India to have smoother and pothole-free roads soon!

At a time when Indian players are reluctant in investing in road projects, India’s Road Transport Ministry is planning to auction about 5,000 km of Government-funded National Highway stretches.

In first-of-its-kind move, the ministry-headed by Union Minister Nitin Gadkari is looking to attract overseas investors and generate resources to construct more roads across the country.

In an interview to Times of India, Gadkari said his ministry hopes to get around Rs 1 lakh crore through the auction from investors such as private equity players and pension and insurance funds. The Government's investment to develop these stretches is estimated at Rs 40,000-50,000 crore.

The Indian players are reluctant, citing large debt on their books and the failure of the Government to ensure availability of land for several projects.
Gadkari told TOI the auction will increase availability of funds to undertake more projects both on government funding mode and hybrid annuity, a new mode for public private partnership (PPP) projects.

"We are confident of getting major foreign investment as pension fund and insurance fund managers will find these projects attractive. Since the projects will be auctioned for certain years after construction, they face no risk of construction and tolling can start from day one," he told the news daily.

TOI had first reported on January 15 that the ministry is mulling a plan to auction highway stretches. Countries including South Korea and some in Latin America have auctioned highway projects and received large investments.

According to sources, officials would prepare a basket of good quality stretches where traffic growth is robust.
"We would auction the projects after identifying them. Ideally length of each stretch should be at least 200 km with a minimum guaranteed return (MGR). We would fix the reserve price of a project while inviting tenders. This can be calculated based on the investment in construction and the minimum likely toll that government could get for certain years," an official told TOI.

Gadkari informed this will be one of the issues that will be discussed at a consultation meeting with all stakeholders in the highway sector including potential bidders, companies and financial institutions.

(Image:Indiatimes)