National Highways go strong

The government on Thursday approved six-laning of 6,500 km of National Highways (NH), comprising 5,700 km of Golden Quadrilateral (GQ) at a cost of Rs 41,210 crore (Rs 35,692 crore from the private sector and Rs 5,518 crore as viability gap funding, utility shifting etc). [news link]

The projects would be taken up on Build, Operate, Transfer (BOT) mode following a Design, Build, Finance and Operate (DBFO) pattern with a maximum of 10 per cent viability gap funding.

For those who are not too comfortable with the jargons used, I would like to put few fundays:

1. Viability Gap Funding: Whenever it is felt that the private players wont be able to realize expected returns on any project if they put in all the money themselves, the Government generally contributes enough from its own pocket to the fund, so that the project is still viable.

2.BOT model: In general, the huge infrastructure systems like highways are owned by the Goverment (might be the centre or the state). A BOT model is one, where though the ownership right is still with the government at any time, the project is built by someone else (generally by a special purpose vehicle), operated by the same/different firm, for a pre-determined time period, and then handed over back to the Government for future operations.