The Prime Minister’s Office, in a letter to the National Highway Authority of India (NHAI), has said that the construction of highways in India is “financially unviable” and has asked the NHAI if it should stop road construction.
The letter dated 17 August has sought a response on the same from the Ministry of Road Transport and Highways, which is headed by Nitin Gadkari.
In the letter, the PMO expressed its unhappiness over “unplanned and excessive expansion” of roads that have been recognised as ‘national highways’, reported ThePrint.
A Bloomberg report states that the PMO wants the NHAI to become a road-asset management company.
The suggestions that the PMO had for the NHAI were sent to Highways Secretary Sanjeev Ranjan by then principal secretary to the PM, Nripendra Misra.
“Road infrastructure has become financially unviable, private investors and construction companies withdrawing from greenfield road projects. Model hybrid annuity and EPC (where the government funds 100 percent of the project cost) mode, with all investment made by government, is unsustainable. Reform needed”, Misra’s letter says.
The Bloomberg report states that the PMO now wants the NHAI to go back to a model where it would auction projects to developers who’d construct the roads, collect toll and then transfer the ownership of the roads back to the NHAI. The system was scrapped as private developers started taking less interest in bidding for highway projects.
The report also states that the NHAI has an outstanding debt of 1.8 trillion rupees which attracts an annual interest of 140 billion rupees. This is when the NHAI collects only about 100 billion rupees as toll.
(With inputs from Bloomberg and ThePrint)
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