3,000 km of highways to be built via EPC deals

The Union Road Transport Ministry is confident of meeting the government's Budget proposal to develop 3,000 km of highways in the first six months of 2013-14, a sharp scale-down from this year's target of 8,880 km target, around one-sixth of which has been met so far.

But the move is unlikely to revive waning investor interest in the infrastructure sector, an impression Finance Minister P Chidambaram tried to convey in his Budget speech. Bottlenecks stalling road projects in the country have been resolved and 3,000 km of road projects will be awarded in the first six months of the coming financial year, Chidambaram had said, as part of his announcements to revive investor interest in the infrastructure sector.

But most of the projects to build these 3,000 km of highways are going to be funded with the taxpayer's money and awarded as engineering, procurement and construction (EPC) contracts, not as public-private partnerships (PPP) where developers play a role in investment and management issues.

About 2,000-2,200 kms of the 3000 km will be done through EPCs. The aim is to get projects off the ground, said a senior roads ministry official adding that the projects would be funded mostly through the oil cess allotted to them by the Centre.

Even experts aren't sure whether too many construction firms would bid for EPC contracts, where they are supposed to function like mere contractors paid to do a job according to the specifications laid down by the government.

While the ministry is hoping that EPCs can deliver where PPPs haven't, it admits the 3,000-km under discussion are actually spillover projects from 2012-13. Incidentally, only 878 kms of highway contracts were awarded between April and December 2012.