Centre empowers roadmin to help expedite projects

Aug 28 2014, 00:43 IST
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SummaryMinistry can now decide on use of PPP route or EPC model for award of project.

The Cabinet Committee on Economic Affairs (CCEA) on Wednesday decided to empower the ministry of road transport and highways to make changes in the model concession agreement (MCA) “as may be required from time to time” and to “decide the mode of delivery of projects”. This means that the ministry would now be able to make expedient decisions on whether to use the PPP route — BoT (toll) or BoT (annuity) — or the conventional EPC model for award of a project, depending economic conditions and viability of the project.

Also, decisions like allowing stake sales by a trouble developer or for even premium rescheduling to salvage a project can be taken at the level of the bureaucrats. Since no CCEA approval would be required for these, the process could become speedier and smoother and help preempt projects from plunging into crises.

“A committee headed by the Cabinet secretary will decide if there is any amendment (needed) in the MCA,” communications and IT minister Ravi Shankar Prasad said after the CCEA meeting. “The ministry was facing problems as regards to timely award of contracts. There was a difficulty in ascertaining how the project can be delivered. Now the ministry has been empowered to take a decision in this regard,” Prasad said.

Against the ambitious target for award of 9,500 kms of road for FY13, only 1,116 kms could be awarded in the year by the NHAI and only 1,436 kms against the target of 4,030 kms for FY14. On analysis after consultations with all the stakeholders in the sector, it has been concluded that this shortfall is primarily attributable to an overall economic slowdown resulting in lack of availability of debt and equity in the market, said a statement issued after the CCEA meeting.

In recent months, the NHAI has increasingly resorted to the EPC model for award for road projects given the tepid investor interest in PPP projects.

CIL, ONGC & NHPC stake sales decision deferred

The CCEA deferred the decision on stake sales in three public sector behemoths, Coal India, ONGC and NHPC, as finance minister Arun Jaitley, away in Mumbai, could not attend the meeting. Officials said that the proposals could now be taken up in the next Cabinet meeting.

The Centre plans to garner R58,425 crore from stake sales in PSUs and residual stake sale in Hindustan Zinc and Balco in FY15. The disinvestment road map includes a

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