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India outsources highways operation and maintenance

The private sector will be awarded the operation and maintenance of publicly-funded highways for concession periods of four to nine years. It will also be allowed to collect user fees from drivers.

India’s Cabinet Committee on Infrastructure (CCI) has approved the outsourcing of operation and maintenance services for the country’s National Highways, offering the private sector longer-term contracts and allowing it to collect tolls, the CCI announced late last week.

Presently, the maintenance of publicly-built highway stretches is outsourced to the private sector via short-term operation and maintenance contracts. User fees are collected through different agencies, with the toll contractor changed annually through a bidding process.

Under the CCI’s new Operation, Maintain and Transfer (OMT) scheme, concessionaires will be awarded longer contracts of between four to nine years, during which they will be responsible for carrying out annual and periodic major maintenance and incident management across India's highways.

The concessionaires will also be able to levy, collect and retain user fees from drivers. The CCI said most projects will be “revenue positive” and that concessionaires will be required to pay an annual premium to the government, with the actual premium amount playing a key role in winning these contracts.

In addition, the CCI has cleared six OMT contracts covering some 963 kilometres of roads across India’s East-West corridor that had been awarded to a bevy of local firms earlier this year.

The outsourcing of a further 2,998 kilometres of highways has been earmarked for 2012-2013, with 517 kilometres to be awarded in 2013-2014.