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India has a vast network of National
Highways (NHs) totaling to 34,298 km connecting important
towns cities, ports and industrial centres of the country.
Industrilation of the country has induced a
traffic growth of 8-12 percent per year on many sections of
National Highways and this growth trend is expected to
continue. While the traffic on National Highways has been
growing at a rapid pace, it has not been possible for the
Government to provide matching funds
due to competing demand from other priority sectors. This has
led to a large number of deficiencies in the network. Many
sections of the NHs are in need of capacity augmentation by
way of widening grade separation construction of bypasses
bridges and expressways etc. Many bridges are in need of
replacement. The traffic movement on NHs is also hindered due
to a large number of Rail-Road crossings where road traffic
has to per force stop due to the frequent closures. The
overall scenario on the highways has led to economic losses
by way of longer turn around time for the vehicle fleeting
rising vehicle operating costs and dissipation of human
energy in the driving. This calls for urgent remedial
measures.
To motivate the inflow of resources for
the development, maintenance and management of NHs and to
improve their efficiency, productivity and quality of service
and to bring in competitiveness in providing highway services
to road users. The Government of India in consonance with its
general policy of liberalisation/globalisation of Country's
economy welcomes private investment in National Highways and
hopes that this measure would help in improvements of the
existing highways and bring in the latest technology and
improvements of the existing highways and bring in the latest
technology and improved management techniques. The users are
already accustomed to pay fee for use of bridges on National
Highways for the last two decades.
Other highway projects have also been
awarded to private sector recently and the experience gained
in the process has been utilised in framing these guidelines.
(A) Existing Network
The deficiencies in the existing
National Highways network (as on 1.4.96) and estimated
cost of their removal are as given below. These works
are required to be completed within a period of 10-15
years.
|
S.No. |
Category of Work |
Length/No. |
Estimated Cost (1.4.96 prices) |
|
1 |
Widening of single lane to two
lanes including strengthening of pavement |
5200 km |
5200 Cr. |
|
2 |
Widening of 2 lanes roads (4
lane or wider) |
14.000 km |
42.000 Cr. |
|
3 |
Strengthening of pavement (2
lane equivalent) and construction of paved shoulders |
15.000 km |
9.000 Cr. |
|
4 |
Construction of bypasses |
40 No. |
2.000 Cr. |
|
5 |
Construction of Bridges |
470 |
1.000 Cr. |
|
6 |
Miscellaneous & Road Safety
Works |
L.S. |
5.000 Cr. |
|
|
|
Total |
64,2000 Cr. |
(B) Expressways
|
Construction of Expressways on
new Alignments |
2000 km |
16,000 Cr |
|
Total (A) + (B) |
|
80,200 Cr. |
|
|
Say : |
80,000 Cr. |
Note : Cr., Crores or Ten
million
Categories
of projects identified for private investment are given
in the following table :
|
S.No. |
Category of projects |
Indicative Quantum |
|
Existing
Network |
|
1 |
Widening from 2 lanes to 4
lanes |
4000 km |
|
2 |
Major Bridges |
50 No. |
|
3 |
Railway Over Bridges |
50 No. |
|
4 |
Elevated section through Urban
Areas |
To be identified |
|
5 |
Interchanges |
To be identified |
|
6 |
Bypasses |
30 No. |
|
New
Network |
|
7 |
Expressways |
1000 km. |
The
Function relating to development, maintenance and
management of National Highways are carried out by the
Central Government under the provision of National
Highways Act. 1956. The Act has been amended in June
1995 to permit private sector participation, relevant
extracts of which are reproduced below
Section 8 (A) :
(1)
Notwithstanding anything contained in this Act, the
Central government may enter into an agreement with
any person in relation to the development and
maintenance of the whole or any part of a national
highway.
(2)
Notwithstanding anything contained in section 7 the
person referred to in sub-section (1) is entitled
to collect and retain the fees at such rate for
services or benefits rendered by him as the Central
Government may by notification in the Official
Gazette specify having regard to the expenditure
involved in building maintenance management and
operation of the whole or part of such National
Highway interest on the capital invested reasonable
return the volume of traffic and the period of such
agreement.
(3) A person referred to in
sub-section (1) shall have power to regulate and
control the traffic in accordance with the
provisions contained in Motor Vehicles Act 1988 on
the National Highway forming subject matter of
such agreement for proper management thereof.
(4) Whoever commits mischief
by doing any act which renders or which he knows
to be likely to render any National Highway
refereed to in sub-section (1) of Section 8A
impassable or less safe for travelling or
conveying property shall be punished with
imprisonment of either description for a term
which may extend to five years or with a fine or
with both.
All policy matters relating
to National Highways are decided by the Ministry
of Surface Transport. Reference to government in
these guidelines shall generally mean the
central Government in the ministry of Surface
Transport (MOST)
The central Government has
decided that the policy of privatisation of the
National Highways will be implemented by the
National Highways Authority of India (NHAI). In
exceptional cases the Central Government may
also assign the function of Implementing Agency
(IA) to the States. Therefore reference to IA
in these guidelines will generally mean NHAI
and the State Public Works Department in
exceptional cases.
A reference to Enterprise
in these guidelines will mean the successful
bidder with whom the Government and the
Implementation Agency has entered into an
agreement for developing, maintaining and
operating any NII project.
The following principles
will generally be observed in identification
of NH projects for private investment :-
(1) Project is one of
the approved projects of MOST.
(2) Project is capable
of yielding adequate Economic Internal Rate
of Return and EIRR. (The Government
investment on the items mentioned in
Guideline 9 will be treated as zero cost
investment in the calculations for EIRR.)
Government will carry
out all preparatory works for the projects
identified for private investment and meet
the cost of following items :
(1) Detailed
feasibility Study
(2) Land for Right-of-way and en route
facilities.
(3) Clearance of the Right-of-way land:
Relocation of utility services, cutting
of trees, resettlement and rehabilitation
of the affected establishments.
(4) Environmental Clearances.
Depending upon the
financial viability of a project the
Government may recoup its investment on
the above items from the project.
Concessions Available
for Enterprise Undertaking any Project
:
(1) In the case of an enterprise (the
enterprise is owned by a company
registered in India or by a consortium
of such companies) carrying on the
business of developing, maintaining and
operating any infrastructure facility,
hundred per cent of the profits and
gains derived from such business for
the initial 5 assessment years and
thereafter, thirty percent of such
profits and gains are expected from
Corporate Tax. The tax concession may
be availed of by the enterprise in any
ten consecutive assessment years
falling within a period of twelve
assessment years beginning with the
assessment year in which the enterprise
beings operating and maintaining
infrastructure facility. The meaning of
infrastructure is given in Section
80-IA (12) (ca) of the income Tax Act
1961, and includes a road, highway and
a bridge.
Concessions Available
for Lenders / Investors
(1) As an incentive to financial
institutions to provide finance for
the infrastructure projects, deduction
upto 40% of their income derived from
financing of these investment is
available provided the amount is kept
in a special reserve.
(2) Exemption for infrastructure Funds
from Income Tax on the income from
dividend, interest on long term
capital gains of such funds or
companies from investments in the form
of shares or long term finance in any
enterprise set up to develop, maintain
and operate an infrastructure
facility.
(3) Subscription to equity shares or
debentures issued by a public company
formed and registered in India and the
issue is wholly and exclusively for
the purposes of developing,
maintaining and operating an
infrastructure facility, will be
eligible for deductions under Section
88 of the Income Tax Act 1961, which
permits deduction equal to 20% of the
amount subscribed, from the amount of
tax payable by the subscriber. In case
of such investment the limit of Rs.
60,000/- per year under section 88 has
been raised to Rs. 70,000/-
Government has
recently decided to permit
automatically Foreign Direct
Investments upto 74% equity for road
and bridge construction as a part of
infrastructure. Foreign Direct
Investment (FDI) proposals beyond
that would be considered by the
Foreign Investment Promotion Board on
case to case basis.
The concession
period comprises of (I) the
construction period which will be
project specific and (ii) the period
during which the enterprise is
permitted to levy fee and is liable
for maintaing the facility which
will be determined on competitive
bidding basis and may be upto 30
years. The concession period may be
extended suitably, to cover any
default of the Government in
fulfilling its obligations. In the
event the enterprise completes
construction of the project before
expiry of the period specified in
(I) it will be entitled to collect
user fee from traffic during the
balance period available from the
construction period at the rates
applicable for the year of opening
the road for traffic. Incase the
enterprise delays completion of the
project beyond the period specified
for construction its fee collection
period will get reduced
correspondingly.
The revision
of the fee may be allowed every
year following commissioning of the
road for traffic, lined to the
Wholesale Price Index (WPI). Such
version may be allowed twice in a
year when the inflation in the same
year jumps by four points. While
full compensation would be allowed
to offset inflation during a
specified period and the extent of
compensation may be progressively
reduced thereafter in accordance
with Bid conditions.
The
enterprise is to complete the
project within the period
specified for construction,
conforming to the standards and
specifications prescribed in the
agreement and to the satisfaction
of Implementing Agency. Any delay
in completion of the project will
be to the account of the
enterprise unless such delay can
be directly attributed to the
Government and/or implementation
Agency's. Delays occurring on
account of Government/
implementing agency would entitle
the Enterprise to an appropriate
extension in the construction
period, and/or to such other
compensation as the Bidding
conditions may specify.
The land
meant for highway construction
and the land meant for and the
land meant for en route highway
related facilities, (guidelines
20(1) and 20(2) will be given to
the enterprise on lease for the
concession period. Any
expenditure on stamp duty etc.
incurred on documentation for
lease of the land will be borne
by the enterprise. The lease for
the land will be suitably
extended in the event the
concession period is extended for
any reason. The enterprise is not
allowed to sub-lease the land to
nay one. However, the enterprise
is free to license the enroute
highway related facilities to
anyone for the period(s) limited
to the concession period.
Bids for
the projects will be accompanied
by a bid security bond which
will be of an amount equal to 1%
of the project cost as
determined in the feasibility
study.
The
successful enterprise will be
required to furnish a
performance security bond of an
amount equal to 3% of the cost
of project as indicated in the
feasibility study. Such bond
would be discharged after 25%
of the works have been
completed.
(1) In
the event of termination of a
Concession Agreement for any
reason attributable to the
Government/Implementing
Agency, the enterprise will be
compensated for all the costs
incurred by it on the project
plus interest thereon at the
rates indicated in the bidding
documents. In addition, the
bidding conditions may also
include payment of suitable
liquidated damaged to be
calculated on the basis of
pre-determined principles. The
objective of such damages
would be to provide comfort
and assurance to the
Enterprise that the Concession
Agreement would not be
terminated in an arbitrary
manner.
(2)
If the concession agreement
has to be terminated due to
inability of the enterprise
to fulfil its obligations,
the Government's liability
towards the enterprise will
be restricted to an amount
not greater than 95% of the
debt secured to project
assets that would stand
transferred to the
Government/ Implementing
Agency upon such termination.
Where necessary, the Bidding
conditions may stipulate
other forms of termination
payment as may be required in
accordance with international
norms and practices.
(1)
Highway construction as per
the scope which may be
finalised by the
Implementation Agency based
on a detailed feasibility
study.
(2)
Highway related facilities,
en route as may be
identified by
Implementation Agency in
the bidding documents :
- Restaurants
- Motels
- Rest / Parking Areas
Land for the above
facilities will normally be
acquired by the
implementation Agency. The
enterprise will be free to
license out such
establishments to anyone
for the period(S) limited
to the concession period
and enjoy revenue from them
during the concession
period.
(3)
In addition, the project
may include other real
estate development that
would help in improving
the revenue streams of the
Enterprise. Cost of land
for such facilities shall
be paid for by the
enterprise but IA may
assist in the acquisition
of the land. Real Estate
Development may include :
- transport Nagars.
- Loading / unloading
terminals for cargo.
- Waterhouses / godowns
- Vehicle repair
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