Conceding that government is facing bottlenecks like dearth of working capital availability for its ambitious Bharatmala scheme, the National Highways Authority of India (NHAI) is working on a system to ensure that project execution is not hampered, a top official said at an ASSOCHAM event held in New Delhi today.
“We are working on how to implement the project in a fast manner, we have to find ways and means to shrink the time it takes to execute a project, one of the bottlenecks we are facing is working capital availability,” said Mr Rohit Kumar Singh, member-finance, NHAI while addressing an ASSOCHAM national conference, ‘Sureties & gurantees: A global way to manage working capital.’
“There is an element of mobilisation advance which is 10 per cent of the project cost that is given but beyond that during the construction project implementors are facing problems of working capital,” he said.
Without divulging the details of the process being developed, Mr Singh added, “We are working on a system as to how to facilitate a contractor with adequate checks and balances so that during the life cycle of the project he does not unduly suffer from lack of working capital and it does not hamper the execution of the project.”
He also informed that there are more than 65 projects that have been bid out under the public-private partnership (PPP) mode and that are ready to be rolled out and some work has already started on certain road projects.
The NHAI official further informed that bids are due from international bidders on January 7 for a set of highways which are complete and running with six in the eastern part and 4 in the western part being clubbed as a bundle which has been bid out to international investors.
“We hope that these nine highways with 10 toll plazas are going to fetch us more than $1 billion in the order of Rs 6,700 crore as a money which will come to us in March if the bids are successful which we will further infuse in our highways which are non-viable for PPP kind of investment, this is also called internationally a way to recycle assets,” said Mr Singh.
He also credited the current government for focusing on resolving over 100 stuck projects. “I am very glad to inform that out of 103 projects that were stuck, there are only 3-4 projects that are facing problems and mostly because of judicial interventions.”
Highlighting the need to look for new ways to finance infrastructure projects, Mr Singh said that there is a huge set of capital required to get into the sector and keeping the cost of capital low is a big issue.
“Our banks are not aligned to funding infrastructure as the debt tenure of banks is 12 years while the PPP concessions are 20-30 years as such there is an inherent mismatch,” he said.
Mr Rohit further said that the government has to proactively realise and appreciate what are the problems being faced by private sector and both need to work in tandem to build the infrastructure which is so necessary for growth of India’s economy.
“Governments can create assets but when it comes to managing them we have to proactively engage the skills of private sector and that will result in a win-win proposition,” he added.