Revival of BOT: MoRTH considers amendment in concession agreement to remove bottlenecks, identifies 53 projects

To revive the Build-Operate-Transfer (BOT) contract mode in road construction, the Ministry of Road Transport and Highways (MoRTH) has come out with Model Concession Agreements (MCA) to address the concerns and overcome the bottlenecks highlighted by the stakeholders. An amendment has been proposed.

The proposed amendments include various provisions to remove anomalies such as determination of payments, modification of the concession period based on actual traffic versus tolling groups of vehicles, and revisiting actual traffic in excess of design capacity.

The proposal also includes compensation for delay on the part of the authority as well as a new provision for buyback in case of additional tollway/competing road and a clearly defined termination payment before the completion of the project due to force majeure.

BOT projects are considered financially risky for builders and developers. In this mode, private investors assume the risk of financing, constructing and operating highway projects over a concession period of two to three decades. The builder gets money through toll.

Presently, due to various challenges in implementation of BOT projects, projects are being awarded on Engineering Procurement Construction (EPC) or Hybrid Annuity Model (HAM).

Several initiatives have been taken for revival of BOT projects and various schemes like harmonious replacement, lump sum fund investment, rational compensation, premium moratorium and allowing refinance have been adopted in the past.

Going forward, 53 BOT projects of 5,200 km length worth Rs 2 lakh crore have been identified. Bids have been invited for seven projects with a length of 387 km worth Rs 27,000 crore.

On Wednesday, the ministry organized a conference to encourage public-private partnerships and promote ease of doing business through BOT projects.

Industry stakeholders and experts participated in the conference which was inaugurated by Union Minister Nitin Gadkari.

NHAI shares proposed amendments in MCA.

As per the ‘Vision 2047’ of the Central Government, it is envisaged to develop a large number of high-speed corridors and for this, a strong Public-Private Partnership (PPP) will play an important role in the development of the road sector.