India’s prime minister, Manmohan Singh, has reshuffled his Cabinet, and among the changes announced on Jan. 19 was the appointment of C.P. Joshi to be Minister for Road Transport and Highways. Joshi, who led the Rural Development Ministry, replaces Kamal Nath, who shifts to become head of the Urban Development Ministry.
As Joshi begins his new job, he aims to make ministry operations transparent and push for new technology to monitor road projects in real time. The industry continues to expect that highway projects will be accelerated, although Joshi has declined to provide specific goals.
In May 2009, then-minister Nath said the ministry would build 20 kilometers of roads per day, aiming to construct 35,000 km in all. But the ministry has fallen short of that target, completing approximately 1,930 km in 2010, or an average of about 6 km per day.
As the highway building program proceeds, the ministry is using two types of build-operate-transfer (BOT) contracts to get the work done. One option is BOT toll, in which a developer constructs a highway and recovers the investment through toll revenue over a lengthy period, usually 30 years. The other option is BOT annuity, in which a developer is paid six months after a highway opens for commercial operations.
Of the 54 contracts totaling 5,182 km that the ministry awarded in 2010, 39 contracts, totaling 3,787 km, were BOT toll, and the rest were BOT annuity.
In early January, the interministry Public Private Partnership Appraisal Committee approved 907 km in highway projects, valued at an estimated $2.4 billion. The Ministry for Road Transport and Highways will invite financial bids for developing those projects. It plans to award the projects as public-private partnerships by March 31, the end of its fiscal year, after receiving Cabinet approval. Of the six projects proposed, five are BOT toll and one is BOT annuity.