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Construction : Web Exclusive | April 2013 | Source : Construction Update

Highway projects worth Rs 1,900 cr get poor response

Country-wide highway projects worth over Rs 1,900 crore have found no takers even though these are based on the annuity model under which the concessionaire recovers a fixed amount of the investment from the government each year, a situation that officials say reflects the severe financial crunch in the private sector. The projects, for four-laning 177 km along NH-37 in Assam, are part of the Special Accelerated Road Development Programme in the North East approved by the Cabinet earlier this month and opened for awarding on April 5.

Sources in the Ministry of Road Transport & Highways, says that none of the 25 odd concessionaires, including L&T and IL&FS selected during the pre-qualification rounds, came forward for bidding on the project. It is very surprising not to get a single bid for an annuity project. This is because the companies don't have enough equity to invest in the projects, said an official in the Ministry.

The concessionaires had asked for a restructuring of the project costs since the original total project cost was calculated about a year ago when the projects were approved by the Public Private Partnership Approval Committee, said the official.

The official added that that National Highways Authority of India had started working on restructuring the project to include the increase in cost. The Ministry is said to have sent a separate note to the Cabinet on easing equity take-out norms for the road projects.

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