04-01-2009, 05:59 AM
<!--QuoteBegin-->QUOTE<!--QuoteEBegin--><b>Govtâs inaction cost taxpayers Rs 6,333 cr</b>
pioneer.com
Nidhi Sharma | New Delhi
Delay in taking decisions on vital highway projects led to cost escalation
Rs 6333.79 crore â this is how much Governmentâs indecision has cost the taxpayer. <b>Delay in taking decisions on vital road and highway projects by the Government has led to cost escalation in several projects, files of which had been lying with the Ministry of Road Transport and Highways since 2005.</b> Putting it in absolute terms, this could have meant replacing the entire DTC bus fleet with 9,000 modern low-floor buses or two brand new Metro lines from IP Estate to Dwarka or nine expressways similar to Delhi-Gurgaon one.
<b>The Government had planned 48 highway projects in different States at a total project cost of Rs 47,181.08 crore. These projects fall in Phase III of National Highway Development Programme (NHDP). Of these 48, detailed project reports (DPRs) of five projects were ready in 2005, 13 in 2006 and remaining 30 in 2007. However, the Ministry of Road Transport and Highways was unable to push these projects for 2-3 years. Thanks to this indecision, there has been a cost escalation of 10-20 per cent. The total project cost of these 48 projects has now been increased to Rs 53,514.87 crore â Rs 6,333.79 crore more than the original project cost</b>.
Had the five projects, where the feasibility reports had been prepared by 2005, been implemented in time they would have cost Rs 3,149.33 crore. However, now their total cost has been revised to Rs 3,780.15 crore âa 20 per cent increase.
As the project files went through the long-winding process of Government approvals, recession set in the last quarter of 2008. A senior Ministry official said: âWe floated bids but the projects did not elicit a good response from the private bidders. Had these bids been floated in time there wouldnât have been this additional burden.â
Ministry records, accessed by The Pioneer, reveal that the Government has taken the approval of Finance Ministry to increase the cost to make these projects more attractive to the private players. Escalation in project cost means the Government grant to private developers in the form of viability gap funding (VGF) will rise in the same proportion. The Government grant, or VGF, is currently capped at 40 per cent of project cost. With increase in project cost, this funding also increases as the Government has to provide them more funds.
A senior Ministry official said: âThis has been done to improve the bankability of these projects offered for bidding on Public Private Partnership (PPP) mode and also keeping in view substantial increase in price of key inputs.â
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pioneer.com
Nidhi Sharma | New Delhi
Delay in taking decisions on vital highway projects led to cost escalation
Rs 6333.79 crore â this is how much Governmentâs indecision has cost the taxpayer. <b>Delay in taking decisions on vital road and highway projects by the Government has led to cost escalation in several projects, files of which had been lying with the Ministry of Road Transport and Highways since 2005.</b> Putting it in absolute terms, this could have meant replacing the entire DTC bus fleet with 9,000 modern low-floor buses or two brand new Metro lines from IP Estate to Dwarka or nine expressways similar to Delhi-Gurgaon one.
<b>The Government had planned 48 highway projects in different States at a total project cost of Rs 47,181.08 crore. These projects fall in Phase III of National Highway Development Programme (NHDP). Of these 48, detailed project reports (DPRs) of five projects were ready in 2005, 13 in 2006 and remaining 30 in 2007. However, the Ministry of Road Transport and Highways was unable to push these projects for 2-3 years. Thanks to this indecision, there has been a cost escalation of 10-20 per cent. The total project cost of these 48 projects has now been increased to Rs 53,514.87 crore â Rs 6,333.79 crore more than the original project cost</b>.
Had the five projects, where the feasibility reports had been prepared by 2005, been implemented in time they would have cost Rs 3,149.33 crore. However, now their total cost has been revised to Rs 3,780.15 crore âa 20 per cent increase.
As the project files went through the long-winding process of Government approvals, recession set in the last quarter of 2008. A senior Ministry official said: âWe floated bids but the projects did not elicit a good response from the private bidders. Had these bids been floated in time there wouldnât have been this additional burden.â
Ministry records, accessed by The Pioneer, reveal that the Government has taken the approval of Finance Ministry to increase the cost to make these projects more attractive to the private players. Escalation in project cost means the Government grant to private developers in the form of viability gap funding (VGF) will rise in the same proportion. The Government grant, or VGF, is currently capped at 40 per cent of project cost. With increase in project cost, this funding also increases as the Government has to provide them more funds.
A senior Ministry official said: âThis has been done to improve the bankability of these projects offered for bidding on Public Private Partnership (PPP) mode and also keeping in view substantial increase in price of key inputs.â
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