Jaitley and Gadkari meet bankers & contractors to rev up highway projects

Meeting held after the cabinet clears hybrid mode of financing road building

GN Bureau | January 28, 2016



In a bid to remove roadblocks and resolve contentious issues that are stalling highway projects in the country, union finance minister Arun Jaitley and transport minister Nitin Gadkari today held a meeting with the bankers, contractors and the builders.

Jaitley and Gadkari agreed to make changes in the mandatory model concession agreement between the banks and borrowers to simplify the loan approvals.

Stressing that the growth in transport sector will have spiral effect on all sectors, Jaitley asked the bankers and contractors to expedite the pending projects as early as possible.

“We have simplified the procedures, made alternative options of flexibilities available for bankers, contractors. We are hoping to award 10,000 Km of highways by march”, said Jaitley.

The meeting came a day after prime minister Narendra Modi chaired a cabinet meeting taking the stock of the progress of key infra projects. Nearly 421 national highway projects are delayed due to cost escalation and disputes between bankers and concessionaires.

Both the ministers spoke about recent cabinet decisions where the government has decided to fund 40% of project cost of high way projects bid on PPP mode. On Wednesday, the cabinet had approved yybrid annuity model for implementing the highway projects bid on PPP mode.

Under this model, the PPP mode projects will receive 40% of project cost from the government to the concessionaire or contractor. Remaining 60% has to be arranged in form of debt and equity.

Gadkari had told a news agency that his ministry is seeking a record Rs 700 billion ($10.3 billion) in government spending to boost road construction and spur economic growth.

In addition to a more than 50 percent increase in budgetary allocations in the fiscal year starting April, Nitin Gadkari said that his ministry is also looking to borrow overseas. The overall target is Rs 5 trillion  road projects over the next three years, he said.

"The policy of our government is giving more priority for development of infrastructure," Gadkari, 58, said in New Delhi on Tuesday. "There is no problem of investments, no problem of money. We only need to fast track our decision-making process."

The transport ministry is also considering options for overseas loans, according to Gadkari. While interest rates may be attractive, the challenge is to find solutions for foreign- exchange hedging costs, Gadkari said.

Gadkari aims to build 100 kilometers of roads a day, up from about 18 kilometers currently. A new funding model is expected to speed things up -- the government will pay an annuity to the successful bidder for a project to cut financial risks. The road ministry has received bids for eight projects under the plan, and will seek offers for another 27 before March, the minister said.

Gadkari's targets are ambitious. In the year through March 2015, India built 4,410 kilometers (2,740 miles) of highways, compared with the goal of 6,300 kilometers.

Comments

 

Other News

RailTel clocks highest turnover of Rs 903 crore

 RailTel has achieved highest ever turnover of Rs 903 crore and clocked a profit before tax (PAT) of Rs 194 crore and net profit of Rs 130 crore in financial year 2016-2017.  RailTel has said that the past year has been remarkable for it as the railway PSU has proved itself to be a key

What ails BHU

From 1969 onwards, following an amendment in the BHU Act, the Banaras Hindu University (BHU)’s executive council is entirely nominated by the president of India on the recommendations of the HRD ministry. None of the executive council members are elected, thus, diluting the democratic structure of th

Indian policymakers don’t have much knowledge of SDGs: Report

The highest proportion of policymakers with not much or no knowledge of the Sustainable Development Goals (SDGs) was found in India (38%), said a report by an international advocacy group. Equal Measures 2030, an advocacy group, which spoke to policymakers in India, Colombia, Indonesia, Keny

Five things you need to know about Saubhagya Yojana

Prime minister Narendra Modi has launched Pradhan Mantri Sahaj Bijli Har Ghar Yojana –“Saubhagya” – to ensure electrification of all households in the country. Here are five elements of this new programme:   The total ou

Take steps to keep cyber-attackers at bay, FinTech firms told

Companies operating in the financial services domain will have to develop novel preventive control mechanisms and significantly invest in reactive capabilities to keep cyber-attackers at bay, suggested an ASSOCHAM-PwC joint study. “Incorporating a more agile cyber risk management appro

Feeding yourself in the city of the future: Food as urban sovereignty

We rarely think of food as a viewpoint. We understand the world of food, but not so much its worldview. Everything that we consider as food has a rich context that’s one part history, one part anthropology, significant bits of science, and a liberal sprinkling of medicine, politics, culture and econo



Video

Current Issue

Opinion

Facebook    Twitter    Google Plus    Linkedin    Subscribe Newsletter

Twitter