Taking note of the country’s foreign exchange reserves which have risen substantially in the recent past, a parliamentary standing committee on transport, tourism and culture on “Role of Highways in Nation Building’ recommended the Reserve Bank of India (RBI) to consider the possibility of utilization of surplus funds to finance long-term road infrastructure projects in the country. “RBI may also look into the feasibility of utilization of the surplus reserves for the creation of a sovereign wealth fund to finance long-term infrastructural assets,†the Committee said in its report, which was tabled in the Parliament on Wednesday.
Committee chairman TG Venkatesh said in its report that National Highways Authority of India (NHAI) should tap into the funds available with insurance companies and pension funds, both Indian and foreign. The Committee recommended that the Ministry may look into any changes in the existing 26 provisions that may be needed to allow insurance companies and pension funds to participate in funding road infrastructure sector in the country. Multilateral agencies, Japan Overseas Infrastructure Investment Corporation for Transport & Urban Development (JOIN), foreign pension funds and sovereign wealth funds may also be approached by NHAI, with suitable assurances/comforts from Government of India. “Securitization of NHAI’s existing assets may be suitable to attract the interest of pension funds since the return targeted by pension funds is on the lower side,†it said.
The Committee further recommended that the Ministry may look into any changes in the existing 26 provisions that may be needed to allow insurance companies and pension funds to participate in funding road infrastructure sector in the country.
The Committee further advised the Ministry of Road, Transport and Highways to consider breaking down big road projects into smaller chunks so as to attract the interest of the small contractors themselves. The Committee said that provisions should be in place to ensure that there is a well-defined lower limit, below which bids for a road project would not be accepted.
The report said the committee has agreed with the apprehension raised by the Member of the Committee regarding a likely hit on the quality of work that can be carried out by a contractor who bids substantially lower than the approved project cost.
The Committee believes that such bids are made with the sole intent of winning the bid and more often than not, it would not be possible for such bidders to do quality work with such low bids. The Committee, therefore, recommended that the Ministry may lay even greater focus on arriving at accurate estimates for the project cost for a given road project and specify an upper and lower limits within which bids can be placed.
The Committee also recommended the Ministry to carefully analyze the shortcomings of the existing mechanism for awarding road projects to the lowest bidder, since doing so includes little thought for ensuring quality of the work.
’There should be consideration for other importance factors besides the bidding amount, while awarding a project to a concessionaire. A qualitative approach must be formulated for awarding road projects,†it said. The Committee recommended that the Ministry may take up with the Central Vigilance Commission (CVC), the shortcomings of the existing system of awarding a project to the lowest bidder, presenting its arguments for modification of the CVC guidelines for awarding of tender in a suitable way to permit an element of qualitative approach in the tender awarding process for road projects.
The Committee also recommended that NHAI may employ the use of blockchain technology to store data about implementation of road projects – including data about the tests performed to ascertain the quality of material used in the construction, the guidelines followed in the execution of the project, the observations made by the Authority’s Engineers at the time of grant of completion certificate for any given project, etc.
