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The Ministry of Road Transport and Highways has revised key provisions in its standard bidding and concession documents for Build-Operate-Transfer (BOT) national highway projects to make the sector more attractive to private investors. The changes include wider eligibility for fund houses, clearer provisions on ownership changes, traffic targets, damages and force majeure, and termination compensation before commercial operations. The government has also streamlined debt-due calculations and changed the dispute-resolution framework, with smaller disputes going to arbitration and larger claims being handled through conciliation or mediation.
The Ministry of Road Transport and Highways has revised the contractual framework for Build-Operate-Transfer (BOT) national highway projects as part of efforts to attract greater private sector participation in highway infrastructure.
The changes cover the standard bidding and concession documents used for BOT projects and are aimed at addressing concerns that have affected private investment in the sector. The government has been working to broaden investment opportunities across national highways, including high-speed corridors, expressways, city ring roads and bypasses, coastal roads and connectivity projects serving ports, airports and industrial nodes.
One of the significant changes is an expansion of bidder eligibility. Fund houses will now be permitted to participate based on their financial strength. If awarded a project, such investors will be required to engage engineering, procurement and construction (EPC) contractors with the necessary technical experience to execute the project.
The revised framework also incorporates changes based on experience from previous litigation and differing interpretations of contractual provisions. The government has amended clauses covering change in ownership, target traffic, damages and compensation for breaches of the concession agreement.
Other areas addressed include compensation related to force majeure costs, construction-support payments during the construction period for capacity augmentation projects, compensation associated with annual passes and provisions governing changes in project scope. The amendments are intended to provide greater clarity to parties involved in highway projects.
Another important provision concerns termination compensation before the commercial operation date. Under the revised framework, such compensation will be payable when a project has achieved at least 20% physical progress. The provision is intended to provide protection to both concessionaires and lenders if a project is terminated before it becomes operational.
The ministry has also streamlined provisions governing the determination of debt due. The change is designed to remove ambiguities in the calculation and provide greater certainty for stakeholders, particularly lenders and project concessionaires.
The dispute-resolution mechanism has undergone a separate restructuring. The earlier Dispute Resolution Board has been abolished under the revised framework. Disputes involving amounts below 10 crore will be taken up through arbitration, while disputes valued at 10 crore or more will be addressed through conciliation or mediation.
These contractual changes come alongside other measures adopted by the government to widen private investment in highway infrastructure. These include reforms to the Model Concession Agreement for public-private partnership projects, changes to models used for monetising national highways through the Toll-Operate-Transfer route and the introduction of Public InvIT.
The ministry has also been engaging with concessionaires, financiers and government bodies through stakeholder conferences to present investment opportunities and understand concerns raised by potential investors.
The government’s broader highway strategy includes expanding access-controlled national high-speed corridors and expressways, developing urban ring roads and bypasses, improving port and airport connectivity and strengthening links to industrial nodes.
By revising the BOT framework, the ministry is seeking to make project contracts more predictable while reducing uncertainties around financing, contractual obligations, disputes and termination. The changes could therefore influence the willingness of private investors and lenders to participate in future national highway projects.
The details were provided by Union Minister for Road Transport and Highways Nitin Gadkari in a written reply in the Rajya Sabha.
Source- PIB
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