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Govt urged to review highway projects

Our Bureau

NEW DELHI, June 18

THE Government should reconsider the road development policy on commercial grounds and offer financially viable and attractive packages, the PHD Chamber of Commerce and Industry (PHDCCI) has said.

In a background note, PHDCCI observed that the highway projects would be attractive to entrepreneurs only with upfront financial support by the Government, although the initiatives in this regard were encouraging.

For the success of the road projects involving private sector participation under the build-operate-transfer (BOT) mechanism, the chamber suggested the adoption of appropriate risk-sharing and risk-migration measures.

It was also important to formulate a set of key agreements which would lay down the contractual structure, stipulate terms, rights and obligations of the various problems involved in implementing the projects, PHDCCI said.

The extent to which private sector might participate in major national highway projects was difficult to precisely estimate, the chamber said.

In the initial stage of large-scale private participation in road projects, a number of financial and legal issues would have to be addressed to ensure the success of these ventures.

Projects offered to private sector were not evaluated by the Government for sure profitability, PHDCCI said, adding that there were no guarantees against certain risks because of fear of audit and accounting.

It had been assessed that none of the proposed expressway sections were viable on stand-alone basis. However, many two-lane sections in the high-density corridors were suitable for four-laning.

There was reluctance on the part of the users to pay toll, which may affect the anticipated rate of return on the projects for developers, the chamber said. The experience so far had shown that small road projects, bridges and bypasses attracted private funding easily.

But the important part of the road development process was to involve and widen the role of private sector in expanding national highways and expressways, it said.