NHAI earns 824cr from projects

NEW DELHI: The National Highway Authority of India (NHAI) has earned Rs 823.5 crore from awarding projects in the last four months as companies have offered a premium over the bid amount for many projects instead of taking the government aid in the form of viability gap funding (VGF).

The authority has projected that the saving could swell to Rs 31,352 crore over 20-25 years, as instead of offering grant or VGF the body has received more money from the bidders. However, the net present value (NPV) of the saving is pegged at Rs 7,877.82crore. All the five projects which have gone for premium fall under the build-operate-transfer (BOT) toll category. Road transport and highways minister C P Joshi presented the rosy figure at the department's review meeting on Wednesday that was chaired by Prime Minister Manmohan Singh. "We've arrived at the expected savings based on calculations. This is a good sign for the sector . We're getting good number of bids for several other projects ," Joshi said.

NHAI officials attributed that the saving could be higher considering in several other projects the private developers have sought less annuity amount than the projection of PPP Appraisal Committee (PPPAC) and Cabinet Committee on Infrastructure (CCI). For BOT annuity projects, the NHAI pays back the entire project cost with interest to the private developer in a staggered manner. "We have not yet calculated how much we have saved so far in annuity projects. There is almost similar trend for several other projects that have received bids in the past one month," said an official NHAI. He added that the sector has shown signs of recovery since September-October 2010. Sources said the projects are going for premium because of high traffic growth.

The PPPAC or CCI projects the annual traffic growth at about 5%. "But the bidders know the trend. The annual growth of traffic on national highways is at least 7%. No wonder, they are taking a calculated risk. In few cases, local players have quoted high premium . It shows that they are aware of the ground realities," said an official.