NHAI likely to issue contracts for 10,000km of highways soon
Mint, 17-03-08

These contracts will be a part of phase III and phase V of the government's highway project

The United Progressive Alliance government wants to award, in the next few months, contracts to build up to 10,000km of national highways, equal to almost 70% the 14,500km of national highways on which similar contracts have been issued since 2000.

The decision to award the contracts, worth at least Rs70,000 crore, comes with the general election likely to be held either late this year or early in 2009, although an official at the agency that regulates the highways sector in India claimed that this was because procedural issues related to the contracts had now been “ironed out”.
The official at the National Highways Authority of India, or NHAI, added that since 2000, when the country’s National Highways Development Programme or NHDP was launched, the regulator had awarded contracts for the construction of 14,500km of highways worth around Rs80,000 crore and that work on 8,500km had been completed.

The contracts that will be issued are part of phase III and phase V of NHDP and involve upgrading existing national highways into four-lane and six-lane ones. Five of the seven phases of NHDP involve upgrading existing highways.
The stretches will first be offered to private companies to be developed under the ‘build-operate-transfer’ model where the companies will build the highways, operate them and collect toll for a certain period of time, and transfer them to the government at the end of a certain period of time called the concession period. In case this fails to draw bids, the projects will be offered on the ‘engineering-procurement-construction’ method, where private companies build the roads for a stipulated fee but will not have any stake in the project.
“Detailed project reports are being created for these stretches and they are expected to be awarded in the next few months,” said a senior government official, who did not wish to be identified. “There was a lull in award of projects because the policy was being ironed out. But now that things are falling into place, you will see more and more projects on offer,” the official added.
For almost a year, NHAI has gone slow in awarding projects.

“Till now we were waiting for ironing out procedural issues such as preparation of the new model concession agreement and setting up a two-stage bidding process. Those matters have been taken care of now. And now the only serious impediment in the way of awarding these contracts is clearing of the toll policy,” said an NHAI official.
The toll policy is to be cleared by the law ministry and this could take a couple of months, the official added.
Analysts however said that while the agency was capable of awarding 8,000km of construction a year, exactly how much would get done depends on a number of factors including a legal challenge to the government’s bid process.

The National Highways Builders Federation, an industry body, filed a suit in January against guidelines issued by the finance ministry and ratified by the Prime Minister’s committee on infrastructure that favour bidders who have executed large projects. The norms, reported by Mint on 28 December, cap the number of bidders at six, with some individual exceptions.
“There are three factors that could affect the process (of awarding contracts),” said Kuljit Singh, a partner with the transaction advisory services practice of audit and consulting firm Ernst and Young Pvt. Ltd.

“Technical detailed project reports usually take a while to prepare. Also, things generally slow down a little in an election year. Also, depending on what the court finds (in the case where the National Highways Builders Federation has challenged NHAI’s bidding norms), the process could be affected,” he added.

Steel min to seek for removal of import duties
Financial Express, 17-03-08

Peeved at steel producers hiking prices arbitrarily, the steel ministry is planning to write to the finance ministry to remove import duties on steel and impose duty on its export, while pondering on a regulator in the sector.

“The steel producers have been hiking prices arbitrarily, which is a matter of serious concern to us. They need to realise that rising prices will adversely affect the ‘aam aadmi’. So we are planning to write to the finance ministry to examine the possibility of removing import duty on steel and imposing export duty on the alloy,” a senior steel ministry official said.

He argued that repeated pleas to the steel producers to contain their prices have not yielded desired results and during the past one month, they raised the prices of various products by Rs 3,000 to Rs 4,000, which would hit the ‘aam aadmi’ hard. “Moreover, there is also a concern with the government that the rising steel prices is also adversely affecting the wholesale price index,” he reasoned. Steel minister Ram Vilas Paswan had a couple of meetings with the producers in the past one month, in which he had urged them to roll back prices and desist from raising prices frequently.

“Inspite of his request, they had hiked the price in the first week of this month after a token reduction last month, after the minister’s appeal,” the official said. It was not immediately clear as to what the export duty suggested by the ministry would be and also whether it favoured abolishing the import duty from the current 5% for all steel products.