Evolution of Model Concession Agreement for National Highways in India

Abstract

Economic liberalisation in 1990s necessitated development of a world class road network to trigger the economic growth trajectory for India. The concept of involving private sector was mooted as the investment required for this task was well beyond the budgetary support. Thus private sector participation in the form of Public Private Partnership emerged in mid nineties and entrenched itself in 2000–10 as the most preferred mode of delivery in the construction of National Highways in India. This paper discusses the evolution of Model Concession Agreement for National Highways, the vital framework on which the success of Public Private Partnership lies. The key learnings of this study would help in further refining the framework for Public Private Partnership in road development and also facilitate in developing the framework for other physical and social infrastructure sectors. There were a series of discussions between Planning Commission and Ministry of Road Transport and Highways and National Highways Authority of India on issues like Grant vs Premium, Site Handover, Omnibus Bipartite State Support Agreement, Specifications and Standards, Supervision, Change of Scope, Security to Lenders, Change in Ownership, Breach of Maintenance Obligations, Variations in Traffic growth, Overloading, Termination etc. The balanced and proactive approach that evolved out of these discussions made the Model Concession Agreement comprehensive, less ambiguous and justifiable for both concessionaire and the Government.