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Govt to take steps to boost private investment in roads, shipping

Economic Times:  January, 2017

New Delhi: The government will take tangible steps to boost corporate investment in roads and shipping with business-friendly strategies that balance profitability with effective project execution, Mansukh L Mandaviya, minister of state for road, transport and shipping, has said.

"We are creating an investor-friendly model for private sector. Who will invest in roads if there's no profit?" the minister told corporate leaders at the ET Roundtable on highways, ports and shipping on Thursday.

He said his ministry would sympathetically consider their suggestions that the PPP model needs to focus on strengthening the element of partnership between the investor and the government.

"We must modify the public-private partnership model as per the need of the day and there's a constant need to change the mindset at all levels. We'll be coming up with a lot of policy interventions in coming days to revive the interest of private sector," Mandaviya said.

He also said cashless payments and toll and upcoming GST law would transform the transportation and logistics sector by cutting down the cost through simplified payment and tax structure.

Business leaders were concerned about the PPP model, but also said it can help infrastructure take a giant leap. "PPPs can bring the same revolution as telecom in infrastructure. The government has taken a lot of important measures but there's still a need to walk that extra mile," said Puneet Dalmia, managing director at Dalmia Bharat Group.

Essar Ports managing director Rajiv Agarwal emphasised the need for "real partnership" between stakeholders, along with access to low-cost funds and flexibility in contracts, in the wake of uncertainties. "This will help revive confidence and investment climate enabling achievement of the national objective of national development on the back of strong infrastructure," he said.

Feedback Infra chairman Vinayak Chatterjee said some solutions were already available with the government.

"The Kelkar report has called for a rational allocation of risks among various stakeholders in a project, and moving away from the onesize-fits-all approach to PPP model concession agreements," he said.

Kaushik Pal, CEO-roads business, at Reliance Infrastructure, said his company had gone all out to encourage cashless tolling. However, the company had to bear the cost of 1% that was charged on cards and wallets.

Industry leaders also emphasised the need to focus on optimisation of different modes of transport -- road, rail and costal shipping. Anil Radhakrishnan, chief executive officer at Adani Logistics Ltd, said the government should incentivise coastal shipping to make it attractive.

Participants also raised concerns about the reluctance of banks to fund projects. Malvika Pillai, portfolio manager, infrastructure and natural resources, International Finance Corporation, Asia-Pacific, said funds were readily available for the sector but there were several obstacles such as badly structured projects and issues of land acquisition.

Anand Kumar, MD, National Highways Infrastructure Development Corporation, said all projects should be made public from the stage of planning itself so prospective bidders know what is coming up in two years and they can plan their resources accordingly.

Dispute resolution mechanism is another area that needs to be addressed, industry believes. "The capacity of decision makers has gone down; most disputes are caused because of this. The government must empower officers to make decisions independently," Chatterjee of Feedback Infra said.