The Hindu Business Line : Highway bidding process dogged by clearance delays

At a glance
PPPAC set up after the Cabinet Committee of Economic Affairs decision in October 2005.

In 2006-07, 1,734 km (valued at Rs 13,201 crore) of NH projects awarded.

NHAI proposal to invite bids for 817 km of highways currently awaiting PPPAC nod.

Mamuni Das

New Delhi, June 29 The bidding process for highway projects is getting delayed by an average of 3.5 months due to the additional approvals that projects have to get from the public private partnership appraisal committee (PPPAC).

PPPAC is an inter-ministerial committee set up after the Cabinet Committee of Economic Affairs decision in October 2005 — its approval is required for all public private partnership projects with capital costs of over Rs 250 crore before the concerned Ministry invites bids.

Procedure

According to data compiled by the Ministry of Road Transport and Highways, without the PPPAC procedure, highway projects required about 17 months from completion of the detailed project report to the award-of-work stage. However, after the PPPAC procedure was introduced, highway projects require about 21 months on an average from completion of the detailed project report to the award of work stage.

PPPAC comprises Secretaries of the Department of Economic Affairs (Chair), Planning Commission; Department of Expenditure; Department of Legal Affairs; and Secretary of the concerned department sponsoring a project (the Road Ministry for highways projects).

Thus, each highway proposal to be taken on a build-operate-transfer (BOT) basis are considered by the PPPAC for ‘in-principle’ clearance before inviting expressions of interest from prospective investors. After getting the in-principle approval, the concerned Ministry invites expressions of interest and develops the documents further.

Process time-slot

This is how the 17 months (before PPPAC was introduced) are taken on an average — completion of the detailed project report including engaging consultants (12 months), invitation and receipt of bids (two months), evaluation of bids (one month), NHAI board approval (one month) and award of work (one month).

And after the PPPAC procedure was introduced, over and above the above 17 months, this is how an extra 3.5 months are taken: about five weeks for in-principle approval of PPPAC, about nine weeks for final PPPAC approval, about four weeks for approval of the Finance Minister or the Cabinet Committee of Economic Affairs.

Initially, after the October 2005 Cabinet decision to set up the PPPAC, the Ministry of Road Transport and Highways had written to the Prime Minister’s Office seeking relaxation for highway projects, which was turned down.

And during that period, from November 2005 to November 2006, not a single BOT-toll project was awarded. It was only in the last quarter of 2006-07 fiscal that about 800 km of BOT-toll projects were awarded.

In 2006-07 financial, a total of 1,734 km (valued at Rs 13,201 crore) of national highways were awarded compared to 4,740 km (valued at Rs 29,920 crore) in 2005-06. As on date, the National Highways Authority of India’s proposal to invite bids for 817 km of highways are awaiting PPPAC nod.