India embraces PPP Model for high-quality highway construction

03 Oct 2023 CW Team

Under this new policy, the NHAI will invite bids for the majority of highway projects through PPP, marking the first time that the road wing of the highways ministry will collaborate with private investors on fresh projects. The decision to favour PPP models, specifically the build-operate-transfer (BOT) and hybrid annuity model (HAM), was made in light of the proven track record of higher quality and reduced maintenance costs associated with these projects.

According to Union road transport secretary Anurag Jain, major projects exceeding Rs 5 billion will preferably be executed under PPP mode. Private players involved in PPP projects are required to maintain the highways for 15-20 years, ensuring a higher standard of construction due to their long-term responsibility.

This strategic shift is exemplified by the immediate maintenance carried out by private entities, spending approximately Rs 1 billion on each of the five highway stretches acquired from NHAI, which were initially built using EPC methods. In contrast, the remaining five corridors, constructed under PPP, did not require immediate attention, showcasing the durability and reliability of the PPP approach.

Union road transport minister Nitin Gadkari emphasised the advantages of roads constructed under BOT and HAM modes, highlighting that private investors' awareness of their long-term maintenance responsibilities leads to better construction quality. Consequently, the government plans to expand the construction of roads under these modes significantly, ensuring the development of high-quality, enduring highway infrastructure.

The government's focus has shifted towards monetising completed highway projects, leading to a significant change in the construction approach for national highways (NHs). Instead of relying solely on government funding or engineering, procurement, and construction (EPC) methods, the National Highways Authority of India (NHAI) has embraced Public-Private Partnership (PPP) mode for nearly 85% of highway projects. This shift is motivated by the recognition that projects executed under PPP demonstrate superior quality and require less maintenance compared to government-funded initiatives. Under this new policy, the NHAI will invite bids for the majority of highway projects through PPP, marking the first time that the road wing of the highways ministry will collaborate with private investors on fresh projects. The decision to favour PPP models, specifically the build-operate-transfer (BOT) and hybrid annuity model (HAM), was made in light of the proven track record of higher quality and reduced maintenance costs associated with these projects. According to Union road transport secretary Anurag Jain, major projects exceeding Rs 5 billion will preferably be executed under PPP mode. Private players involved in PPP projects are required to maintain the highways for 15-20 years, ensuring a higher standard of construction due to their long-term responsibility. This strategic shift is exemplified by the immediate maintenance carried out by private entities, spending approximately Rs 1 billion on each of the five highway stretches acquired from NHAI, which were initially built using EPC methods. In contrast, the remaining five corridors, constructed under PPP, did not require immediate attention, showcasing the durability and reliability of the PPP approach. Union road transport minister Nitin Gadkari emphasised the advantages of roads constructed under BOT and HAM modes, highlighting that private investors' awareness of their long-term maintenance responsibilities leads to better construction quality. Consequently, the government plans to expand the construction of roads under these modes significantly, ensuring the development of high-quality, enduring highway infrastructure.

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