NEW DELHI, Apr 29: Highways development in the country requires an investment of Rs 200 crore every day in the next 15-20 years, according to a Parliamentary panel.
“The quantum of financial resources required for implementation of highway projects is significantly high. An estimated investment of Rs 200 crore is required every day for a period of 15-20 years,” the Committee on Estimates, Chaired by Francisco Sardinha, said in its report on National Highways Development Project (NHDP).
The Project is aimed at upgradation, rehabilitation and widening of major highways to international standards. Projects worth Rs 3 lakh crore are likely to be put on bidding under the programme, which is being executed in seven phases.
Since the government resources are not enough for such capital intensive activity, “an efficient financing plan mobilising all resources needs to be worked out to ensure steady flow of funds”, the panel said in the report tabled in Lok Sabha.
The need for such a plan assumes significance in the wake of public-private-partnership (PPP) mode being preferred for highway construction. Under PPP, “highways concessions have tenures extending up to 30 years and they need loan facilities for up to 75-80 per cent of such tenure,” it added.
“Since both the capital market and institutional mechanisms appear to have constraints in providing long-term structured sources of funds, private investors pick the project selectively as they find it difficult to access capital,” it said.
The committee said it is of “firm opinion that the government intervention is not only desired but also indispensable to enable faster capital inflows and resource mobilisation”.
For availability of long-term debt, the committee in its report said that the Ministry of Finance is already pursuing the matter.
“In this regard, the committee are of the firm opinion that the government intervention is not only desired but also indispensable to enable faster capital inflows and resource mobilisation in this infrastructure sector,” it said.
Agreeing with suggestions in the World Bank report on financing infrastructure, the panel said there is a need for specialised infrastructure institutions such as Infrastructure Leasing and Financial Services (ILFS) and Infrastructure Development Finance Corporation (IDFC) to participate at the design stage/DPR stage of a project.
Noting that Ministry of Power has reportedly set up an inter-institutional group (IIG) consisting of infrastructure developers and senior representatives from banks and financial institutions, which has been helpful in resolving disputes between developers and agencies, the committee has suggested Highways Ministry to emulate such model.
The highways ministry, it its reply, said it is examining the recommendations of the Committee to emulate the model, which is being followed by power ministry. (PTI)
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