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"We would need to build strong regulatory mechanism and need investment protection and dispute resolution".

New Delhi , Sept. 15

THE Centre is planning to work out model concession agreement for road and port sector projects that would take care of issues such as land acquisition in advance. That is, the land is acquired in advance before the contract is awarded to the concessionaire. At present, land acquisition process is a major cause for delay in several infrastructure projects.

"We are trying to build a mechanism that ensures land acquisition, etc is done in advance at the State side before the concessionaire starts working on the project. Moreover, if there are delays in such reasons, concessionaire should not get affected," said Mr Gajendra Haldea, Advisor to the Deputy Chairman, Planning Commission, said while speaking at a Construction Summit organised by Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, the Construction Federation of India and the Confederation on Indian Industry, here.

Later, he told Business Line that the Government is trying to build this mechanism in the model concession agreements for road and port sector. He said the model concession agreements for the road sector would be ready in a few weeks, and for airports and ports, in a few months.

Earlier, Mr Athar Shahab, Director-Business Development (Transport), IDFC, had drawn attention towards various kinds of challenges in land acquisition. There was a certain case, where land acquisition was getting delayed since the State concerned could not track down the owners of land on which road was to be built, he said.

In the inaugural session of the Construction Summit 2005, Mr R.R. Shah, Member-Secretary, Planning Commission, said the Government planned to move towards funding mechanisms for infrastructure development that distribute risk between the private sector and the implementing agency, and were more transparent. These included public-private partnerships and build-operate-transfer arrangements. It would slowly phase out engineering construction and commission procedure.

Infrastructure: Pointing out that India needs Rs 6,75,000 crore as investment in infrastructure, Mr P.K. Deb, Joint Secretary (FT and Infrastructure), Department of Economic Affairs, Ministry of Finance, said, "Inevitably, we will be looking for offshore investment in Indian infrastructure. We would need to build strong regulatory mechanism and need investment protection and dispute resolution. We are talking to countries and are signing several bilateral investment protection agreements (BIPAs). We now have 78 BIPAs in place."

He added that the Government is addressing the dearth of long-term debt for infrastructure projects. "These projects have a long gestation period and the Government was working on a special purpose vehicle (SPV) to resolve this issue," he said. Mr Deb also said that the Government would limit itself to absorbing only non-commercial risks. Commercial risks would be transferred to the concessionaire, indicating that there would be a trend towards BOT projects rather than annuity projects.

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