The United Progressive Alliance government will soon consider a proposal to provide Rs 15,000 crore (Rs 150 billion) of budgetary support for a project that was announced more than a year ago by the National Democratic Alliance government.

In his Independence Day speech in 2003, former Prime Minister Atal Bihari Vajpayee had announced the launch of the third phase of the National Highways Development Programme, which was christened the Pradhan Mantri Bharat Jodo Pariyojana. The project was to take up the widening of 10,000 kilometres of national highways in different parts of the country.

The ministry for road transport and highways has now prepared a Cabinet note on the project, which is estimated to cost Rs 55,000 crore (Rs 550 billion). To meet 27 per cent of this cost, a budgetary allocation of Rs 15,000 crore (Rs 150 billion) has been sought over the next five years. The project is expected to be completed by December 2010.

Ministry officials told Business Standard that multilateral agencies like the World Bank and the Asian Development Bank might contribute Rs 10,000 crore (RS 100 billion) for the project, while private operators would account for the remaining Rs 30,000 crore (Rs 300 billion).

The government has also proposed a capital grant of up to 40 per cent of the project cost to meet the shortfall in revenue. The bidding will take place on the basis of a capital grant component to be provided by the government to the private operator. Officials expect the government support will be provided through viability gap funding.

"Even though the entire stretch of 10,000 kilometres is to be upgraded through the build-operate-transfer model, loans from multilateral agencies and government support are required to fund the up to 40 per cent subsidy to be provided by the government to the BoT operator," the official said.

The Pradhan Mantri Bharat Jodo Pariyojana was announced by the previous government for converting 10,000 kilometres of national highway stretches into four-lane roads.

The stretches are to be identified on the basis of traffic density, connectivity with state capitals and their importance in terms of tourist and economic activity.

Though the bidding process for the first six stretches is already in its last stage, the decision to award the contracts has been delayed because of the change in government. The government has also identified 10 more stretches, for which bidding is yet to happen.