Rs 10,000 cr road projects to be bid out

The public private partnership appraisal committee (PPPAC) has approved eight road projects worth Rs 10,883 crore,which will be bid out under the PPP mode in the coming months. Six of the eight projects will be executed under build-operate-transfer annuity mode showing a visible shift in approach for pushing infrastructure development in the sector in the light of economic slowdown.

Under the build-operate-transfer (BOT) annuity mode,the government pays an annual amount to the developer in order to provide cover and bear a part of the cost of the project. This is opposed to the BOT toll model where the developer charged a user fee for a fixed concession period of 20 or 30 years to recover the investment made.

The projects approved will be taken up in the states of Jammu and Kashmir,Haryana and Karnataka. Another reason for adopting the annuity mode is that the cost of building roads in hilly stretches such as that of Jammu and Kashmir is almost double of plain area roads.

This increases the burden on the developer. In the case of Jammu and Kashmir a certain risk element in making investments is also involved,according to sector experts.