Model Concession Agreement Highways

But both models have increased the financial burden for NHAI and garnered criticism from several sides. The revised concession-type agreement was approved a few days ago by the inter-ministerial group of the ministries of finance, law, road transport and motorways, as well as by NITI Aayog. An official announcement in this regard is expected shortly, he added. The government has presented its ambitious national infrastructure pipeline, under which it will develop an additional 67,000 km of national roads over the next five years, at an estimated cost of 19.6 trillion euros. Private actors should finance 22% of the total cost. Privately funded motorway projects, whose prices have become low over the years, have been ended with an enhanced revenue protection clause, which was included in the revised concession pact. In accordance with the revised model concession agreement, the project`s revenues will be assessed after five years. «Therefore, if there is a radical change in the toll, the concession period will be adjusted accordingly,» said a government official, who was informed of the plan. An inter-ministerial group (IMG) has approved major changes to the Model Concession Agreement (MCA) for the construction of privately funded highways on the Build-Operate and Transfer (BOT) toll model, which contains a tax protection clause to address traffic risks. However, for the dealership, the revision of the concession period was limited, as before, to 20%. The increase in traffic due to diversions due to a competing corridor (value of the existing road network) and competing modes of transport (dedication of freight corridors or inland waterways) could be much higher and cannot be fully addressed within the 20% ceiling, said one dealer.

The concession period has been set at 20 years. The revised concession agreement provides for the creation of a dispute resolution commission that will act as a permanent dispute resolution mechanism to resolve issues quickly. Under the revised model concession agreement (MCA) for construction and transfer projects (BOT-Maut), the production potential of a project would be reassessed every five years during the concession period compared to every ten years.

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