PPP model for roads may not work in KBK

PPP model for roads may not work
Business Standard, July 10, 2009

The public-private -partnership (PPP) model introduced for the development of road projects to be taken up by the Union surface transport and highways ministry may not benefit states like Orissa.

Though it will not affect the national highway projects which have already been awarded to the contractors, the future road projects to be taken up in PPP mode is likely to suffer, official sources said.

“The road projects which will pass through the remote and rural areas and are commercially unviable will not be able to attract participation of private investors in PPP mode”, a senior official of the Orissa government said.

According to industry insiders, the PPP model for road development will not be successful in Orissa as people in the interior areas are not in a position to pay and use the roads.

It is futile to expect the people in the economically backward KBK (Koraput-Bolangir-Kalahandi) districts, where everybody does not have enough to eat, to pay for use of road. This model can work in states which are developed both agriculturally and industrially, they added.

This decision of the Union ministry of surface transport and highways will only compound the problems in states like Orissa where the progress of the national highway projects is very slow.

Sources said, the progress of the projects like Khurda-Bolangir (NH-224), Bhubaneswar-Puri (NH-203), Bhawanipatna-Berhampur (NH-217), Sambalpur- Manguli via Angul ((NH-42) has been very slow. Though the work had started in these patches, the contractors are facing problems in getting payments for their running bill.

The top infrastructure companies are in a dilemma how to continue procurement of materials and implement the National Highway projects in Orissa as there is delay in payment for the work already done and also for the on-going work. “We are in a dilemma and unable to plan procurement of man and machinery for upcoming works as there is problem of getting payments for the work done and for the on-going works”, a top executive of a Orissa based infrastructure company said. The companies are in talks with the Orissa government to resolve the issue.

When contacted S K Ray, secretary, works admitted the inconvenience faced by the contractors executing the NH projects in Orissa. He said, NHAI will have to sort out these issues.