The Ministry of Road Transport and Highways is planning an incentive scheme to solve the issue of shortage of contractors for highways development in the North-East. Also on the cards is a scheme to reserve a part of the work for local contractors in the region.
The Centre is pursuing ₹1,64,000 crore worth of highway projects in the North-East. Of the total, projects worth ₹31,000 crore (1,726 km) have already been awarded. However, the pace of development is slow for various reasons, including lack of contractors.
Overleveraging in the past and the resulting credit squeeze, have already impacted infrastructure companies in India. And not many of the eligible contractors are interested in braving additional risks of working in the North East, sacrificing more profitable opportunities in the plains.
To resolve this, the Ministry now plans to offer successful contractors in the North-East 40-50 per cent bid enhancement facility in the rest of the country. It means contractors with work experience in N-E will get additional opportunity to grab projects in the plains.
At a meeting last week, the Ministry formed a committee to explore the opportunity to modify bid documents for highway projects, in this regard. Currently, there is no incentive for contractors for pursing projects in hilly and forested N-E States, which offer narrow weather window and sufferfrom law and order risks.
The National Highways and Infrastructure Development Corporation (NHIDCL), which was incorporated in 2015, for highway construction in the NE, Jammu and Kashmir, Uttarakhand, Himachal and Andaman and Nicobar Islands, also proposed a scheme for developing local contractors.
As per bid conditions, the winning contractor can sublet 70 per cent of the project work. NHIDCL proposes to reserve at least 30 per cent of the sublet work for local contractors as part of a vendor development strategy.
Local contractors
Local contractors have already started playing a role in highway construction in Arunachal Pradesh (mostly two-lane highways) and Nagaland. A good number of such contractors are from Assam.
To ensure participation of contractors with smaller balance-sheet size, NHIDCL has already reduced the length of gighway packages from 40-50 km in the country, to 15-25 km in the North-East. The average package value is reduced from ₹400-500 crore to ₹100 crore.
Effort is on to accommodate contractors from other N-E States, who are too small to take up construction packages, in road maintenance. Approximately five Manipuri contractors are now engaged in highway maintenance.
“Involving local contractors is important for long-term vendor development. Guwahati-based Bhagya-Kalita group which started with maintenance work has now grown big enough to take up highway construction,” said a Ministry source.
What is more important is sharing a part of work with the locals helps avoid law and order issues, he said.