The Hindu Business Line : Govt plans sops to help road operators

PRIVATE road operators may soon be relieved with the Government planning to take responsibility for issues such as land acquisition and utilities clearance before the project starts.

The Government also plans to cushion them to some extent against those changes in tax regime during project operation that would inversely affect their revenue flow.

Meanwhile, the operators would also be required to share their revenues earned from toll operations with the Government from the eighth year of operation.

The Prime Minister's Committee of Infrastructure is likely to take up the new model concession agreement (MCA) for the build, operate and transfer (BOT) of highway projects of road sector on Tuesday.

"The agreement is almost ready. We expect to finalise it during the next Committee of Infrastructure meeting slated for September 27," a top Ministry official told Business Line.

The MCA seeks to link the duration of concession period with the actual traffic realisation on the roads. The concession period would vary from 12-20 years.

"The duration of concession period would be inversely proportional to the variation with regards to actual traffic volumes. If the actual traffic volume is short of the projected traffic then the duration of concession would be increased by up to 20 per cent. Similarly, in case the actual traffic is higher than the projected one, then the concession period would be reduced," said the official.

Additionally, there is a provision for widening the roads to six lanes depending on the traffic volumes during the concession period. If the volumes warrant further widening of the road, then during the tenth year, the concessionaire would be given the choice of first right of refusal at that time. If he refuses, then at the end of the concession period, the new operator would take over.

A move that would be a major relief to the concessionaires is that the risk of delays caused due to land acquisition and getting clearances from utilities is being "transferred completely" to the National Highway Authority of India (NHAI).

"Eighty per cent of the total land acquisition required in building the project would have to done by the time of appointed date of start. The rest 20 per cent has to be acquired within the next 90 days," said the official. Failing this, NHAI would be required to pay damages of 0.1 per cent of performance security amount of the project for each day of delay, subject to a maximum of 20 per cent.

Moreover, even if there are stretches of road that the concessionaire is unable to construct owing to such delays on the project completion day, it would not result in a delay in the date from which he can start collecting toll.

The operator would also be required to share the toll revenues with NHAI from the eighth year of operation. "During the ninth year, the concessionaire would be required to share one per cent of revenues and during the subsequent years the revenue share increases by another one per cent each year. For example, it becomes two per cent in the tenth year, three per cent in the 11th year and so on," shared the official.

In case there are changes in taxation policy during the concession period that affect the revenue stream of the operator to an extent of over Rs 50 lakh per annum, then the operator would be compensated, said the official.

Senior officials of the Ministry of Road, Highways and Surface Transport and the National Highway Authority of India (NHAI) were busy giving a final shape to the agreement on Monday.

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