Karnataka's PRR Project Revival Strategy: Government Seeks International Consultant To Secure Rs 21,091-Crore Global Funds

The Karnataka state government recently announced plans to expedite the Peripheral Ring Road (PRR) project, which was proposed 17 years ago, to alleviate city congestion.

The PRR project was proposed to alleviate traffic congestion in Bengaluru, but it has faced numerous obstacles including legal disputes over land acquisition and cost issues.

However, the tender process for the project is now expected to be delayed by a few months. To help secure global resources for the Rs 21,091-crore project, the government has decided to hire a consultant with international experience.

Despite two rounds of tendering in 2022, no bidders have come forward for the 73-km PRR project, which is being undertaken through a private-public partnership model.

The Infrastructure Development Corporation Karnataka Limited or iDECK is serving as the project's consulting firm.

According to The New Indian Express report, the government plans to engage a new 'transaction advisory service' (financial advisor) for the PRR project. The main challenge faced by the project is resource mobilisation.

Given the significant amount of funding required, it is believed that a firm with international exposure would be better equipped to help secure the necessary funds globally. Therefore, the government intends to first initiate a short-term tender to appoint the transaction advisor.

The advisory firm will be responsible for identifying suitable funding options for the project and attracting major firms to invest in it.

Although the exact delay is uncertain, it is anticipated that the third tender may be postponed by an additional six months.

Initially, the plan was to allow the concessionaire to fund the project and lease it out for 50 years, recovering the investment through toll charges over that period. However, due to the long-term nature of the project, the expected response from potential investors has been lacking.

The plan is to lease the PRR for a period of 20 to 25 years. In order to support this, the government can implement measures such as levying a "betterment tax" on nearby areas, increasing stamp duty charges, and providing financial assistance to the contractor through viable gap funding methods.

The PRR project will cover a total of 1,810 acres of land in Bengaluru North, Bengaluru East, and Anekal taluks. It will encircle the city, starting from Tumakuru road on NH-48 at the NICE road junction and ending on Hosur road on NH-44, at the NICE road starting point.

One of the major issues between the land losers and the Bengaluru Development Authority (BDA) is the matter of compensation. Land losers are demanding compensation based on the 2013 Act, which would amount to Rs 15,475 crore.

However, the BDA is only willing to pay compensation based on the Act that was in place prior to 2013, which would reduce the compensation by Rs 3,000 crore. The Supreme Court has ruled in favour of the BDA in this matter.

Peripheral Ring Road (PRR) project

The PRR is planned as a 73 km stretch with a 100-metre-wide road.

On completion, it will connect Tumakuru Road and Hosur Road via Hessaraghatta Road, Doddaballapur Road, Ballari Road, Hennur-Bagalur Road, Old Madras Road, Hoskote-Anekal Road, and Sarjapur Road.

Along with NICE road, which links Tumakuru road and Hosur road via the city’s northwestern, western and southwestern areas, Bengaluru will have a 116-km-long bypass on its periphery.

The proposed alignment of PRR will be located at an approximate radial distance of 17 km-25 km from the city centre and is envisaged to be a by-pass to the city for the long-distance personalised vehicles (cars and cabs) and commercial vehicles (trucks and LCVs).

The total land requirement for the project, which was initially estimated to be 733 hectares (1,811.28 acres), was later revised to 1,036.51 hectares (2,561.27 acres) due to the change in length of PRR from 65.5 km to 74 km.

The increase in length was due to the realignment and inclusion of cloverleaf structures to integrate at Tumakuru road and Hosur road with NICE road.

The project's total cost is Rs 14,934 crore, out of which Rs 9,318 crore is required for land acquisition and rehabilitation purposes, while the construction cost is estimated to be around Rs 5,600 crore.

When originally conceptualised with the aim of decongesting Bengaluru and easing traffic, the project was estimated to be Rs 3,000 crore.

Significance Of The Project

The project is very significant to Bengaluru city because it is expected to address serious traffic challenges.

According to local authorities and the state government, Bengaluru needs the PRR, given the massive geographical expansion of the city to the current spread of 2,196 sq/km and explosive growth of vehicular ownership (2019 estimate — over 80 lakh).

The ring road is also expected to provide massive economic benefits. Bengaluru has been attempting to complete several large ring road projects to improve its city-region connectivity and alleviate traffic congestion.