India is well on its way to achieve the target of constructing 40 km of highways in the next two years, an expert said.
Bhavik Damodar, Partner, Deloitte India said that the pace of construction, from the central government’s side is there, the ecosystem is in place, the capacity to construct exists.
“If land acquisition and regulatory issues are quickly addressed, we can have 40 km per day of road construction in the next 24 months,” he added.
Talking about the highway projects in the near future, Damodar said that the upcoming contracts would be a mix of EPC and HAM and less of BOT.
EPC or engineering, procurement and construction projects are the ones where the government pumps in money, HAM or hybrid-annuity model of road construction is where the government partially funds the construction and BOT or build-operate-transfer is where the construction risk is borne by the private concessionaire.
Even though more EPC projects mean that the government will shell out more money, the same projects can be monetized under the TOT or Toll-Operate-Transfer model by the government.
“The Union government is doing a lot of corridors on EPC and a lot of those projects would go for TOT later,” Damodar added.
The Union government’s focus on the infrastructure sector can be gauged from the announcements made in the Union Budget.
Finance Minister Nirmala Sitharaman announced four road connection projects – Patna-Purnea Expressway, the Buxar-Bhagalpur Expressway, the Bodhgaya, Rajgir, Vaishali, and Darbhanga project in Bihar. These projects will come up at a cost of around Rs 26,000 crore.
For the next five years, the budget has set Rs 11,11,111 crore for capital expenditures related to infrastructure in order to sustain robust fiscal support for this sector.
