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Government Revises Highway Bidding And Investment Framework
ROADS & HIGHWAYS

Government Revises Highway Bidding And Investment Framework

The Government, through the Ministry of Road Transport and Highways, is responsible for national highway development and will prioritise access controlled National High Speed Corridors, ring roads and bypasses for cities with population of more than one lakh, equivalent to 0.1 million (mn), and those exceeding five lakh, equivalent to 0.5 million (mn). It will also focus on coastal roads and connectivity to ports, airports and industrial nodes. These measures are intended to broaden investment opportunities and improve logistics efficiency.

To attract private participation the Government has revised the Model Concession Agreement for public private partnership (PPP) projects and updated model contracts for monetisation of National Highways on a Toll Operate and Transfer basis. It has promoted a public infrastructure investment trust and convened stakeholder conferences with concessionaires, financiers and government bodies to showcase opportunities and address investor concerns. These initiatives aim to make projects more appealing to fund managers and contractors.

Major amendments to bidding and concession documents for build operate transfer projects enhance bidder eligibility by allowing fund houses to qualify on financial strength, subject to their engagement of engineering, procurement and construction contractors with requisite experience. Contractual clauses have been clarified on change of ownership, target traffic, damages, compensation for breach and force majeure costs, payment of construction support in capacity augmentation and change of scope. The changes reflect lessons from past litigations and seek greater contractual certainty.

A provision permits payment of termination compensation before commercial operation date where physical progress of the project is 20 per cent or more, offering protection to concessionaires and lenders. Debt determination has been streamlined to reduce ambiguity for financiers. The dispute resolution framework has been simplified with the dispute resolution board abolished and disputes below Rs 100 mn to be referred to arbitration while those of Rs 100 mn and above will go to conciliation or mediation.

The Union Minister of Road Transport and Highways, Nitin Gadkari, provided the information in a written reply to the Rajya Sabha. The measures are intended to improve project predictability and catalyse private investment in national highway infrastructure.

The Government, through the Ministry of Road Transport and Highways, is responsible for national highway development and will prioritise access controlled National High Speed Corridors, ring roads and bypasses for cities with population of more than one lakh, equivalent to 0.1 million (mn), and those exceeding five lakh, equivalent to 0.5 million (mn). It will also focus on coastal roads and connectivity to ports, airports and industrial nodes. These measures are intended to broaden investment opportunities and improve logistics efficiency. To attract private participation the Government has revised the Model Concession Agreement for public private partnership (PPP) projects and updated model contracts for monetisation of National Highways on a Toll Operate and Transfer basis. It has promoted a public infrastructure investment trust and convened stakeholder conferences with concessionaires, financiers and government bodies to showcase opportunities and address investor concerns. These initiatives aim to make projects more appealing to fund managers and contractors. Major amendments to bidding and concession documents for build operate transfer projects enhance bidder eligibility by allowing fund houses to qualify on financial strength, subject to their engagement of engineering, procurement and construction contractors with requisite experience. Contractual clauses have been clarified on change of ownership, target traffic, damages, compensation for breach and force majeure costs, payment of construction support in capacity augmentation and change of scope. The changes reflect lessons from past litigations and seek greater contractual certainty. A provision permits payment of termination compensation before commercial operation date where physical progress of the project is 20 per cent or more, offering protection to concessionaires and lenders. Debt determination has been streamlined to reduce ambiguity for financiers. The dispute resolution framework has been simplified with the dispute resolution board abolished and disputes below Rs 100 mn to be referred to arbitration while those of Rs 100 mn and above will go to conciliation or mediation. The Union Minister of Road Transport and Highways, Nitin Gadkari, provided the information in a written reply to the Rajya Sabha. The measures are intended to improve project predictability and catalyse private investment in national highway infrastructure.

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