2.5.1. How is EPC different and better than PPP?

♤ Here the government bears the entire financial burden and funds the project. Capital is either raised by issuing bonds like NHAI bonds or by taking steps to secure road toll receivables post construction. Note that the fund here is not raised through banks, thereby saving banks from the risk of NPAs. Secondly, it relieves funds for the off take by other players in economy.

♤ Government now takes care of clearances, acquiring land and estimating the traffic a very huge exercise that had to be done by private parties earlier. This reduces the risk for private player, thereby encouraging them to take up more projects.

♤ With decreased risk on private builders and increased incentives for early completion, it creates comfortable base to lure investors to carry on the EPC work i.e. the contractor now designs the installation, procures the necessary materials and builds the project, either directly or by subcontracting part of the work.

♤ Timeline required to construct reduces remarkably and there may even the clause of penalizing the private player for overshooting the timeline.

♤ Here the government takes responsibility of raising capital, procuring clearances before the onset of the project.

♤ EPC model is better than PPP model as the company gets the whole responsibility to complete the project and it is also easy for the government to hold the company accountable for the project. In PPP model various companies are involved in a single project. This creates the opportunity to start blame game if anything goes wrong after completion.

The decision of the Government of India to develop, operate and maintain the wayside amenities alongside National highways across India through EPC model is an example for an EPC project.