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Delays in decision making, flawed pacts hurt road sector: NHAI
Delays in decision-making by authorities, flaws in developer agreements and absence of a clear blueprint for highways have scuttled road sector's growth and PPP projects, NHAI Chairman R P Singh said on Tuesday.
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New Delhi: Delays in decision-making by authorities, flaws in developer agreements and absence of a clear blueprint for highways have scuttled road sector's growth and PPP projects, NHAI Chairman R P Singh said on Tuesday.
He, however said efforts were on to bring the sector on track with steps like putting in place a dispute redressal mechanism, rescheduling of premium, easier exit norms for developers and changes in Model Concession Agreement (MCA).
Much of the problem on PPP projects was caused by aggressive bidding for projects and there is tendency to pass on the risk to the government when the project becomes unviable, Singh said addressing a FICCI Infrastructure summit.
The solution lies in total transparency in PPP projects, he added.
A major problem, he said, was with interpretation of the Model Concession Agreement (MCA). The bureaucracy has the tendency to look for government-centric interpretation of the clauses in the MCA much to the detriment of the private sector, he said.
"There are 20 areas in the MCA which require interpretation... Planning Commission was not willing to interpret MCA...," he said.
Singh earlier also blamed Planning Commission for the plight of highway sector in the country.
"The Planning Commission never did any exercise to assess what is the optimal grid of roads which is required in this country," Singh said.
He added said the Commission along with some wings of the government had marginalised the NHAI and Transport Ministry.
"The infrastructure situation in the country is dismal; the pace of investment is sub-optimal and unless we come out of the subsidy regime and inject substantially more funds into capital expenditure for asset creation, the situation will not look up," he said.
He said sector's problems were not unsurmountable and could have been easily fixed if only decisions had come faster on policy issues.
"Unfortunately the country is not matured to go into PPP mode", he said added that "MCA needs to be changed to give as much flexibility as possible."
In a bid to revive investment in the sector, NHAI has sought easing of exit policy to enable divestment of equity to PE funds to bring liquidity into the system, and rescheduling of premium to start projects.
"The two things which I expected the government to do which could have revived the sector for once and all... Have been done to some extent with much delays and we have been able to help 13 projects, which were sure NPAs," he said.
He, however said efforts were on to bring the sector on track with steps like putting in place a dispute redressal mechanism, rescheduling of premium, easier exit norms for developers and changes in Model Concession Agreement (MCA).
Much of the problem on PPP projects was caused by aggressive bidding for projects and there is tendency to pass on the risk to the government when the project becomes unviable, Singh said addressing a FICCI Infrastructure summit.
The solution lies in total transparency in PPP projects, he added.
A major problem, he said, was with interpretation of the Model Concession Agreement (MCA). The bureaucracy has the tendency to look for government-centric interpretation of the clauses in the MCA much to the detriment of the private sector, he said.
"There are 20 areas in the MCA which require interpretation... Planning Commission was not willing to interpret MCA...," he said.
Singh earlier also blamed Planning Commission for the plight of highway sector in the country.
"The Planning Commission never did any exercise to assess what is the optimal grid of roads which is required in this country," Singh said.
He added said the Commission along with some wings of the government had marginalised the NHAI and Transport Ministry.
"The infrastructure situation in the country is dismal; the pace of investment is sub-optimal and unless we come out of the subsidy regime and inject substantially more funds into capital expenditure for asset creation, the situation will not look up," he said.
He said sector's problems were not unsurmountable and could have been easily fixed if only decisions had come faster on policy issues.
"Unfortunately the country is not matured to go into PPP mode", he said added that "MCA needs to be changed to give as much flexibility as possible."
In a bid to revive investment in the sector, NHAI has sought easing of exit policy to enable divestment of equity to PE funds to bring liquidity into the system, and rescheduling of premium to start projects.
"The two things which I expected the government to do which could have revived the sector for once and all... Have been done to some extent with much delays and we have been able to help 13 projects, which were sure NPAs," he said.
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