Sudhir Hoshing, CEO-Roads, Reliance Infrastructure
Rural roads constituted over 84 per cent (2.65 million) of Indian Roads Network in 2010-11, and were constructed at the rate of 124 km per day. Around 80,195 km of rural roads were completed till March this year.
Additional finances needed: A key issue in rural roads segÂment is financing. Initially these projects were funded through cess on high speed diesel and loans from mulÂtilateral agencies. However, increase in the estimated cost necessitated additional loans to be sought from NABARD. In December 2010, World Bank had finaÂnced projects for improving connectivity especially in ecoÂnomically weaker or hilly states such as Rajasthan and Himachal Pradesh.
This has also brought about a paraÂdigm shift in the way rural roads are mapped, designed, monitored, and built. In Bihar, the CM has borrowed the responsibility of rural roads development from the central government. This is expected to expedite the construction of roads. Plans are afoot to attract funding from multilateral agencies including ADB.
Currently, there is dearth of good contractors who can implement the projects in time and maintain the quality of roads. In Orissa, 269 projects got delaÂyed by four years because of incapability of the contractors.
EPC vs PPP: Rural road projects are of small size and awarded on EPC contracts, attrÂacting marginal, somÂetimes ill-equipped, players. Our compÂany's focus has always been more on BOT proÂjects with total project cost aroÂund Rs 1,500 crore. Thus, as of now we are not keenly looking at rural road projects.
However, it is expected that the rural road proÂjects may be awarded through PPP by bundÂling in packages. National Rural Roads Development Agency (NRRDA) has proposed the states to implement a pilot project on a “modified EPC basis”, whereby there would be a concession period and payments would be in equÂated annuities, subject to pre-determined perÂformance parameters.
This could help attract the large road developers like R-Infra into the rural roads sector thereby increasing competition and improving quality of the projects. Once projects get bundled and achieve scale, and reasonable returns through annuity are visible large players with expertise will be attracted.
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