The Cabinet Committee on Economic Affairs (CCEA) on 27 August 2014 empowered the Road Transport and Highway Ministry to make changes in the Model Concession Agreement (MCA).
The Road Transport and Highway Ministry would now be able to take following decisions:
(i) Mode of delivery of projects
(ii) Whether to use the PPP route BoT (toll) or BoT (annuity) or the conventional EPC model for award of a project which depends on economic conditions and viability of the project.
(iii) Allowing stake sales by a small developer
(iv) Premium rescheduling to recover a project can be taken at the level of the bureaucrats.
A committee headed by the Cabinet secretary would decide whether there is need of any amendment in MCA or not.
Reasons behind the decision
The Road Transport and Highway Ministry was facing difficulty in timely award of contracts. There was problem in knowing the mode of delivery of project. This empowerment would be helpful in making the execution of the projects speedier and smoother and help prevent projects from sinking into crises.
Despite the target for award of 9500 kms of road for 2013 only 1116 kms could be awarded in 2013 by the National Highways Authority of India (NHAI). For the Year 2014, only 1436 kms of road was awarded against the target of 4030 kms.
Moreover, earlier an inter-Ministerial Group (IMG) used to take decisions on modifications in the documents of road projects. If the project got stuck, IMG need to go to Union cabinet which led to delays in the delivery of the projects.
Model Concession Agreement (MCA)
MCA forms the base of public private partnership (PPP) projects in India. MCA is a legal contract that prescribes the terms and conditions for executing a road project. It comprises the policy and regulatory framework for implementation of a PPP project.
The Model Concession Agreements are available for various sectors like National Highways, State Highways, Urban Rail Transit System and Ports.
When: 27 August 2014