The road transport and highways ministry in the financial year 2016-17 has lined up highways projects worth Rs 50,000 crore to be awarded under public-private partnership (PPP) mode. It will be the largest chunk of highways projects to be awarded by the ministry under the PPP mode in a single financial year. Projects will be awarded mostly under the hybrid annuity model. Some of them will also be given out on the build-operate-transfer (BOT) model. In the current fiscal year, the government expects to garner more than Rs 20,000 crore by way of private investments in the roads sector. It has already awarded projects worth Rs 12,000 crore.
Besides, during the next fiscal, the ministry plans to award projects close to 5,000 km to private companies. As part of this plan, the ministry will invite bids for its religious tourism circuit programme including Char Dham connectivity and the Bharat Mala project, which envisages development of roads along the international borders and coastal areas. Further, in the next four years the government is also targeting to increase the length of highways across the country to 1.5 lakh km from the existing 1 lakh km. During next fiscal year it plans to undertake construction of 7,000-8000 km on its own.
The ministry is now promoting the hybrid annuity model, a new mode of delivery under PPP, for awarding road projects under which 40% of project cost is provided by the government to the concessionaire. The remaining 60% is to be arranged in form of debt and equity to be compensated over 15 years as bi-annual annuities.
In order to boost the private sector interest in the sector, the ministry has taken a slew of measures including introducing an exit policy aimed at improving the availability of equity funds by allowing developers to monetise existing projects. The exit policy framework permits concessionaires to divest 100% equity and exit all operational BOT projects two years after completion of construction.
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