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TARGETS OF NH CONSTRUCTION AND PPP MODELS

Why in news?

Development and maintenance of National Highways (NHs) is a continuous process. NH projects are identified annually as per available budgetary outlay, inter se priority, requirement of connectivity and traffic density. Government has fixed a target of 11000 Km for construction in the country for the current fiscal year.

Salient features of the models being adopted for construction of National Highways:

  1. Public Funded Projects:  In such types of model, 100% funding is provided by Government. Different types of Public Funded Models are as under:

(i)  Item Rate:

  • Detailed design, specifications & estimates are provided by the employer and contractor is paid for the quantities executed as per item wise rates quoted in the Bid.
  • Cost/Risk of any variation in quantity is borne by the employer.

(ii) Engineering, Procurement and Construction (EPC):

  • In such types of models, full freedom to plan, design and construction is given to the contractor and core requirements of design, construction, operation and maintenance are specified in schedules.
  • Scope for adopting best practices and innovation to optimize the efficiency and economy is available in such types of model.
  • Payments are linked to specified stages of construction.
  • The Contract Price is subject to adjustment on account of variation in the cost and change in scope ordered by employer.

2. Public Private Partnership Projects (PPP):

(i)  BOT (Toll):

  • Private developers/ operators, who invest in toll-able highway projects, are entitled to collect and retain toll revenue for the tenure of the project concession period.
  • Responsibility for design and development of the project is vested with the Concessionaire under this mode.
  • He is also responsible for Operation and Maintenance (O&M) of the project for the entire concession period after it is developed and put to commercial operation.
  • The tolls are prescribed by the authority on per vehicle per km basis for different types of vehicles.

(ii) BOT (Annuity):

  • As in case of BOT (Toll) Projects, responsibility for design, development and O&M of the Project Section for the entire Concession Period is vested with the Concessionaire for the Project.
  • Concessionaire is given Annuity Payments during the O&M period as per provisions of the Concession Agreement.
  • Tolling rights during O&M period vest with the employer after declaration of Commercial Operation of the developed section.

(iii) Hybrid Annuity Model (HAM):

  • Under this model, 40% of the Project Cost is paid by the Government/ Executing Agency as Construction Support/ Grant to the private developer and the balance 60% is to be arranged by the successful bidder during the construction period.
  • The Concessionaire is paid back the amount of 60% along with interest and Operation & Maintenance (O&M) payment in the form of annuities during operation period.
  • While the concessionaire is responsible for the Operation & Maintenance during the concession period. The traffic risk is taken by the project Executing Agency/ Employer.
  • Tolling rights during the O&M period are vested with the employer after declaration of commercial operation of the developed section.
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October 2022
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