In the recent past road
sector has experienced a significant slowdown, primarily due to the lack of
participation of the private sector and the fact that lenders are staying away
from these projects. This very dispute-heavy sector has seen an increased no.
of disputes till date between the stakeholders. According to Analyst a third
party can be looked upon to resolve them in the form of Independent regulator
and act as a dispute settlement mechanism. To address this long
felt need, Finance minister P. Chidambaram had announced the
government’s decision to constitute an independent regulatory authority for the
road sector in his national budget 2013-14.
The ministry has proposed
that the roads regulator will have an adjudicatory role for contract dispute
resolution, renegotiation of future contracts and enforcement of contractual
obligations between the government, developers, lender and especially the users.
Also, it is proposed to have control on national highways and other roads under
the directorial control of the ministry of road transport and highways.
According to the Draft
Regulatory Bill, there would be three to nine full time working members including
the chairperson on board that will constitute the authority. The draft also
clearly indicates that all contracts whether it is a PPP or a public funded one
will have to be mandatorily get registered by the parties involved in the
contract by paying a specific fee for it. It is pragmatic that the contracts on
EPC basis faces even more disputes and challenges as compared to the other
modes of delivery as they have cost and valuation based issues which may differ
at times.
It is evident from the
discussions being made over the proposed regulator, that it will not only act
as a watchdog but will also play a role of peace maker among different
stakeholders at various stages of the contract. As the investment in the
highway sector is fading and several other constraints like that of toll,
project cost and cost escalations owing to delayed clearances have led to
pullouts. Exit of GMR and GVK from big ticket projects are the major hold back
we can count upon. For overcoming such issues, setting up of regulator is the
need of an hour that will bring transparency on the entry and exit policy and
other regulatory policies which are currently functional.
As per the government
sources the much awaited decision of the Ministry of Road Transport and
Highways to set up a road regulator is likely to be before the Union
Budget 2014-15. According to Analysts if all strings are attached in a
structured way it is going to
resolve all concerned challenges associated with
the sector.
Everyone is keeping a close
eye and faith in the Ministry’s decision for setting up of the Independent
regulator that could track and handle the growing uncertainties and
externalities in the sector. Though despite being criticized by the various
authorities, initially the planning commission opposed the decision, certainly
setting up a regulator is moving on tracks. This very government’s decision
portrays a great potential to grip the number of problems acting as a road
block in the India’s Highway development process.
Infraline Energy Roads Research Team
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