Stuck highway projects: NHAI may get to approve changes in road pacts

New Delhi: Who should really have the power to change the model concession agreement, which is the guiding document in any road or highway building project?

The Ministry of Road Transport and Highways wants the National Highway Authority of India (NHAI) to have the power to tweak a model concession agreements for highway projects, instead of having to take approval from the Union Cabinet each time.

Cabinet approvals are seen as unnecessary and cumbersome - and in many instances bodies like the Planning Commission would routinely object to simple changes.

So now a Cabinet Note is being prepared for getting NHAI requisite powers in this matter, a senior ministry official said today. Once approved, this provision will enable NHAI to change conditions in the bidding documents in case of projects being stuck.

Highway project contractors, bankers and other stakeholders should feel relieved if this moves goes through.

There are a large number of stalled highway projects as of now - stalled because of cost escalation, inadequate funding availability or other issues. If concession agreements can be tweaked to suit both the concessionaire and the party awarding the project, it should help revive highway building across the country under the PPP model.

“NHAI has five secretaries……let them take these decisions instead of the Cabinet each time a project gets stalled,” this official said. Since the NHAI cannot make any changes to a model concession agreement as of now, the government has, in the recent past, had to come up with a policy for rescheduling of premium for developers whose projects have been stuck.

As per a Business Standard report earlier, 250 road projects worth Rs 60,000 crore have been stuck. Perhaps NHAI getting the power to tweak the concession agreements will help speed them up.