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Rediff News  All News  » Business » Rs 1 trillion invesment in roads this year: Nath

Rs 1 trillion invesment in roads this year: Nath

July 13, 2009 13:23 IST

The government planned to build 12,000 kilometres of roads, including highways, at an estimated cost of Rs 1,00,000 crore (Rs 1 trillion) in the current financial year, Union Road Transport and Highways Minister Kamal Nath said.

"We are committed to the new target of laying 20 kilometres of roads per day, and to achieve this target there needs to be a quantum jump in construction activity across the country," Nath told reporters after addressing the 'Build India- Road infrastrcture' summit.

Citing land acquisition as a major hurdle to speedy construction of roads, the minister said henceforth projects would have to acquire 80 per cent of the required land before bids were allotted.

Nath also said he wanted state governments to play a more proacive role in road projects. "States must be stakeholders in these projects. If we do not get satisfactory participation from them, we are ready to abandon these projects."

The minister said the government was looking at various innovative financing instruments to fund road projects and attract both the domestic and foreign investors.

Also, the government was planning to involve pension funds, sovereign wealth funds, equity funds, besides other available investment channels like banks, to fund the road projects, which would require an investment of over Rs 2 lakh crore (Rs 2 trillion) from the private sector over the next five years, he said.

Priority would be given to tolled roads and 60 per cent of projects this year will be on the toll-based revenue model and the remaining on annuity and engineering, procurement and construction (EPC) contract models.

According to Nath, the National Highways Authority of India (NHAI) has adequate resources at the moment and has no plans to borrow funds for the current year.

Chanda Kochar, managing director and chief executive officer of ICICI Bank, said road projects were a unique asset class with stable returns but since the investment period is long, there was a need for innovative modes of financing that will cover both equity and debt markets.

The Ministry of Road Transport and Highways, along with ICICI Bank, is planning to conduct International Road Shows in Asia, Europe and the US for attracting investments in the sector.

BS Reporter in Mumbai