The Hindu Business Line : A road for private sector

THE COMPLETION OF the 90-km Jaipur-Kishangarh road under the National Highway Development Project marks an important milestone in the country's road development programmes. For several reasons. It is the first six-lane Build-Operate-Transfer toll road project. More important, it was completed ahead of schedule when the progress of several other projects under the NHDP leaves much to be desired and when the functioning of the National Highway Authority of India has been on a low key for the past couple of years. But, above all, it is the issue of public-private partnership in road projects that faces the biggest test: How to get private entrepreneurs to participate in a big way and, on completion, how to get more and more people use the roads and how to get the users to pay.

The issue of private participation in road projects has been in the air for quite some time, though not much has happened. About 80 per cent of the projects under the NHDP are EPC (engineering procurement and civil construction) works, built by contractors and handed over to the NHAI. Actual private investment in road projects has been limited. Also, the toll projects have not been major commercial successes. On the estimated Rs 25,000 crore invested on various NHDP projects, the collection has been a mere Rs 1,300 crore. Not surprising. While it is inherently difficult to make motorists pay in a country of India's size and complexity, the NHDP's road pricing policy has often drawn flak from politicians for what they call the latter's "narrow anti-motorist ploy". The latter aspect triggers political risk worries among potential investors, as roads are typically long-gestation projects and today's critic might well become the ruler tomorrow.

Fortunately, the UPA Government has initiated steps to remove these misgivings and smooth out hurdles to get NHDP projects going. In fact, under NHDP III, IV, V, VI and VII, the government proposes to spend Rs 172,000 crore. Besides budgetary support, the NHDP will resort to various financing mechanisms, including fuel cess, loans from international funding agencies, private participation through BOT annuity contracts/toll system, shadow tolling and the Special Purpose Vehicle route. But the BOT mechanism, both in toll and annuity forms, has been declared the preferred financing mode. For example, under NHDP III — a fresh project of the UPA Government — of the 6,708 km of the North-South/East-West corridor for which civil contract is to be awarded, 2197 km are earmarked for private sector participation. Of this, 978 km would be on BOT toll and 324 km on BOT annuity basis.

Besides financing, another issue that deserves careful attention, as more projects get commissioned, is `corridor management'. This the process of managing the highways so as to deliver to the paying users maximum throughput in terms of speed and volume of traffic even while keeping the number of accidents as low as possible. This issue is critical because of the traffic mix. Jostling for space on the highways are high-speed cars and trucks, two-wheelers, tractors, animal-drawn carts and even elephants and camels. Toll-paying users must be assured of savings in vehicle operating costs and time. This may necessitate certain regulations on highway use.

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