NEW DELHI: China Railway Construction Corporation, one of the largest construction companies in the world, has evinced interest in bidding for Rs 35,000-40,000 crore worth of highway contracts in India.
Top executives of the Chinese construction major held a meeting with National Highways Authority of India (NHAI) Chairman Raghav Chandra on Monday to discuss the proposal.
“They are keen on bidding for around 3,000-km highway contracts. They will be participating in hybrid annuity, build-operatetransfer (BOT) and engineering, procurement and construction (EPC) models,” Chandra told ET.
This would be the single largest foreign investment in the country’s roads sector if the Chinese company succeeds in fulfilling the criteria set by the government. The company could also bid for several expressway projects that are considered to be high traction in terms of return on investment.
The Chinese corporation builds 60% of highways and 80 per cent of railway tracks in China. India’s road transport and highways ministry has set a construction target of 40 km per day, or 15,000 km for the current financial year.
The target to award highway contracts is 25,000 km. Construction of 15,000 km of highways would cost around Rs 1.5 lakh crore. However, the ministry has received only Rs 57,000 crore as budgetary support and is hopeful of getting Rs 10,000 crore more from the finance ministry.
A lot of foreign investors and construction companies have come forward to bid for road projects in recent months. Road transport and highways minister Nitin Gadkari is slated to meet several investment firms, including JP Morgan and Goldman Sachs, during his ongoing US trip.
The revival of investor interest in roads sector has been credited to 21 policy changes that the Narendra Modi-led government has introduced in recent months to make investments in the sector more attractive. The changes include relaxing the exit policy for investors and innovative payment methods in hybrid annuity and engineering, procurement and construction models.
Investor interest in the sector had weakened drastically after 2010 due to difficulties related to land acquisition and getting various approvals, besides public opposition to toll collection. Projects worth less than Rs 10,000 crore were awarded in FY15.
In the previous year, the value of projects awarded to public-private partnerships (PPPs) was less than Rs 1,000 crore, as companies were unable to raise funds.