Stalled, road contracts to be put in the fast lane

In a bid to expedite clearances for road projects through the public-private partnership mode, the finance ministry is in the process of relaxing the norms whereby road projects upto a capital cost of Rs 500 crore would not need an approval from the inter-ministerial public-private partnership appraisal committee

In a bid to expedite clearances for road projects through the public-private partnership mode, the finance ministry is in the process of relaxing the norms whereby road projects upto a capital cost of Rs 500 crore would not need an approval from the inter-ministerial public-private partnership appraisal committee (PPPAC).

Added to this, for all other infrastructure projects, the investment ceiling for PPPAC clearance will be raised from the existing Rs 100 crore to Rs 250 crore. A Cabinet note has already been circulated to this effect. Once approved, Secretary of the nodal ministry and Secretary, Department of Economic Affairs in the Finance Ministry can directly clear these projects without sending it to the PPPAC.

In the roads sector, the Finance Ministry has suggested that this waiver can be claimed only if the project complies with “conditions precedent” such as that of adhering to the model concession agreement.

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The immediate impact of this new decision will be felt for all projects with a length ranging between 20 to 100 km but having an average capital cost of Rs 5 crore/km.

Figures show that there are at least 14 pending projects under the new NHDP III programme — connecting state capitals as well as key towns and cities — that could be cleared without PPPAC approval.

These include the 30-km Hyderabad-Yadgiri project in Andhra Pradesh, Panaji-Goa to Karnataka border highway and another project linking the Gujarat/Maharashtra border to the Surat-Hazira port.

The Armur- Adloor Yallareddy Section on NH-7 in Andhra Pradesh under NHDP Phase-II with an estimated cost of around Rs 380 crore, which is presently with the PPPAC, is a typical example of a project in the pipeline that needn’t have come to the PPPAC for approval.

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Sources also said that as some projects need viability gap funding (VGF), it has been suggested that for road projects where the VGF is less than 20 per cent of the project cost — or that the government’s financial support to a particular project is less than 20 per cent (out of a maximum of 40 per cent of the project cost that is permitted) — these projects also do not need to come to the PPPAC for approval.

PPPAC was created last year as an inter-ministerial secretary-level body to scrutinize and clear all infrastructure projects that are being executed through the PPP mode by the Centre. This is normally done within a month once a firm proposal is sent from the nodal minsitry, sources said.