To provide for a framework for private participation in financing, construction, maintenance and operation of infrastructure projects, Gujarat Infrastructure Development Act, 1999 popularly known as BOT Law was enacted in and later on amended as Gujarat Infrastructure Development (Amendment) Act, 2006. It is the first of kind institutional arrangement in India for Private Sector Participation. A concession period of maximum 35 years is allowed under this act. It provides three modes for private sector participation in Infrastructure Projects as follows:
Competitive bidding (section-9 GID Act)
- It is preferred as the most preferred mode for the public sector participation in infrastructure sector
- The cost/user charges/subsidy reduces through this mode and/or enhances revenues to Government
- It provides legal sanctity to the procedure of bidding
- Detailed procedure is laid down for technical and financial bid processing
- Even the spread and periodicity of tender bid notice is part of the Act
- It allows two-stage bidding process: technical and financial
Comparative bidding/ SWISS Challenge Route (section-10 GID Act)
- Unsolicited proposals which does not require state subsidy are processed through this route
- Involves three stages:
- acceptance of the project by the Government and that it can be delivered by the developer in a time frame
- detailed negotiations to arrive at a consensus on the project parameters including the price
- competitive bidding on functional specifications of the project taken as fait accompli
- If better proposal (s) is received, the original proponent is given the opportunity to make his proposal competitive with that
- If he fails, the project goes to the selected bidder
- The project development cost can be reimbursed
Direct negotiation (section-10A GID Act)
- It involves projects having innovative or involves proprietary technology or franchise which is exclusively available with the person globally
- A project wherein competitive public bidding as provided in section 9 has failed to select a developer
- A project to provide social services to the people including community services and public utilities
- An infrastructure project which is an essential link for another bigger infrastructure project owned or operated by the same person
Modified Bombay Motor Vehicle Tax Act
To facilitate private sector participation in road projects, the Gujarat Government has amended the Bombay Motor Vehicles Act, 9 of 1994, which permits the levy of toll on either new construction or strengthening/improvements of road and bridge projects. A comprehensive set of rules which would provide further guiding framework to facilitate private sector participation is under finalisation.
For providing an efficient road network across the length and breadth of the State so as to effectively meet with the transportation needs of every sector, cost effectively and with the right inter modal mix, Road policy was structured in 1996.
The basic aim of the policy was to work towards rapid economic and social up-liftment, while simultaneously ensuring that the growth achieved is balanced, and the accruing benefits are evenly spread.
The objectives of the road policy are as follows:
- To provide connectivity to all villages by all weather roads by the end of 1997, and thus, further improve quality of life in rural areas, in terms of quick access to health services, better education, social services, etc.
- To provide an adequate and efficient road system encompassing all transportation needs so as to ensure smooth and uninterrupted flow of goods and passenger traffic both within the State as well as on interstate routes.
- To constantly upgrade technology by inducting superior and quicker construction and maintenance methods with a view to reducing the total transportation cost as well as to reduce the overall life cycle cost of roads.
- To induct more scientific principles of resource allocation for maintenance and new construction programs.
- Overall, to set high standards of road safety and travel comfort.
Toll Policy/ Tariff Setting Mechanism
To facilitate clarity regarding toll rate, location of toll plaza, distance between two toll plaza, types of preferred road sections on which toll can be collected etc. and thereby also to encourage private investor, Government of Gujarat through a Government Resolution dated 25th August, 2008 has formulated a Toll Policy which lays down tolling principles to be followed. The revision of Tariff is done by issuing a fee notification by Government of Gujarat through concern department.
Concessions available for Lenders/Investors
To provide financial support for the development of infrastructure projects, subsidy upto 40% (GoG-20% & GoI-20%) of the total project cost is available for the developers under the Viability Gap Funding (VGF) Scheme.
The state government has adopted a Model Concession Agreement for road sector which allocates risks between various stakeholders of a road project.
Dispute Resolution Mechanism
The dispute resolution shall be as per Gujarat Public Works Contracts Disputes Arbitration Tribunal Act, 1992 or as specified in the concession agreement. In case any Dispute which is not resolved amicably by conciliation, such arbitration shall be held in accordance with the Rules of Arbitration of the International Centre for Alternative Dispute Resolution, New Delhi.
The Government of Gujarat through concerned departments carries out all preparatory work for the projects identified for private investment and provides the following facilities:
- Cost for preparing Detailed Feasibility Study
- Land for Right of way and en-route facilities
- Relocation of utility services, resettlement and rehabilitation of the affected establishments.
- Environmental clearances
- Streamlined land acquisition procedures
- Competitive and transparent bidding process
- Extending a subsidy upto 40% (GoG-20% & GoI - 20%) on a case to case basis subject to the viability of the project
- Allow commercial development along the corridor to increase the revenue by a stream of projects like hotels, restaurants, warehousing, etc wherever deemed necessary.