of future cash flows to invest as equity in other projects. This has benefited seven road projects to securitise Rs.415 crore.
It also permitted rescheduling the premium payment in 19 stressed projects, where developers had promised paying upfront amount annually while bagging projects .Premium of Rs.10,000 crore has been deferred so far. The government has also allowed harmonious substitution of existing concessionaire of stressed projects and also permitted 100% divestment of equity in projects that have been completed two years back. These two decisions benefited nine projects.
The government also authorised NHAI to revive stuck projects by rationalising the compensation to developers in the form of extending tolling period where work was delayed due to fault on government's part. NHAI has been authorised to infuse one-time fund to complete PPP projects under where 50% work has been completed. Operational details and concerns of banks in giving the first right of recovering investment to NHAI are being addressed, sources said.

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