Road projects worth Rs 23K cr mired in funding delays

“Around 23 projects have asked for an extension in the duration of 180 days given to them to complete financial closure. The reasons for the extension are several that includes land issue,environmental issues and their internal issues,” road secretary A K Upadhyay said at the Economic Editors’ Conference.

Each of the projects asking for extension in duration are four-laned ones with paved shoulders and most of them were awarded during the last fiscal,said another senior official.

According to the rules,a company gets 180 days to financially close a project. If it is unable to do so,it gets a grace period of 120 days,with a penalty. If the company is still unable to complete it,the project award is cancelled. It is either re-bid or awarded to the second lowest bidder. The lull in the road transport ministry has come after a highest-ever award of 7,957 km of road projects in 2011-12. Of the 51 projects awarded during the year,as many as 31 were at a premium.

Banking on the success,the ministry has committed Prime Minister Manmohan Singh to award around 9,500 km of road projects in the current year,which was an increase of 700 km from 8,800 km announced by Finance Minister Pranab Mukherjee in the Budget.

However,the ministry has only been able to award projects covering 600 km in the current fiscal.

But despite these troubles,the ministry has decided to award another 4,000 km of road projects on Engineering Procurement Contract mode during the current fiscal.

“We have cleared the model concession agreement for the projects and will be awarding 4,000 km of road projects in the current fiscal. We have enough money raised through tax free infrastructure bonds and money will not be an issue for these projects,” said road transport minister CP Joshi.

Unlike the toll and annuity models under Build Operate and Transfer,road project are funded by the government in EPC and the road developer is obligated to build the highway within the stipulated time.