Experts say that the Budget announcement about the setting up of a regulator for roads is a blessing in disguise for India's highways sector. They say that the dispute-heavy sector can now look forward to a third party to resolve them, in the form of a regulator.
In the absence of a regulator, many disputes have landed in the courts, like in the case of the Delhi-Gurgaon Expressway, where toll collection was stalled for more than a month. The present dispute redressal method is very tough and costly, said Vishwas Udgirkar, senior director at Deloitte Touche Tohmatsu.
Companies say many such issues arise and the nodal agency, National Highways Authority of India (NHAI) is unable to address them. They claim that the NHAI is also a party in most cases which involve concession agreements of road projects, and hence cannot be neutral.
There are a lot of differences on the completion of a project, change in the scope of a project and concession time period increases, which are sought when land acquisition is delayed, explained Madhu Sapre, executive director of IL&FS Transportation Networks. Many engineers who are appointed from the government's side, report to the NHAI.
The number of disputes could also go up if a regulator comes into place, as many developers do not battle with the NHAI. The developers would have to go back to the NHAI for other projects. So, they tend to stay away from complications, said an industry expert.
Projects which are awarded on engineering, procurement and construction (EPC) basis have more number of disputes than those awarded on public private partnership (PPP) basis. EPC projects have cost and contract valuation-based feuds, said Udgirkar.
The regulator could also ensure that the toll charged is fair, transparent and reasonable, apart from facilitating and overseeing the development of the road sector, said B K Batra, Executive Director of IDBI Bank.