Traffic jam on road to Rohtang Pass. India’s inadequate road network is holding back growth, while bureaucracy and a finance crunch are holding back construction plans. (Credit: Wikimedia Commons)

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Indian road-builders shun PPP model

5 August 2014 | By GCR Staff | 0 Comments

The Indian government has been forced to go back to funding road construction itself after 21 projects advertised under the public-private partnership model (PPP) failed to get a single response from the country’s builders.

India’s transportation minister Krishanpal Gurjar told the upper house of the Indian parliament, the Rajya Sabha, in a written reply this week that “due to lack of equity in the market there has been a lukewarm response from the builders for the projects under PPP mode during 2012-13 and 2013-14,” the Economic Times newspaper reported.

In PPP schemes, consortia of construction companies and investors fund the road construction up front and try and recoup the cost in subsequent years through toll charges.

In recent years India has launched an ambitious PPP road-building scheme but bureaucratic delays and difficulties in acquiring the necessary land have increased the financial risk for investors and turned many away.

Gurjar said the government would go back to the traditional method of public funded engineering, procurement and construction (EPC) contracts.