Companies offer to build 2,496km (1,550 miles) of toll expressway around Bangalore India

A consortium of four companies is proposing to build nine toll expressways totalling 2,496km (1,550 miles) in the Indian state of Karnataka whose capital is Bangalore, the Times of India reports. The state enacted a new framework for toll concessions in 2007 and this is the most spectacular proposal to result.

Six initial expressways totaling 1834km (1140 miles) are proposed by the four Indian companies led by Maytas Infra Public Ltd:

Bidar to Chitradurga via Gulbarga and Kudligi - 445km

Raichur to Belgaum via Bagalkot - 315km

Bellary to Karwar - 306km

Mangalore to Kolar - 335km

Chitradurga to Udupi - 215km

Chitradurga to Madikeri - 218km

Swiss challenge rule

Integral to the enlistment of private capital in building new highways in several Indian states now is the Swiss Challenge System, so-called. This encourages unsolicited proposals to gain innovation, and to prevent highway investment being limited to a set of projects developed by politicians and bureaucrats.

The challenge part gives competitors an opportunity to make better proposals during a set period from the time the initial unsolicited offer is published.

Then in stage three of the Swiss Challenge after the competing bids or challenges are received the initial proposer has an exclusive right to come back and make a best and final offer.

The state makes a final decision on which proposal to select. The state has to support route selection, permitting and right of way acquisition, and will enforce the terms of the concession contract.

The Swiss challenge is held to provide a good balance between the need to have competition and the need to encourage unsolicited proposals by giving the first proposer an edge.

World's second largest highway program

India now has the world's second largest highway building program after China. Both depend almost entirely on toll financing and private equity. Both are administered in a highly decentralized fashion with states and provinces and cities taking the lead and the central government playing a subordinate role.

Different approaches unconstrained by central rules allow experimentation and comparisons.

TOLLROADSnews 2008-08-19