Approvals delay halts award of road projects under EPC mode this fiscal

Feb 13 2013, 09:05 IST
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SummaryThe road transport ministrys plan to provide an impetus to the ailing road construction industry

The road transport ministrys plan to provide an impetus to the ailing road construction industry by awarding 4,000 km of road projects on Engineering Procurement and Contract (EPC) this fiscal is unlikely to happen due to delay in getting approvals for these projects.

A senior road transport ministry official said that the whole procedure of getting approvals is taking a lot more time than expected and is likely to hamper the plan of meeting the target of achieving the announced target.

We are unlikely to meet our target of awarding 4,000 km of road projects in the current fiscal and the projects will then be awarded next year. We have only a few weeks of the current fiscal left and we have not moved much in terms of approval for these projects, said the official, on condition of anonymity.

In an EPC project, the government funds the construction and the road developer only has to develop the road project in a stipulated period of time. Unlike the other forms of public-private partnership (PPP) projects, the road developer does not have to arrange funds for the project in an EPC projects.

The road transport ministry and the National Highways Authority of India (NHAI) had announced a target of awarding 4,000 km of roads projects in the current fiscal.

The total cost of the project is estimated to be around Rs 24,000 crore to be carried out over a period of three to four years and around Rs 5,000 crore would have been required in the first year itself.

A government source said that the finance ministry is taking more than the normal time in clearing these EPC projects and the approval activity is unlikely to pick up in the weeks left in the current fiscal.

Since these projects are all government funded, approval from various departments including the finance ministry is required.

Of the total around EPC projects covering 4,000 km that were slated to be awarded this year, only one project covering 130 km has received all approvals and the rest are awaiting approvals.

Due to non award of EPC projects, the ministry has also brought down its project award target to around 3,000 km for the current fiscal from a target of 8,800 km set by the prime minister.

The officials in the ministry are, however, up beat about road construction in the country and say that they will construct highest-ever length of road projects this year.

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