Guj throws its Rs7K cr highway project on the wayside

The state government has decided to scrap its ambitious Rs7,245 crore State Highway Development Project (SHDP) after promoting it for almost two-and-a-half years. The aim of the scheme was to build 3,000 km of state highways in public-private partnership (PPP), to connect all important ports, special investment regions, special economic zones, industrial estates and stretches of ‘pragatipaths’ in the state.

On Monday,  the state’s Road and Building (R&B) Department cancelled bids worth Rs1,540 crore for the construction of 637.20 km of roads in SHDP Phase-I.

More than 50 big companies such as ITNA (IL&FS), GMR, HCC, Reliance Infrastructure and Shapporji Paloonji had bid for the project. In the first phase, many important roads connecting key places in the state were to be built.

Highly-placed sources in the state government said the reason why the ambitious project has been scrapped is, mainly, high project cost of private companies and lack of funds with the government. Private developers’ project costs were bloated by 12 to 15% interest on loans, 10 to 15% profit margin and around 25 to 30% unforeseen risks cost.

“All these factors increased the cost of the project to more than 40% of what the government had estimated,” the official said. “The government can get loans at 3-4% interest from international agencies such as the World Bank and can build low-cost roads on its own.”