Undertaking Maintenance of National Highways on Operation, Maintenance and Transfer (OMT) Basis

The Ministry of Road Transport & Highways (M/o RT&H) has undertaken the strengthening and up-gradation of National Highways under National Highways Development project (NHDP) in various phases. Stretches developed under PPP mode are being maintained to the desired performance standards by the Concessionaire during the concession period. However, for the stretches developed with support of public funds predominantly during the development of Golden Quadrilateral (GQ) and North-South–East-West (NSEW) corridor, a need was felt for seamless maintenance of these high value infrastructure assets. Thus it was contemplated to create a scheme for tapping the private sector’s efficiencies in operation, fee collection and maintenance, as service life of high-valued road infrastructure asset depends on timely maintenance before the performance level sinks below the minimum threshold standards.

Presently, maintenance of stretches implemented through public funds is being done separately through short term Operation and Maintenance Contracts funded from budgetary resources. User fee is being collected through different agencies (wherever applicable) on annual contract basis and deposited into the Consolidated Fund. Change of maintenance or toll Contractor on annual basis by calling bidding process every year consumes considerable time and energy without delivering the good maintenance of roads. It was felt that there is scope for further improvement for better maintenance and ensuring high standards of riding quality on National Highways. The OMT scheme is expected to synergize the process of collection of user fee and operation and maintenance of road stretches, in quest of achieving these objectives.

A Model Concession Agreement (MCA) for operation and maintenance of highways through Private Parties on Operate, Maintain and Transfer (OMT) basis has already been approved.  Under the OMT basis of PPP, the operation and maintenance of the roads is outsourced to a private entity for a definite concession period. The basic principles of OMT are similar to Build, Operate and Transfer (BOT) with construction, operation and maintenance of highway reduced to merely operation and maintenance of highways. A long term, performance based maintenance and operation contract is bound to be more effective and yield good results. Some of the key features of OMT Concessions are as follows:

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(i)   The project section of the Highways is handed over to the Concessionaire for a fixed concession period. The concessionaire is responsible for carrying out the annual and periodic major maintenance during the concession period of the project section of the Highways, apart from ensuring smooth operation of traffic in the stretch including Incident Management.

(ii)  The concession period is so decided that the Concessionaire is required to maintain the stretch for a period almost equal to the life of the renewal work, before the necessity to upgrade such stretch so arises from 2 Lane to 4 Lane or 4 Lane to 6 Lane etc.

(iii) Concession periods shall remain between 4 to 9 years, after which, the concessionaire has to transfer back the road after the concession period.

(iv)  The concessionaire is authorized through Government Gazette notification to levy, collect and retain user fee from road users.

(v)   Most projects are expected to be revenue positive and the concessionaire is required to pay annual premium of agreed amount during the process of bidding with the amount of annual premium being the bidding parameter.

Implementation Strategies and Targets

These contracts would be awarded by the Ministry of Road Transport & Highway/ NHAI after the approval of investment proposal by the competent authority as per prescribed procedure.

Major Impact

           This will help ensure the regular maintenance of all the upgraded National Highway sections developed through the public funded initiatives or otherwise, in an efficient manner for the period of the concession awarded to OMT concessionaires, without any liability to the Government.  By doing this, the public faith in the PPP policy for development and upgradation of National Highways would get a boost and wider acceptability.

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No. of beneficiaries

            The users of National Highways from all over the country will be benefited in a big way as the traffic on well maintained roads will be smooth.

Work Plan for OMT projects:

For 2012-13

·         6 projects with total length of 963 Kms have already been awarded.

·         2998 Kms of stretches have been identified to be undertaken during the year.

For 2013-14

·         517 Kms have been identified to be undertaken during next year.

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