HIGHWAYS AND ROADS

INFRASTRUCTURE AND LEGAL

ASPECTS
India - the second-largest road network in
the world (5.89 million kilometres).
Transports64.5% of all goods in the country
and 90% of India’s total passenger traffic uses
road network to commute.
Road transportation increased due to
improvement in connectivity between cities,
towns and villages in the country.
NHAI plans to construct 25,000 kilometres of
national highways in 2022-23 at a pace of 50 km
per day.
India’sGati Shakti program - consolidated a list of
81 high impact projects.
The major highway projects include…
Delhi-Mumbai expressway (1,350 kilometres),
Amritsar-Jamnagar expressway (1,257 kilometres)
Saharanpur-Dehradun expressway (210 kilometres).
Roads in India – Various Categories
National Highways
State Highways
Major District Roads
Other District Roads
Village Roads
Delhi – Mumbai Express Way
Ahmedabad – Dholera Express Way
Aritsar – Jamnagar Express Way
Progressof the Nation is visible on its roads
and Highways..
 ROAD INFRASTRUCTURE – BACKBONE OF
ECONOMY

2020 – 62.16 K.m. Road Network of India

70% goods transfer
85% passenger transfer
60% Cargo movement
5 – 6 % GDP Contribution
 ROAD INFRASTRUCTURE – BACKBONE OF
ECONOMY

BetterRoad Infrastructure – Cut

Down the Logistic Cost from 15 –
16% to 10%
 MAJOR HIGHWAY INFRASTRUCTURE
PROJECTS

Golden Quadrilateral –
Connecting 4 major Metro Cities
of India
Delhi – Mumbai – Chennai –
Kolkata
 MAJOR HIGHWAY INFRASTRUCTURE
PROJECTS

Bharatmala Project – 34800 kms

– Estimated Cost – 535000 Crore
 MAJOR HIGHWAY INFRASTRUCTURE
PROJECTS

PM Grameen Sadak Yojana –

780000 kms connecting rural
areas
Connecting Industrial Cities with
Agricultural Cities
 MAJOR HIGHWAY INFRASTRUCTURE
PROJECTS

Delhi – Vadodara – Mumbai

Express Way – 1350 km – 12.5
hours
Dearka Express Way – 27.6 km
 MAJOR HIGHWAY INFRASTRUCTURE
PROJECTS

Mumbai – Nagpur Express way –

701 km – 390 willages – 10
Districts
 MAJOR HIGHWAY INFRASTRUCTURE
PROJECTS

Ganga Express Way – 594 km

Meerut – Prayagraj – 12 hours to
6 hours
 MAJOR HIGHWAY INFRASTRUCTURE
PROJECTS

Banglore – Chennai Expressway

– 258 km
 MAJOR HIGHWAY INFRASTRUCTURE
PROJECTS

Purvanchal Expressway – 340

km – Religious Tourism – Varanasi
– Ayodhya – Gorakhpur
 MAJOR HIGHWAY INFRASTRUCTURE
PROJECTS

BRO – Boarder Roads

Organisation – 75 Road Projects
in 2022
45 Bridges, 27 Roads
Constitution of India – Two Categories of
Roads
Highways declared by or under the law made
by Parliament
Roads and Bridges
 LEGAL FRAMEWORK
National Highways Act 1956
For declaration of certain highways as
National Highways
National Highways Authority of India Act,
1988
To provide framework for establishment of
authority for development, maintenance and
management of NIs
NATIONAL HIGHWAYS ACT 1956
Highways include
All lands appurtenant thereto whether
demarcated or not
All bridges, culverts, tunnels, causeways,
carriageways and other structures constructed
on or across such highways
Allfences, trees, posts and boundary, furlong
and milestones of such highways or any land
appurtenant to such highways. – Sec. 4
 AMENDMENT 1997

Scope of NH – restricted to the part of

highway falls outside any municipal area –
Under jurisdiction of local authorities
The National Highways Laws (Amendment)
Act, 1997 – exception deleted – Entire
stretch of NH vests with Union
 LAND ACQUISITION ISSUES

NH Act, 1956 – Central Govt Empowers for

Land Acquisition.
Sec. 3J – the Land Acquisition Act, 1894
shall not be applicable to an acquisition
under the NH Act, 1956
 LAND ACQUISITION ISSUES
Notification by C.G
Inspection and Survey
Land Acquisition – Can not be reversed..
Only disputes allowed for quantum of
compensation
Dispute does not stop vesting of land to
the Govt.
Dispute Settlement through Arbitration
DEVELOPMENT & MAINTENANCE
Mandate of NH Act, 1956 – IT shall be responsibility
of Central Govt. to develop, maintain in proper
conditions all the national highways.
Delegation of functions to.. (Sec. 5)
States

Any authority
Any Officer
 LEVY OF FEES

Sec.7 – Central Govt. may levy fees at such rates

as may be laid down in rules for
 Services or Benefits rendered relating to..
Use of NH
Use of Bridges
Use of Tunnels
 PRIVATE PARTICIPATION

Sec. 8A – Notwithstanding anything contained in

this Act, the Central Govt may enter into an
agreement with any person in relation to the
development and maintenance of the whole or
any part of the NH
 PRIVATE PARTICIPATION
A person with whom such an agreement is
entered into, is entitled to collect and retain fees at
such rate for such services or benefit rendered by
him as the Central Govt may by notification in the
official gazette specify for..
 Expenditure for building, maintenance, management and
operation of highway
 Interest on capital invested
 Reasonable Return
 Volume of Traffic
 Period of Agreeemtn
NATIONAL HIGHWAYS AUTHORITY

Separate Authority with statutory powers for

development, maintenance and management of
NHs.
Body Corporate with perpetual succession and
common seal with power to hold and dispose
properties.
NATIONAL HIGHWAYS AUTHORITY

Important Point –
NHAI Act, 1988 – does not create an independent
authority or regulator which is vested with powers
and functions to regulate, develop, construct,
operate, manage and maintain NH
NHAI – Completely under the control of Central
Government.
NATIONAL HIGHWAYS AUTHORITY

Sec. 11 – C.G has power to vest in or

entrust NHAI by notification such NHs or
Stretch thereof
NHAI has authority over NHs as are vested
or entrusted by C.G. – subject to rules and
regulations – Sec. 16
NATIONAL HIGHWAYS AUTHORITY
Primary
Function – to develop, maintain and
manage NHs
NHAI – bound to follow any direction given to it
in writing by the C.G on the questions of policy –
Sec. 33
Power of C.G to supersede the NHAI for such
period not exceeding one year if any time it is
observed that NHAI is not able to discharge
functions and duties – Sec. 32
 FUNCTIONS OF NHAI

Sec. 16(1) – Principal function of NHAI – to

develop, maintain and manage the NH and
any other highway vested in or entrusted to it by
the Govt.
StateGovts could also vest and entrust to NHAI
highways within their jurisdiction.
CONCESSION AGREEMENT??

Different CAs developed by NHAI

CA for Major Toll Road Projects
CA for Small Road Projects
CA for Annuity Project
 TOLL REGIME
Schedule 7 – List II – Entry 59 –
Power of States to levy tolls
Toll– Money taken in respect of a
benefit arising out of the temporary
use of land
Indian Tolls Act 1851
 TOLL REGIME
The tolls - similar to taxes – However not
levied on the general public.
Applicable only to the people using toll
roads.
Not to be collected forever – only till the
recovery of the cost of construction.
Reduction applicable for the purpose of
maintenance
 Indian Tolls Act 1851
 Amendment by most of the states.
 General Framework of the Act:
 State Govt. vested with powers to levy tolls
 Towards the public benefits including roads making or
repairing
 Collectionof tolls can be placed under the management of
any person by the State
 ‘Competitive Bidding’ – as a model
 Tolls deemed to be a public revenue
 All Police officers – bound to assist toll collectors
 Police officer on duty – exempted.
Financial Aspects of Road Projects
Inherent Risk Associated
Risks for Construction – Operation –
Maintenance
Political Risks
Regulatory Risks
Force Majeure Risks
Litigation / Disputes Risks
Risk relating to termination of CA
Risks for Project and Route
Commercial unviability
Alternative Routs Existence
Area covered by route not suitable
Access roads to project roads
Development of toll free alternative route
Availability of better transportation facility
 Risks related to Traffic
Low usage of road
Diversion to alternative route
Prevention of particular traffic
Handling of local traffic / non-motor traffic
Inadequate control of traffic
 Risks related to Toll

Associated with determination, revision

and levy of tolls
Associated with collection of toll
Appropriation of tolls by concessionaire
Adequacy of rates of toll
ROLE OF A CONCESSION AGREEMENT?
A contract between a government and
private organization which gives exclusive
rights to the private organization to
operate the business in the facility
specified under the government’s
jurisdiction for a limited period under
specified terms and conditions.
ROLE OF A CONCESSION AGREEMENT?

Allows the government to grant a

private entity exclusive rights to build,
operate, and maintain a facility for the
duration of the concession.
ROLE OF A CONCESSION AGREEMENT?
The main purpose of a concession agreement:
Vest the concessionaire all the rights required for
implementation of the project and obtain the agreed
returns in accordance with the terms of the
concession agreement.
Achieve an appropriate allocation of risks.
Most commonly entered in the form of a public-
private partnership (PPP) model
ROLE OF A CONCESSION AGREEMENT?
CA - different from other common commercial
agreements.
General Commercial Agreements - for transactions of
assets and properties owned by private parties,
CA - for public goods and services - aimed at making
available essential facilities and services.
Used to be long term contracts with high-value
transactions.
 BOT
BOO
EPC
BOOT
BOT Annuity
BOLT
HAM – Hybrid
DBFO Annuity Model

VARIOUS MODELS
 VARIOUS MODELS

BOT – Build Operate and Transfer

EPC – Engineering Procurement and
Construction
BOT Annuity
HAM – Hybrid Annuity Model
 BOT – BUILD OPERATE AND TRANSFER -
 One of the earliest models of PPP.
TOLL
 Other than sharing the project cost (with the Government), the private
bidder was to build, maintain, operate the road, and collect toll on the
vehicular
 The bid was given to the private company offering to share maximum toll
revenue to the government.
 The private party used to cover “all risks” related to— land acquisition,
construction (damage), inflation, cost over-runs caused by delays and
commercial. The government was responsible for only regulatory
clearances.
 Proved to be unsustainable for the private bidder—undue delay in land
acquisition due to litigation, cost over-runs and uncertainties in traffic
movement
 BOT – BUILD OPERATE AND TRANSFER
BOT - ANNUITY

A developer/Concessionaire builds the highway, operates it

for a specified duration and transfers it back to the
government.
 The government starts annuity payment to the
Concessionaire after the launch of commercial operation of
the project.
EPC – ENGINEERING PROCUREMENT AND
CONSTRUCTION
Contractual Agreement between Project
Owner and Contractor
Owner – Transfer the complete risk of design,
procurement and construction to the
Contractor
Contractor – Solely responsible for
completion of project and handing over.
EPC – ENGINEERING PROCUREMENT AND
CONSTRUCTION

Helpful for risk mitigation and management

tool.
Main Origin – to specifically transfer the risk
to contractor.
 HAM – HYBRID ANNUITY MODEL
 Cross between the EPC and the BOT ANNUITY models.
 Thecost of the project is split 40:60 between the government and
the private player.
 Theprivate player is responsible for building and handing over
the roads to the government, which will raise tolls (if desired)—
maintenance is the private player's responsibility until the annuity
period
 The government pays a fixed amount of economic
compensation (called annuity, similar to the BOT ANNUITY model
of the past) to a private player for a set period of time (normally
15 years, though it is flexible).
 HAM – HYBRID ANNUITY MODEL
 Thecontract to the private player who offers the lowest
annuity (in bidding).
 Thegovernment covers the majority of the major risks in this
model, including land acquisition, clearances, operation, toll
collection, and commercial, while the risks of inflation and
cost overruns are shared in proportion to the project cost
sharing.
 The private sector exposed to construction and maintenance
risks (delays from the government side in clearances and
land acquisition have chances to enhance the degree of
risks private players are exposed to).