Holding SPV for expressways on cards

Realising there is no one-size-fits-all in expressway funding, the Ministry of Road Transport and highways will set up a holding company special purpose vehicle under the National Highways Authority of India (NHAI), to monitor each expressway project.

“The holding company SPV will be controlling the various SPVs of the individual projects. To begin with, 12 existing SPVs will be brought under the domain of the holding company SPV. All are being taken under an umbrella SPV to address project specific issue,” said an NHAI official.

The contours of the holding SPV are likely to be finalised in a month.

The urgency behind taking up the SPV route of building the expressways is the government’s failure to set up an expressway authority for speedy laying of a planned network spanning 18,637 km.

This was to be executed by 2022 in three phases. In the first phase, projects connecting 3,140 kms were to come up by 2012.
It is the delay in the first phase that has set a cat among the pigeons in the NHAI, which is now scouting for options to speed up the job.

Due to delays over clarity on land acquisition and funding model, expressways have been non-starters so far.

The delays have also inflated the cost of construction.
In May 2010, the NHAI had pegged the per km cost of building expressways at Rs20 crore a km.

Union Road Transport and Highways Minister CP Joshi told DNA, “The per-km cost depends on various issues. It all depends on what cost the land is being acquired for the project. It also depends on the specifications, like whether it is an elevated corridor, or virgin track.”

A senior NHAI official said that starting from Rs20 crore a km, the cost of building expressways may go up to Rs60-70 crore.
However, the ministry has not yet made any official review of its earlier cost projections.