Centre to release funds for NH projects in Orissa

Expressbuzz, 2nd Aug, 2009

BHUBANESWAR: The uncertainty over execution of some National Highway projects due to change of policy at the Centre has come an end.

The Centre has finally agreed to release funds for the NH projects which were awarded under built, operate and transfer (BoT) mode following nation wide protest, sources said.
After the UPA Government came to power, the Planning Commission recommended the National Highway Authority of India (NHAI) to look for an alternative model to the existing BoT annuity model for road construction. Accordingly, Union Surface Transport Minister Kamal Nath issued instruction to NHAI to lay stress on the public-private partnership (PPP) model.

The public-private partnership (PPP) model introduced by the NHAI finds few takers for road projects in the State. As a result work on the ongoing Khurda-Balangir (NH-224), Bhubaneswar-Puri (NH-203), Bhawanipatna-Berhampur, Panikoili-Rajamunda and Sambalpur-Manguli (NH-42) road projects came to a standstill.

The executing agencies stopped these projects worth Rs 600 crore following delay in payment by the NH authority for the work already done. The agencies have expressed their inability to execute the projects on their own and have sought the intervention of the State Government.

These projects were awarded under BoT annuity model in which the contractors get return on their investment in form of semi-annual payment from the NHAI. The other model is BoT (toll) where the operator earns toll revenue through the concession period to recover his investment.

The NHAI has proposed a hybrid model containing features of both toll and annuity schemes for highways development under PPP route. In addition, there is a provision of viability gap funding (VGP) upto 40 per cent of the project cost for toll-based project. However, the VGF is not applicable to annuity based projects. The contractors of the NH projects in the State objected to the PPP model saying it is neither sustainable nor viable. Besides, the road projects awarded to them should not be brought under the new policy.

``Such a scheme will not be acceptable for a state like Orissa where a large number of people are socially backward and economically poor. Road projects passing through remote and backward areas will not be economically viable for the operator’’, official sources said adding, ``such schemes are only viable in states which are economically and industrially progressive’’.

Works Secretary SK Ray told this paper that the issue has been resolved and the Centre has started releasing funds for the State NH projects.

NOTE: Not sure which road they mean for Bhawanipatna - Berhampur. New route of NH217 does not pass through Bhawanipatna.