According to rating firm ICRA outlook for the road sector, while the engineering, procurement and construction (EPC) project executions may witness a temporary slowdown during the general elections; the build-operate-transfer (BOT) and hybrid annuity model (HAM) projects executions are expected to continue unabated.
Limited investments across the sectors, given the muted private sector spending, is driving the Engineering, Procurement and Construction (EPC) players towards infrastructure projects, especially road sector related projects, says ICRA in its latest study on road sector.
To support the Rajasthan government improve rural connectivity, the World Bank recently approved a $160 million credit for the Rajasthan Road Sector Modernisation Project. The credit is to aid improve rural connectivity in rural Rajasthan, enhance road safety and strengthen the road sector management capacity of the state.
The Union Finance Minister P Chidambaram had promised to set up an independent regulator for the road sector, seen as a reform for the sector. But the Planning Commission has raised objections to the proposal of the independent regulator for the roads sector. Chidambaram promised the proposal of the regulator when he toured the world to attract investment.
For the second phase of Tamil Nadu Road Sector Project, the State government has obtained approval of the World Bank and the Central government, said Finance Minister O Panneerselvam, while presenting the State budget for 2013-14 in Chennai on March 21. Under this project, a total of 1,678 km of roads will be strengthened and widened.
In the road sector of the country, lenders are set to get more flexibility in public-private partnership (PPP) projects, where investor interest is waning. The government is planning to amend the model concession agreement (MCA) for road sector PPPs, empowering lenders to seek replacement of a concessionaire failing to meet milestones even before the project starts commercial operation.