Despite EPC switch, no road project awarded since May
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Since May this year, the National Highways Authority of India (NHAI) has failed to award even a single highway development project. This is despite the authorities taking a decision to shift to the EPC (Engineering Procurement Contract) format for offering projects to developers, primarily to tide over the lacklustre response seen from private players to the other public-private partnership (PPP) formats that includes highway sections offered on the Build, Operate and Transfer (Toll) model.
This is the second consecutive year after 2012-13 when award of road projects has seen a dismal show. Last fiscal, awards had touched a low of 800 km.
"The slow pace of award is essentially because of the slowdown in the economy and we are finding it difficult to find takers for our projects, especially those offered on the PPP route. Projects on EPC are also not coming up for bid, as they are in various stages of the project design process," said a senior NHAI official.
This slow pace of award is despite the fact that the EPC projects offered in April received interests from as many as 28 bidders per project. The developers also lowered project cost quotes by as much as 45 per cent than the NHAI's benchmark cost. The highways authority had been able to award 475 km of road projects in April, of which 355 km of road projects were on EPC and the rest were awarded on Build, Operate and Transfer (Toll).
In an EPC project, the contractor has to quote the cost of constructing or upgrading the road section, which is completely funded by the government. Every project has an estimated project cost and the developer offering to complete the project at the lowest cost gets it. A BOT (Toll) project, on the other hand, is a form of PPP project where the developer builds the road and recovers his investment through toll to be collected over a concession period.