Prime Minister Manmohan Singh has called for transparency in awarding highway projects to eliminate the possibility of favouratism or crony capitalism.
“It is necessary to demonstrate that the award, construction and operation of these (highways) projects is based on a fair and transparent approach which eliminates any suspicion of favouratism or what might be described as crony capitalism,” he said at the conference of Public Private Partnership (PPP) in National Highways at New Delhi on Monday.He further said that for a large road building programme, “efficiency, economy, competition and transparency are vital touchstones that should be used for judging our level of success.
These are especially important when we deal with the private sector. “We must remember that these are public projects where public interest must be foremost in our mind,” he added.
The government plans to double investment in infrastructure projects to USD 1 trillion to achieve a GDP growth rate of 9 percent during the 12th Five-Year Plan (2012-17).
“…it goes without saying that it seems a very challenging task, but I am convinced that our economy has the resilience to live up to challenges that lie ahead”, he added.
The Prime Minister further said that the government has been successful in attracting large volumes of private investment in the road sector.
Contract awards exceeded about 4,800 km in 2010-11, and the Road Transport and Highways Ministry is well poised to award of 7,300 km this year, to fulfil government’s resolve to build 20 km a day, he said.
The National Highways with a total length of over 71,000 km serve as the arterial network of the country.
However, the flagship National Highways Development Programme has only addressed about 25,000 km so far.
In the recent meeting of the full Planning Commission, the government had endorsed the proposal of the Road Ministry to take up a large programme for developing the National Highways in far flung areas.
At present, there are about 20,000 km of National Highways which have only a single lane.
“A time-bound programme for widening these roads to two-lane standards would be taken up through turn-key contracts that would ensure speedy and cost-effective outcomes,” the Prime Minister said asking the Ministry to accelerate this programme to increase the reach of the NHDP across the country.
Talking about the financing constraints faced by infrastructure projects, Singh said the Finance Ministry is also taking the initiative to set up Infrastructure Debt Fund to enhance the flow of the much needed long-term debt in infrastructure projects.
Singh said financing an ambitious highways programme will no doubt require substantial resources and some parts of the network can only be developed through public investment.
“There are, however, areas where private investment can be invited, based on affordable user charges with some capital subsidy as necessary,” he said adding, “I have often said PPP is private profit in service of public at large”.
He said the NHAI, which deals mostly with the roads that can attract private capital, has made PPP the preferred mode for most of its projects.
PPP projects take much less time to complete and the government does not have to bear cost overruns, he said.
“This will not only enable us to leverage our limited public resources but also improve efficiency of service delivery,” Singh said.
India has attained the second rank globally among developing countries in attracting private investment for infrastructure projects.
Singh said that the government has been encouraging the use of standard documents and processes to streamline and expedite decision-making process by the concerned authorities in a manner that is fair, transparent and competitive.
“This approach has contributed significantly to the recent strides in rolling out a large number of PPP projects in the highways sector,” he said.
He said that emphasis on transparency and competition in the award of PPP projects in the roads sector which has “led to a very robust and competitive bidding that has saved very large sums for the exchequer by limiting the capital subsidy or enhancing the revenue share”.
Referring to the role of state governments in creating road infrastructure, the Prime Minister urged them to “formulate their respective State Highway Development Programmes for a coordinated and time-bound development of all roads in their respective States”.
Earlier at the occasion, Planning Commission Deputy Chairman Montek Singh Ahluwalia said that the private sector will have to contribute about 50 percent of the proposed USD 1 trillion investments in the infrastructure sector during the 12th Plan period.
Road Transport and Highways Minister C P Joshi said the Planning Commission should work in close cooperation with state governments to ensure that state highways become world class.
He further said states have so far approved 77 projects under the PPP mode for construction 7,801 km state highways.
According to Joshi, NHAI will award contracts for construction of 7,300 km of highways envisaging a private investment of about Rs 50,000 crore by the end of the current fiscal.
He said the PPP projects have been able attract investments of Rs 21,000 in the first four months ending July 2011.